SHAREHOLDER PROTECTION RIGHTS AGREEMENT
BETWEEN
NORTH VALLEY BANCORP
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Dated as of September 9, 1999
TABLE OF CONTENTS
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Page
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SECTION 1. - DEFINITIONS.....................................................1
SECTION 2. - APPOINTMENT OF RIGHTS AGENT.....................................4
SECTION 3. - ISSUE OF RIGHTS CERTIFICATES....................................4
SECTION 4. - FORM OF RIGHTS CERTIFICATES.....................................6
SECTION 5. - COUNTERSIGNATURE AND REGISTRATION...............................6
SECTION 6. - TRANSFER, SPLIT UP, COMBINATION AND
EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED, DESTROYED,
LOST OR STOLEN RIGHTS CERTIFICATES...........................................7
SECTION 7. - EXERCISE OF RIGHTS; PURCHASE PRICE;
EXPIRATION DATE OF RIGHTS....................................................8
SECTION 8. - CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.............9
SECTION 9. - AVAILABILITY OF PREFERRED SHARES................................9
SECTION 10. - PREFERRED SHARES RECORD DATE...................................9
SECTION 11. - ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS............................................................10
SECTION 12. - CERTIFICATE OF ADJUSTED PURCHASE PRICE
OR NUMBER OF SHARES.........................................................18
SECTION 13. - CONSOLIDATION, MERGER OR SALE OR TRANSFER
OF ASSETS OR EARNING POWER.................................................18
SECTION 14. - FRACTIONAL RIGHTS AND FRACTIONAL SHARES.......................22
SECTION 15. - RIGHTS OF ACTION..............................................23
SECTION 16. - AGREEMENT OF RIGHTS HOLDERS...................................23
SECTION 17. - RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER............24
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SECTION 18. - FEES, EXPENSES AND LIABILITIES OF THE RIGHTS AGENT............24
SECTION 19. - MERGER OR CONSOLIDATION OR
CHANGE OF NAME OF RIGHTS AGENT..............................................25
SECTION 20. - DUTIES OF RIGHTS AGENT........................................25
SECTION 21. - CHANGE OF RIGHTS AGENT........................................27
SECTION 22. - ISSUANCE OF NEW RIGHTS CERTIFICATES...........................28
SECTION 23. - REDEMPTION....................................................28
SECTION 24. - EXCHANGE......................................................29
SECTION 25. - NOTICE OF CERTAIN EVENTS......................................30
SECTION 26. - NOTICES.......................................................31
SECTION 27. - SUPPLEMENTS AND AMENDMENTS....................................32
SECTION 28. - REGISTRATION OF SECURITIES....................................32
SECTION 29. - DETERMINATIONS AND ACTIONS
BY THE BOARD OF DIRECTORS...................................................33
SECTION 30. - SUCCESSORS....................................................33
SECTION 31. - BENEFITS OF THIS AGREEMENT....................................33
SECTION 32. - SEVERABILITY..................................................33
SECTION 33. - GOVERNING LAW.................................................33
SECTION 34. - COUNTERPARTS..................................................34
SECTION 35. - DESCRIPTIVE HEADINGS..........................................34
EXHIBIT A - Certificate of Determination (ss1(m)) .........................A-1
EXHIBIT B - Form of Rights Certificate (ss3(a)(2); ss4) ...................B-1
EXHIBIT C - Summary of Rights (Letter to Shareholders) (ss3(b)) ...........C-1
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SHAREHOLDER PROTECTION RIGHTS AGREEMENT
THIS SHAREHOLDER PROTECTION RIGHTS AGREEMENT (the "Agreement"), dated
as of September 9, 1999, is made between North Valley Bancorp, a California
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agent").
Pursuant to this Agreement, the Board of Directors of the Company has
authorized and declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the Company
outstanding on September 23, 1999 (the "Record Date"), each Right representing
the right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1.
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 10% or more of the Common Shares
of the Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company, any employee
benefit plan of the Company (including without limitation the Employee Plans) or
of any Subsidiary of the Company, or of any entity holding Common Shares for or
pursuant to the terms of any such plan, provided, however, that any Person who
first obtains the written approval of a majority of the Board of Directors of
the Company for the acquisition of 10% or more of the Common Shares of the
Company and thereafter accumulates at least 10% of the Common Shares, but not
more than the percentage of the Common Shares of the Company specified in such
written approval, shall not be an "Acquiring Person."
Notwithstanding the preceding paragraph, no Person shall become an
"Acquiring Person" as the result of an acquisition of Common Shares by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 10% or more
of the Common Shares of the Company then outstanding; provided, however, that if
a Person shall become the Beneficial Owner of 10% or more of the Common Shares
of the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
any additional Common Shares of the Company, then such Person shall be deemed to
be an "Acquiring Person".
(b) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
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(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) Which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) Which such Person or any of such Person's Affiliates or
Associates has:
(A) The right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and
selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, 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) The right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement
or understanding to vote such security (1) arises solely from
a revocable proxy or consent given to such Person in response
to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) Which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso in Section
l(d)(ii)(B)) or disposing of any securities of the Company; provided,
however, that in no case shall an officer or director of the Company be
deemed the Beneficial Owner of securities held of record by the trustee
of any employee benefit plan of the Company (including without
limitation the Employee Plans) or any Subsidiary of the Company for the
benefit of any employee (other than the officer or director) of the
Company or any Subsidiary of the Company, by reason of any influence
that such officer or director may have over the voting of the
securities held in the plan.
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Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of California or the State
of New Jersey are authorized or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., Pacific
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., Pacific tiem, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall mean
the shares of common stock, no par value, of the Company. "Common Shares" when
used with reference to any Person other than the Company shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(h) "Current Value" shall have the meaning set forth in Section
11(a)(iv) hereof.
(i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(j) "Employee Plans" shall mean the North Valley Bancorp 1989 Director
Stock Option Plan, the North Valley Bancorp 1998 Employee Stock Incentive Plan,
the North Valley Bancorp 1999 Director Stock Option Plan, the North Valley
Bancorp Employee Stock Ownership Plan and any other tax-qualified employee
benefit plan of the Company or any Subsidiary, or any of them, and any successor
plan to any of them.
(k) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(l) "Person" shall mean any individual, firm, association, partnership,
joint venture, corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, no par value, of the Company having the rights
and preferences set forth in the Certificate of Determination for Series A
Junior Participating Preferred Stock attached hereto as Exhibit A.
(n) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(o) "Purchase Price" shall have the meaning set forth in Section 4
hereof.
(p) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
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(q) "Registered Common Shares" shall have the meaning set forth in
Section 13(b)(ii)(A) hereof.
(r) "Shares Acquisition Date" shall mean the date of first public
announcement (which, for purposes of this definition, shall include, without
limitation, the date of filing of a report filed pursuant to Section 13(d) of
the Exchange Act) by an Acquiring Person that an Acquiring Person has become an
Acquiring Person, or such earlier date as a majority of the directors of the
Company shall become aware of the existence of an Acquiring Person.
(s) "Spread" shall have the meaning set forth in Section 11(a)(iv)
hereof.
(t) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(u) "Substitution Period" shall have the meaning set forth in Section
11(a)(iv) hereof.
(v) "Trading Day" shall have the meaning set forth in Section 11(d)(ii)
hereof.
(w) A "Trigger Event" shall be deemed to have occurred when any Person,
together with all Affiliates and Associates of such Person, becomes an Acquiring
Person.
SECTION 2.
APPOINTMENT OF RIGHTS AGENT
The Company hereby appoints the Rights Agent to act as agent for 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. 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.
SECTION 3.
ISSUE OF RIGHTS CERTIFICATES
(a) Except as provided in subsections (i) and (ii) below, the Rights
shall at all times be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Rights
Certificates) and not by separate Rights Certificates, and the right to receive
Rights Certificates will be transferable only in connection with the transfer of
Common Shares.
(i) After the Close of Business on the earlier of (A) the
tenth day after the Shares Acquisition Date, or (B) the tenth Business
Day (or such later date as may be determined by action of the Company's
Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date when any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of
the Company, including without limitation the Employee Plans, or of any
Subsidiary of the Company or of any entity holding Common Shares for or
pursuant to the terms of any such plan)
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commences, or first publicly announces an intention to commence, a
tender or exchange offer which would result in such Person becoming the
Beneficial Owner of Common Shares aggregating 10% or more of the then
outstanding Common Shares (the earliest of such dates being herein
referred to as the "Distribution Date"), the Company shall distribute
Rights Certificates in accordance with subsection (ii). The provisions
of this Section 3(a) shall control regardless of whether any Common
Shares are actually purchased pursuant to such offer, and the
Distribution Date may include any date which is after the date of this
Agreement and prior to the issuance of the Rights.
(ii) As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent
will if requested and if provided with all necessary information send)
by first-class, insured, postage-prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a
Rights Certificate, in substantially the form of Exhibit B hereto (a
"Rights Certificate"), evidencing one Right for each Common Share so
held. As of the Distribution Date, the Rights will be evidenced solely
by such Rights Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by first-
class, postage-prepaid mail, to each record holder of Common Shares as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
regardless of whether a copy of the Summary of Rights is attached thereto. Until
the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.
(c) Certificates for Common Shares (including, without limitation,
reacquired Common Shares referred to in the last sentence of this paragraph (c))
which become outstanding after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in an agreement between North Valley
Bancorp and ChaseMellon Shareholder Services, L.L.C. dated as of
September 9, 1999 (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the
principal executive offices of North Valley Bancorp. 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. North Valley Bancorp will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as
set forth in the Rights Agreement,
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Rights issued to any Person who becomes an Acquiring Person (as defined
in the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, the Company shall not be
entitled to exercise any Rights associated with such Common Shares while they
are not outstanding.
SECTION 4.
FORM OF RIGHTS CERTIFICATES
The Rights Certificates (and the forms of election to purchase
Preferred Shares and of assignment to be printed on the reverse thereof) shall
be substantially the same as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate (but which do not affect the
rights, duties or responsibilities of the Rights Agent) 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 or other
organization on which the Rights may from time to time be listed or quoted, or
to conform to usage. Subject to the provisions of Section 22 hereof, the Rights
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
SECTION 5.
COUNTERSIGNATURE AND REGISTRATION
The Rights Certificates shall be executed on behalf of the Company by
its Chairman of the Board, its President and Chief Executive Officer, or any of
its Executive Vice Presidents, either manually or by facsimile signature and
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 the Rights Agent and shall not be valid for any
purpose unless 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 the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such 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.
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Following the Distribution Date and receipt by the Rights Agent of any
and all relevant information, the Rights Agent will keep or cause to be kept, at
its office designated for such purpose, 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 CERTIFICATES; MUTILATED,
DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES
Subject to the provisions of 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 earlier of the Redemption Date or the Final Expiration Date, any
Rights Certificate or Rights Certificates, other than Rights Certificates
representing Rights that have become null and void pursuant to Section 11(a)(ii)
hereof or that have been exchanged pursuant to Section 24 hereof, 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 one one-hundredths of a Preferred Share as the Rights Certificate or Rights
Certificates surrendered then entitled such holder 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 at the
designated office of the Rights Agent. Thereupon the Rights Agent shall
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 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. The Rights Agent shall have no duty or
obligation to take any action under any Section of this Agreement which requires
the payment by a Rights holder of applicable taxes and governmental charges
unless and until the Rights Agent is satisfied that all such taxes and/or
charges have been paid.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if mutilated, the
Company will make and deliver a new Rights Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
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SECTION 7.
EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS
(a) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the designated office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on September 9, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date"), or (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $45.00, shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in accordance
with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares to be purchased and an
amount equal to any applicable tax or governmental charge required to be paid by
the holder of such Rights Certificate in accordance with Section 9 hereof by
cash, certified check, cashier's check or money order payable to the order of
the Company, the Rights Agent shall thereupon promptly:
(i) Requisition (A) from any transfer agent of the Preferred
Shares, certificates for the number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent of the
Preferred Shares to comply with all such requests, or (B) from the
depository agent, depository receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (in which
case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depository agent) and
the Company hereby directs the depository agent to comply with such
request;
(ii) When appropriate, requisition from the Company the amount
of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof;
(iii) After receipt of such certificates or depository
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) When appropriate, after receipt of such cash from the
Company, deliver such cash to or upon the order of the registered
holder of such Rights Certificate.
(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
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Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Rights Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury the number of Preferred Shares that will
be sufficient to permit the exercise in full of all outstanding Rights in
accordance with this Section 7.
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 to any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled 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 canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
SECTION 9.
AVAILABILITY OF PREFERRED SHARES
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Preferred Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued, fully paid and nonassessable.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state taxes and charges which may be payable in
respect of the issuance or delivery of the Rights Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however, be
required to pay any tax or charge 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 certificates or depository receipts for the Preferred
Shares in a name other than that of, the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depository receipts for Preferred Shares upon the exercise
of any Rights until any such tax or charge shall have been paid (any such tax or
charge being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax or charge is due.
SECTION 10.
PREFERRED SHARES RECORD DATE
Each Person in whose name any certificate for Preferred Shares is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred
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Shares 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 any applicable taxes or charges) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Shares transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Shares transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a holder of Preferred Shares for which
the Rights shall be exercisable, including, without limitation, the rights to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
SECTION 11.
ADJUSTMENT OF PURCHASE PRICE,
NUMBER OF SHARES OR NUMBER OF RIGHTS
(a) The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding shall be subject to adjustment from
time to time as provided in this Section 11.
(i) In the event the Company shall at any time after the date
of this Agreement:
(A) Declare a dividend on the Preferred Shares
payable in Preferred Shares;
(B) Subdivide the outstanding Preferred Shares;
(C) Combine the outstanding Preferred Shares into a
smaller number of Preferred Shares; or
(D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (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), the Purchase Price
in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification,
and the number and kind of shares of capital stock issuable on such
date, shall be proportionately adjusted so that the holder of any
Rights exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such
Rights had been exercised immediately prior to such date and at a time
when the Preferred Shares transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than
the
10
aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event:
(A) A Trigger Event shall have occurred (other than
through an acquisition described in subparagraph (iii) of this
paragraph (a)); or
(B) During such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or recapitalization or
reorganization of the Company or other transaction or series
of transactions involving the Company which has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of
equity securities of the Company or any of its Subsidiaries
beneficially owned by any Acquiring Person or any Affiliate or
Associate thereof,
each holder of a Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of the Company (such number of
shares being referred to herein as the "Adjustment Shares") as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the number
of one one-hundredths of a Preferred Share for which a Right is then
exercisable, and dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined pursuant to Section
11(d) hereof) on the date of the occurrence of the earliest of the events
described in clauses (A) and (B) above.
From and after the occurrence of the earliest of the events described
in clauses (A) and (B) above, any Rights that are or were acquired or are or
were beneficially owned by any Acquiring Person (or any Associate or Affiliate
of such Acquiring Person) shall be null and void and any holder of such Rights
(including any subsequent transferee) shall thereafter have no right to exercise
such Rights under any provision of this Agreement. No Rights Certificate shall
be issued pursuant to Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be null and void pursuant to the preceding
sentence or any Associate or Affiliate thereof; no Rights Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person whose
Rights would be null and void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Rights Certificate delivered to the Rights Agent
for transfer to an Acquiring Person whose Rights would be null and void pursuant
to the preceding sentence shall be canceled.
(iii) The right to buy Common Shares of the Company pursuant
to subparagraph (ii) of this paragraph (a) shall not arise as a result
of any Person becoming an Acquiring Person through a purchase of Common
Shares pursuant to a tender offer made in the manner prescribed by
Section 14(d) of the Exchange Act and the rules and regulations
promulgated thereunder; provided, however, that such tender offer shall
provide for the acquisition of all of the outstanding Common Shares
held by any Person other than such Acquiring Person and its Affiliates
or Associates at a price and on terms
11
determined by at least a majority of the members of the Board of
Directors who are not officers of the Company and who are not
representatives, nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more investment or financial
advisers, to be (A) fair to shareholders, taking into account all
factors which such members of the Board deem relevant including,
without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize
maximum value, and (B) otherwise in the best interests of the Company
and its shareholders, employees, customers and communities in which the
Company does business.
(iv) In the event that there shall not be sufficient Common
Shares authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company
shall:
(A) Determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the
"Current Value"), over (2) the Purchase Price (such excess
being hereinafter referred to as the "Spread"); and
(B) With respect to each Right, make adequate
provision to substitute for such unavailable Adjustment Shares
either (1) cash, (2) a reduction in the Purchase Price, (3)
other equity securities of the Company, including without
limitation, Preferred Shares, (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing having, together with the Adjustment Shares issued
upon exercise of such Right, an aggregate value equal to the
Current Value, where such aggregate value has been determined
by the Board of Directors of the Company based upon the advice
of a reputable investment banking firm selected by the Board
of Directors of the Company.
Notwithstanding the provisions of the preceding paragraph, if, within
30 days following the date of the occurrence of the earliest of the events
described in clauses (A) and (B) of Section 11(a)(ii) above, the Company shall
have not made adequate provision to deliver value pursuant to clause (B) above,
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Common Shares
(to the extent such shares are available) and then, if necessary, cash or
Preferred Shares, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional Common Shares 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 120 days
following the date of the occurrence of the earliest of the events described in
clauses (A) and (B) of Section 11(a)(ii) above, in order that the Company may
seek shareholder approval for the authorization of such additional shares (such
period, as it may be extended, hereinafter referred to as the "Substitution
Period").
12
To the extent that the Company determines that action needs be taken
pursuant to the first and/or second sentences of this Section 11(a)(iv), the
Company (x) shall provide, subject to Section 11(a)(ii) 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, as well as a public announcement at such time as
the suspension is no longer in effect (with prompt written notice thereof to the
Rights Agent). For purposes of this Section 11(a)(iv), the value of the Common
Shares shall be the current per share market price (as determined pursuant to
Section 11(d) hereof) per Common Share on the date of the occurrence of the
earliest of the events described in clauses (A) and (B) of Section 11(a)(ii)
above.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price (as defined in Section 11(d)) of the Preferred Shares 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 number of
Preferred Shares outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of Preferred
Shares and/or equivalent preferred shares so to be offered (and/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
number of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible).
In case such subscription price may be paid in a consideration part or
all of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent. Preferred Shares 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 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.
13
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (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
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) 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 then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares. 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 again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) For the purpose of any computation hereunder:
(i) The "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any date shall
be deemed to be the average of the daily closing prices per share of
such Security for the 20 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to but not including such date.
In the event that the current per share market price of the Security is
determined:
(A) During a period following the announcement by the
issuer of such Security of:
(1) A dividend or distribution on such
Security payable in shares of such Security or
securities convertible into such shares; or
(2) Any subdivision, combination or
reclassification of such Security, and
(B) Prior to the expiration of 20 Trading Days after
but not including the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification,
then, and in each such case, the current per share market price shall
be appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be
the last sale price or, in case no such sale takes place on such day,
the average of the closing bid and asked prices 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 Security is 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
Security is listed or admitted to trading or, if the
14
Security is not listed or admitted to trading on any national
securities exchange, the last reported trade in the over-the-counter
market, as reported by the Nasdaq National Market ("Nasdaq") or such
other system then in use, or, if on any such date the Security is 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 Security selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in
the Security, the fair value of the Security on such date as determined
in good faith by the Board of Directors of the Company shall be used.
The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the Security is listed or
admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section 11(d)(i).
If the Preferred Shares are not publicly traded, the "current per share
market price" of the Preferred Shares shall be conclusively deemed to
be the current per share market price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred. If neither
the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair
value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement
filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
Preferred Share or one one-hundredth of any other share or security, 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 requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Rights thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
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
Preferred Shares contained in this Section 11, and the provisions of Sections 7,
9, 10, 13 and 14 with respect to the Preferred Shares shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price,
15
the number of one one-hundredths of a Preferred Share 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) below, upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one one-hundredth
of a Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share 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 substitution for any
adjustment in the number of one one-hundredths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one one-hundredth) 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 (with prompt written notice thereof to
the Rights Agent) 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 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 one one-hundredths of a Preferred Share issuable upon the exercise
of the Rights, the Rights Certificates previously and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredths of a
Preferred Share that were expressed in the initial Rights Certificates issued
hereunder.
16
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares 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 Preferred Shares at such adjusted Purchase Price.
(1) 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 (with prompt written notice
thereof to the Rights Agent) until the occurrence of such event the issuing to
the holder of any Rights exercised after such record date of the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preferred Shares and 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 xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o)), (ii) permit or cause any Person to consolidate
with the Company, or merge with and into the Company (other than a Subsidiary of
the Company in a transaction that complies with Section 11(o)), or (iii) sell or
otherwise transfer (or permit any Subsidiary to sell or transfer), in one or
more transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o)), if at
the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23, Section 24 or Section 27 hereof,
take (or permit any Subsidiary of the Company 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.
17
(p) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-hundredths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-hundredths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
SECTION 12.
CERTIFICATE OF ADJUSTED
PURCHASE PRICE OR NUMBER OF SHARES
Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts and computations accounting for
such adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 25 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such a certificate.
SECTION 13.
CONSOLIDATION, MERGER OR SALE OR
TRANSFER OF ASSETS OR EARNING POWER
(a) If, following the Distribution Date, directly or indirectly:
(i) The Company shall consolidate with, or merge with and
into, any other Person and the Company shall not be the continuing or
surviving corporation of such consolidation or merger;
(ii) Any Person shall consolidate with the Company, or merge
with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or
exchanged for stock or other securities of any other Person (or the
Company) or cash or any other property;
(iii) Any Person shall acquire all or a majority of the Common
Shares pursuant to a statutory plan of exchange; or
18
(iv) The Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person other than the Company or one or more
of its wholly-owned Subsidiaries,
then, and in each such case, proper provision shall be made so that:
(A) Each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common Shares
of the Principal Party (as hereinafter defined), not subject to any
liens, encumbrances, rights of first refusal or other adverse claims,
as shall equal the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred Share
for which a Right is then exercisable and dividing that product by (2)
50% of the then current per share market price of the Common Shares
(determined pursuant to Section 11(d) hereof) of such Principal Party
on the date of consummation of such consolidation, merger, sale or
transfer;
(B) Such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement;
(C) The term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 11 shall apply only to such Principal Party after
the first occurrence of an event described in this Section 13(a);
(D) Such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its Common
Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to the Common Shares thereafter deliverable upon the exercise
of the Rights; and
(E) The provisions of Section 11(a)(ii) shall be of no further
effect following the first occurrence of any event described in this
Section 13(a).
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in clause (i),
(ii) or (iii) of Section 13(a):
(A) The Person that is the issuer of any securities
into which Common Shares of the Company are converted in such
merger, consolidation or for which they are exchanged in such
statutory plan of exchange, or, if there is more than
19
one such issuer, the issuer of Common Shares that has the
highest aggregate current market price (determined in
accordance with Section 11(d)); and
(B) If no securities are so issued, the Person that
is the other party to such merger, consolidation or statutory
plan of exchange, or, if there is more than one such Person,
the Person whose Common Shares have the highest aggregate
current market price (determined in accordance with Section
11(d)); and
(ii) in the case of any transaction described in clause (iv)
of Section 13(a), the Person that is the party receiving the largest
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 transferred pursuant to such transaction or transactions
or if the Person receiving the largest portion of the assets or earning
power cannot be determined, whichever Person whose Common Shares have
the highest aggregate current market price (determined in accordance
with Section 11(d)); provided, however, that in any such case:
(A) If the Common Shares of such Person are not at
such time and have not been continuously over the preceding
twelve-month period registered under Section 12 of the
Exchange Act ("Registered Common Shares"), or such Person is
not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Shares
outstanding, "Principal Party" shall refer to such other
Person;
(B) If the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation,
and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another
Person which has Registered Common Shares outstanding,
"Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person;
(C) If the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation,
and such Person is directly or indirectly controlled by more
than one Person, and one or more of such other Persons has
Registered Common Shares outstanding, "Principal Party" shall
refer to whichever of such other Persons is the issuer of the
Registered Common Shares having the highest aggregate current
per share market price (determined in accordance with Section
11(d)); and
(D) If the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation,
and such Person is directly or indirectly controlled by more
than one Person, and none of such other Persons have
Registered Common Shares outstanding, "Principal Party" shall
refer to whichever ultimate parent entity is the corporation
having the greatest shareholders' equity or, if no such
ultimate parent entity is a corporation, shall refer to
whichever ultimate parent entity is the entity having the
greatest net assets.
20
(c) The Company shall not consummate any such consolidation, merger,
statutory plan of exchange, sale or transfer unless prior thereto the Company
and the Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement confirming that:
(i) Such Principal Party shall, upon consummation of such
consolidation, merger, statutory plan of exchange or sale or transfer
of assets or earning power, assume this Agreement in accordance with
Section 13;
(ii) All rights of first refusal or preemptive rights in
respect of the issuance of Common Shares of such Principal Party upon
exercise of outstanding Rights have been waived;
(iii) Any provision of the authorized securities of such
Principal Party or of its charter, bylaws or other instruments
governing its corporate affairs which would obligate such Principal
Party to issue in connection with, or as a consequence of, the
consummation of a transaction referred to in Section 13(a), Common
Shares of such Principal Party at less than the then-current per share
market price (determined in accordance with Section 11(d)(i)) or
securities exercisable for, or convertible into, such Common Shares at
less than such then- current per share market price (other than to the
holders of Rights pursuant to this Section 13) have been waived or
canceled; and
(iv) Such transaction shall not result in a default by such
Principal Party under this Agreement, and further providing that, as
soon as practicable after the date of any consolidation, merger,
statutory plan of exchange or sale or transfer of assets or earning
power referred to in Section 13(a), such Principal Party will:
(A) Prepare and file a registration statement under
the Securities Act of 1933, as amended, with respect to the
Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause
such registration statement to become effective as soon as
practicable after such filing and use its best efforts to
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act until the Final Expiration Date of the Rights,
and similarly comply with applicable state securities laws;
(B) Use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon
exercise of the Rights or to meet the eligibility requirements
for quotation of the Rights and such securities on Nasdaq or
other system then in use; and
(C) Deliver to holders of the Rights historical
financial statements for such Principal Party which comply in
all respects with the requirements for registration on Form 10
(or any successor form) under the Exchange Act.
In the event that at any time after the occurrence of an event
described in Section 11(a)(ii) hereof some or all of the Rights shall not have
then been exercised at the time of the occurrence of an event described in
Section 13(a) hereof, the Rights which have not theretofore been exercised
21
shall thereafter be exercisable in the manner described in Section 13(a)
(without taking into account any prior adjustment required by Section
11(a)(ii)).
(d) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
(e) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in Section
13(a)(i), (ii) or (iii) if: (i) such transaction is consummated with a Person or
Persons who acquired Common Shares pursuant to a tender offer described in
Section 11(a)(iii) (or with a wholly-owned Subsidiary of any such Person or
Persons), (ii) the price per Common Share offered in such transaction is not
less than the price per Common Share paid to all holders of Common Shares whose
shares were purchased pursuant to such tender or exchange offer, and (iii) the
form of consideration being offered to the remaining holders of Common Shares
pursuant to such transaction is the same as the form of consideration paid
pursuant to such tender offer. Upon consummation of any such transaction
contemplated by this Section 13(e), all Rights shall expire.
SECTION 14.
FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the 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 Right would
have been otherwise issuable. The closing price for any day shall be the last
sale price, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, 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 reported trade in the
over-the-counter market, as reported by Nasdaq or such other 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 of Directors of
the Company. If on any such date no such market maker is making a market in the
Security, the fair value of the security on such date as determined in good
faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may,
22
at the election of the Company, be evidenced by depository receipts, pursuant to
an appropriate agreement between the Company and a depository selected by it;
provided, that such agreement shall provide that the holders of such depository
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depository receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company shall
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 Preferred Share. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the closing price
of a Preferred Share (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 the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above). The Rights Agent shall have no
duty or obligation under this Section (and any other Section of this Agreement
relating to fractional shares) unless and until it has received specific
instructions from the Company with respect to its duties and obligations under
such Sections and the Company has provided or caused to be provided to the
Rights Agent sufficient depository receipts or cash necessary to satisfy the
Company's obligations with respect to fractional shares.
SECTION 15.
RIGHTS OF ACTION
All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under 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 Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Shares), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such 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 an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations 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 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 the Common Shares;
23
(b) After the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the designated office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) The Company may deem and treat the Person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary.
SECTION 17.
RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder of any Rights Certificate, by reason only of being a holder
of such Rights Certificate, shall be entitled to vote, receive dividends or be
deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights
Certificate, by reason only of being a holder of such Rights Certificate, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in Section 25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
SECTION 18.
FEES, EXPENSES AND LIABILITIES OF THE RIGHTS AGENT
The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the preparation, execution, delivery and amendment 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, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent (as finally determined by a
Court of competent jurisdiction), for any action taken, suffered 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. The indemnity provided herein shall survive the
termination of this Agreement and the termination and the expiration of the
Rights. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its acceptance and administration of this Agreement in reliance upon any Rights
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer,
24
power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
SECTION 19.
MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement any of the Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case 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
Rights Agent 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.
In case 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 Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case 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 only the duties and obligations expressly
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Rights Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent, and the
Rights Agent shall incur no liability for or in respect of, any action taken,
suffered or omitted by it in good faith and in accordance with such advice or
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
25
identity of any Acquiring Person and the determination of Current Per Share
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 any one of the
Chairman of the Board, the President and Chief Executive Officer, any Executive
Vice President, or the Secretary or an Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
and protection to the Rights Agent and the Rights Agent shall incur no liability
for or in respect of any action taken, omitted 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 to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct,
(each as finally determined by a court of competent jurisdiction). Anything in
this Agreement to the contrary notwithstanding, in no event shall the Rights
Agent be liable for special, indirect, punitive, incidental or consequential
loss or damage of any kind whatsoever (including, but not limited to, lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action. Any liability of the Rights
Agent under this Rights Agreement will be limited to the amount of fees paid by
the Company to the Rights Agent.
(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 (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any liability for or 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 thereof); 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 change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Sections 3, 11,
13, 23 or 24, or the ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Preferred Shares will, when issued, be duly and
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 any
one of the Chairman of the Board, the President and Chief Executive Officer, any
Executive Vice President, or the Secretary or an
26
Assistant Secretary 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, omitted or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.
(h) Provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it believes that repayment of such funds or adequate indemnification against
such risk or liability is not assured to it.
(i) The Rights Agent and any shareholder, director, affiliate, officer
or employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
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 Person.
(j) 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, absent gross negligence, bad faith or willful misconduct
in the selection and continued employment thereof.
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' prior notice in
writing mailed to the Company and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and 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' prior 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 Shares or Preferred Shares by registered or
certified mail, and 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 the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such
a court, shall be a Person (or an affiliate of a such Person) organized and
doing business under the laws of the United States or any state of the United
States so long as such Person is in good standing, and is subject to supervision
or examination by federal or state authority, and has at the time of its
27
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment the Company
shall file notice with the predecessor Rights Agent and each transfer agent of
the Common Shares or Preferred Shares, and 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 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 to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors 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.
SECTION 23.
REDEMPTION
(a) The Board of Directors of the Company may, at its option, at any
time prior to such time as any Person becomes an Acquiring Person, redeem all
but not less than all the then outstanding Rights at a redemption price of
$0.001 per Right, 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"); provided,
however, that if, following the occurrence of a Shares Acquisition Date and
following the expiration of the right of redemption hereunder but prior to any
event described in clause (B) of Section 11(a)(ii) or clauses (i), (ii), (iii)
or (iv) of Section 13(a) hereof:
(i) A Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common
Shares in one transaction or series of transactions, not directly or
indirectly involving the Company or any of its Subsidiaries, which did
not result in the occurrence of an event described in clause (B) of
Section 11(a)(ii) or clauses (i), (ii), (iii) or (iv) of Section 13(a)
hereof such that such Person is thereafter a Beneficial Owner of less
than 10% of the outstanding Common Shares; and
(ii) There are no other Persons, immediately following the
occurrence of the event described in clause (i), who are Acquiring
Persons,
28
then the right of redemption shall be reinstated and thereafter be subject to
the provisions of this Section 23. The redemption of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish. The
Company may, in its discretion, round up the redemption price to be paid to any
holder of Rights to the nearest whole cent.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, 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. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors ordering
the redemption of the Rights, the Company shall mail a notice of redemption to
the Rights Agent and to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. 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 of Directors of the Company 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 null and void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company, including without limitation the
Employee Plans, or of any such Subsidiary, or of any entity holding Common
Shares 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 Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company 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 holders of
such Rights shall be to receive that number of Common Shares 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 (with prompt written
notice thereof to the Rights Agent); 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
29
exchange will state the method by which the exchange of the Common Shares 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 null and void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b) hereof) for Common Shares exchangeable for
Rights, at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant to the
terms thereof, so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this Section 24, the
Company shall use its best efforts to cause all such action to be taken as may
be necessary to authorize additional Common Shares or Preferred Shares for
issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (e), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to 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 to:
(i) Pay any dividend payable in stock of any class to the
holders of its Preferred Shares or to make any other distribution to
the holders of its Preferred Shares (other than a regular quarterly
cash dividend);
(ii) Offer to the holders of its Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights
or options;
(iii) Effect any reclassification of its Preferred Shares
(other than a reclassification involving only the subdivision of
outstanding Preferred Shares);
(iv) Effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other
30
transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person;
(v) Effect the liquidation, dissolution or winding up of the
Company; or
(vi) Declare or pay any dividend on the Common Shares payable
in Common Shares or effect a subdivision, combination or consolidation
of the Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares);
then, in each such case, the Company shall give to the Rights Agent and to each
holder of a Rights Certificate, 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, or distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed. Such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
SECTION 26.
NOTICES
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any 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:
North Valley Bancorp
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Chairman of the Board
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:
31
ChaseMellon Shareholder Services, L.L.C.
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Relationship Manager
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 shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Rights Agent.
SECTION 27.
SUPPLEMENTS AND AMENDMENTS
The Company may from time to time supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, but none of which shall change or increase the Rights Agent's duties,
liabilities or obligations (without the Rights Agent's consent), any such
supplement or amendment to be evidenced by a writing signed by the Company and
the Rights Agent; provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights. Without
limiting the foregoing, the Company at any time prior to such time as any Person
becomes an Acquiring Person may amend this Agreement to raise or lower the
thresholds set forth in Sections l(a) and 3(a), provided the threshold may not
be lowered to less than the greater of (i) any percentage greater than the
largest percentage of the outstanding Common Shares then known by the Company to
be beneficially owned by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares for or pursuant to the terms of
any such plan or a person excluded from the definition of "Acquiring Person" by
such definition), and (ii) 10%.
SECTION 28.
REGISTRATION OF SECURITIES
The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days, the exercisability of the Rights in order to prepare and file,
if deemed necessary by the Company, such registration statements and other
filings under the Securities Act and the securities or "blue sky" laws of any
state, with respect to any securities purchasable upon the exercise of the
Rights, and to permit the same 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, as well as a public announcement at
such time as the suspension is no longer in effect (with prompt written notice
thereof to the Rights Agent). Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction has been obtained.
32
SECTION 29.
DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS
The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations, calculations or valuations required
pursuant to the provisions hereof or deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or to not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
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 to any liability to the holders of the Rights. The Rights
Agent shall always be entitled to assume that the Company's Board of Directors
acted in good faith and shall be fully protected and incur no liability in
reliance thereon.
SECTION 30.
SUCCESSORS
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.
SECTION 31.
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, the Common Shares) 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, the Common Shares).
SECTION 32.
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.
SECTION 33.
GOVERNING LAW
This Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of California and for
all purposes shall be governed by
33
and construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contract made to be performed entirely within such State.
SECTION 34.
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 35.
DESCRIPTIVE HEADINGS
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
NORTH VALLEY BANCORP
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Chairman of the Board
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Xxx Xxxx
Name: Xxx Xxxx
Title: Assistant Vice President
34
EXHIBIT A
---------
CERTIFICATE OF DETERMINATION
SERIES A JUNIOR PARTICIPATING PREFERRED SHARES
OF
NORTH VALLEY BANCORP
Pursuant to Section 401 of the California Corporations Code of the
State of California:
We, Xxxxxxx X. Xxxxxxx, President and Chief Executive Officer, and X.
X. ("Xxxx") Xxxxx, Jr., Secretary, of North Valley Bancorp, a corporation
organized and existing under the laws of California (hereinafter called the
"Corporation"), do hereby certify as follows:
1. On September 9, 1999, the Board of Directors of the Corporation
adopted a resolution designating 125,000 shares of Preferred Stock as Series A
Junior Participating Preferred Stock.
2. No shares of Series A Junior Participating Preferred Stock have been
issued.
3. Pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the Corporation, the following resolution was
duly adopted by the Board of Directors on September 9 , 1999, creating the
series of Preferred Stock designated as Series A Junior Participating Preferred
Stock:
RESOLVED FURTHER, That the Board of Directors, to implement
the Rights, pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Articles
of Incorporation, a series of Preferred Stock of the Corporation be and
hereby is created, and that the determination and amount thereof and
the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
"Series A Junior Participating Preferred Stock"
Paragraph 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock"
(the "Series A Preferred Stock") and the number of shares constituting
the Series A Preferred Stock shall be One Hundred Twenty Five Thousand
(125,000). Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall
reduce the number of shares of Series A Preferred Stock to a number
less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series A Preferred Stock.
A-1
Paragraph 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock, no par value (the "Common Stock"), of the
Corporation, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, dividends payable in cash
(each payment date determined by the Board of Directors being referred
to herein as a "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (subject
to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
the Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Dividend Payment Date or,
with respect to the first Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred
Stock. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this
Paragraph 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock).
(C) The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled
to receive payment of a dividend or distribution declared thereon,
which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Paragraph 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at
any
A-2
time declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such an event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Amendment to the Articles of Incorporation or
Certificate of Determination creating a series of Preferred Stock or
any similar stock, or by law, the holders of shares of Series A
Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights shall
vote together as one class on all matters submitted to a vote of
shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Paragraph 4. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, or in any other Certificate of Amendment to
the Articles of Incorporation or Certificate of Determination creating
a series of Preferred Stock or any similar stock or as otherwise
required by law.
Paragraph 5. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preferred Stock unless, prior thereto,
the holders of shares of Series A Preferred Stock shall have received a
minimum of $100.00 per share, plus an amount equal to declared and
unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment, provided that the holders of shares of Series
A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (2) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in
A-3
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of
shares of Series A Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately prior to
such event.
Paragraph 6. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an amount
per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock into a greater
or lesser number of shares of Common Stock), then in each such case the
amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Paragraph 7. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Paragraph 8. Rank. The Series A Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of
assets, junior to all other series of the Corporation's Preferred
Stock.
Paragraph 9. Amendment. The Articles of Incorporation shall
not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without, in addition to any other vote
of shareholders required by law, the affirmative vote of the holders of
at least a majority of the outstanding shares of Series A Preferred
Stock, voting together as a single class.
Paragraph 10. Fractional Shares. The Series A Preferred Stock
may be issued in fractions of a share which shall entitle the holder,
in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of the Series A Preferred
Stock."
A-4
4. We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in this certificate are true and
correct of our own knowledge. Executed on September 9, 1999, at Redding,
California.
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
/s/ X. X. Xxxxx, Xx.
X. X. ("Xxxx") Xxxxx, Jr.
Secretary
A-5
EXHIBIT B
---------
FORM OF RIGHTS CERTIFICATE
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 9, 2009, OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT.
RIGHTS CERTIFICATE
NORTH VALLEY BANCORP
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 September 9, 1999 (the "Rights Agreement"),
between North Valley Bancorp, a California corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., Pacific time, on September 9,
2009, at the designated office of the Rights Agent, or at the office of its
successor as Rights Agent, one one-hundredth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock (the "Preferred Shares"),
of the Company, at a purchase price of $45.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one one-
hundredths of a Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of September 23, 1999, based on the Preferred Shares as constituted at
such date. As provided in the Rights Agreement, the Purchase Price and the
number of one one-hundredths of a Preferred Share which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the designated office of the Rights Agent, may be exchanged
for another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Rights Certificate or Rights
Certificates
B-1
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 (i) may be redeemed by the Company at a redemption price of
$.001 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Stock, no par value.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares 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 shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
ATTEST: NORTH VALLEY BANCORP
------
By:
--------------------------------
COUNTERSIGNED:
--------------
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:
Authorized Signature
B-2
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 therein,
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.
Date:
-----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by
this Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
B-3
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
TO: NORTH VALLEY BANCORP
The undersigned hereby irrevocably elects to exercise
_______________ Rights represented by this Rights Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining 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)
--------------------------------------------------------------------------------
Date:
-----------------------------------
Signature
B-4
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the rights evidenced by
this Rights Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
B-5
NOTICE
The signature in the foregoing Forms of Assignment and Election
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
EXHIBIT C
---------
Dear Shareholder of North Valley Bancorp:
As part of its overall effort to enhance shareholder value, the Board of
Directors on September 9, 1999, adopted a shareholder rights plan set forth in a
Rights Agreement under which the Company's common shareholders as of the record
date of September 23, 1999, will receive Rights to purchase shares of preferred
stock. Our purpose in writing this letter is to describe the Board's reasons for
adopting the Rights Agreement and to briefly explain how the Rights Agreement
works. Please note that this description of the Rights is only a summary and is
qualified in its entirety by reference to the Rights Agreement. A copy of the
Rights Agreement has been filed with the Securities and Exchange Commission and
is available to shareholders free of charge from the Company.
The purpose of the Rights Agreement is to provide additional protections to
you as a shareholder of the Company in the event of an unsolicited attempt to
acquire the Company in a manner or on terms that the Board does not believe are
fair to you or in your best interests. The Board believes certain takeover
tactics are a serious potential problem and are not in the best interests of
shareholders. They could deprive the Board of any real opportunity to
participate in the determination of the Company's destiny. Many other companies
have adopted shareholder rights plans to protect shareholders against these
tactics.
The Board was aware when it adopted the Rights Agreement of arguments that
securities of the sort being issued by the Company may deter legitimate
acquisition proposals. The Board has found no evidence that this has occurred.
The Rights Agreement is not intended to and will not prevent an acquisition of
the Company or substantial investments on terms that are favorable and fair to
all shareholders. It will not interfere with a merger or other business
combination transaction approved by the Board. Its purpose is to require that a
potential acquiring company or person negotiate terms directly with your elected
Board of Directors.
The Board did not adopt the Rights Agreement in response to any specific
proposal. However, the Board concluded that the Rights Agreement should be
adopted now so it would be in place to protect your interests in the future.
Issuance of the Rights does not in any way weaken the financial strength of the
Company and has no dilutive effect on the value of your shares, although the
ultimate effect of the Rights, if they are exercised, would be to dilute
substantially the value of shares acquired by an unfriendly or hostile acquiror.
The Rights will only be exercisable if and when a situation arises which they
were created to address. The Rights work in the following manner.
One Right will be distributed as a dividend on each outstanding share of
common stock to shareholders of record as of the record date of September 23,
1999. Each Right will entitle the
C-1
registered holder, when and if certain specified takeover activity occurs, to
purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, no par value (the"Preferred Shares"), at a price
of $45.00. Generally, each one one-hundredth of a Preferred Share will have the
same economic and voting rights as one share of common stock, and in fact the
Rights will entitle the holder to purchase shares of common stock rather than
preferred stock, at the reduced price of one-half the then current market price
of the common stock.
Initially, no separate Rights Certificates will be issued. Instead, the
Rights will be attached to all outstanding common stock certificates, including
certificates issued after the record date of the distribution of the Rights,
regardless of whether any such certificate actually indicates that Rights are
attached. The Rights will separate from the common stock if a person or group of
persons acquires or announces that it intends to acquire 10 percent or more of
the outstanding common stock of the Company without Board approval. Such a
person or group of persons is called an "Acquiring Person." After and if any
person or group becomes an Acquiring Person, separate Rights Certificates will
be mailed to shareholders of record of the common stock. After that time, Right
certificates alone will evidence the Rights, and the Rights may be traded and
transferred independently.
The Rights are not exercisable unless and until there is an Acquiring
Person. If there is an Acquiring Person, all shareholders other than the
Acquiring Person will have the right to receive upon exercise of a Right the
number of shares of common stock having a market value of two times the exercise
price of the Right. In other words, each Right will allow its holder to purchase
$90.00 worth of common stock (or equivalent securities) for $45.00, unless the
holder is an Acquiring Person. The Rights Agreement also has provisions for
forms of cashless exercise of Rights and for the direct exchange of Rights for
common or preferred shares. Until exercised, a Right confers no voting or other
shareholder rights. The Rights will expire on September 9, 2009. The Board may
redeem the Rights before then at a price of $0.001 per Right at any time before
a person becomes an Acquiring Person.
At present, there is no need for shareholders to exchange their share
certificates. Because the Rights are not currently exercisable and will not be
exercisable until there is an Acquiring Person, there is no need for
shareholders to make any decisions regarding the exercise of the Rights or take
other action at this time. Because of the dilutive effect this process would
have on the shares of an Acquiring Person, the Board does not expect that the
Rights will actually separate from the common stock or actually become
exercisable; their deterrent effect on aggressive investors is their primary
purpose.
In adopting the Rights Agreement, we have expressed our confidence in the
Company's future and our determination that you, as a shareholder, be given
every opportunity to participate fully
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in that future.
---------------------------------
Xxxx X. Xxxxx, Chairman of the Board of Directors
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Xxxxxxx X. Xxxxxxx, President and Chief Executive Officer
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