RIGHTS AGREEMENT
EXHIBIT
4.1
Agreement,
dated as of July 2, 2007 between Bank of Marin Bancorp, a California corporation
(the "Company"), and Bank of Marin, a California corporation, as Rights Agent
(the "Rights Agent").
Pursuant
to this Agreement, the Board of Directors of the Company (the "Board") 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 July 23, 2007 (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).
This
Agreement is intended to replace that previous “Rights Agreement” executed
August 11, 2003 between Bank of Marin, a California corporation and Bank of
Marin, a California corporation, as Rights Agent, which was redeemed effective
June 14, 2007, as part of a holding company reorganization that resulted in
Bank
of Marin Bancorp becoming the bank holding company for Bank of
Marin.
Accordingly,
in consideration of the premises and the mutual agreements herein set forth,
the
parties hereby agree as follows:
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SECTION 1.
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CERTAIN
DEFINITIONS
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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 15% or more of the Common Shares of the Company
then
outstanding (other than as the result of a Permitted Offer (as such term is
hereinafter defined)), 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 the term
"Acquiring Person" shall not include any Grandfathered Person (as such term
is
hereinafter defined), unless such Grandfathered Person subsequently becomes
the
Beneficial Owner of more than the Grandfathered Percentage (as such term is
hereinafter defined) of the Common Shares of the Company; and provided, further,
that any person who first obtains the written approval of a majority of the
Board of Directors of the Company for the acquisition of 15% or more of the
Common Shares of the Company and therefore accumulates at least 15% of the
Common Shares, within six months of the date of such written approval shall
not
be an "Acquiring Person." Any Grandfathered Person who subsequently becomes
the
Beneficial Owner of less than 15% of the Common Shares of the Company shall
cease to be a Grandfathered Person, except where such Grandfathered Person's
ownership percentage becomes less than 15% due solely to the issuance of
additional securities by the Company and not due in whole or in part to sales,
gifts or other dispositions of Common Shares by such Grandfathered Person.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person"
as
the result of either (x) 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 15% or more of the Common Shares
of the Company then outstanding; PROVIDED, HOWEVER, that if a Person shall
become the Beneficial Owner of 15% 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 (except as provided above for
Grandfathered Persons who may acquire up to the Grandfathered Percentage),
then
such Person shall be deemed to be an "Acquiring Person" or (y) if (i) within
8
days after such Person would otherwise have become an Acquiring Person (but
for
the operation of this subclause y), such Person notifies the Board of Directors
that such Person did so inadvertently and (ii) within 5 days after such
notification, such Person is the Beneficial Owner of less than 15% of the
outstanding Common Shares or, if the Person is a Grandfathered Person, such
Person is the Beneficial Owner of less than the Grandfathered
Percentage.
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(b)
"Adjustment Shares" shall have the meaning set forth in Section 11(a)(ii)
hereof.
(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
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(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 or in the capacity of 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 of the Company or
any
Subsidiary of the Company, other than the officer or director, by reason of
any
influence that such officer or director may have over the voting of the
securities held in the plan.
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 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., San Francisco time,
on such date; PROVIDED, HOWEVER, that if such date is not a Business Day it
shall mean 5:00 P.M., San Francisco time, 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 any Employee Stock Ownership Plan, 401(k) Plan or other
tax-qualified employee benefit plan of the Company or of any Subsidiary of
the
Company.
(k)"Final
Expiration Date" shall have the meaning set forth in Section 7
hereof.
(l)
"Grandfathered Percentage" shall mean, with respect to any Grandfathered Person
(as such term is hereinafter defined), the percentage of the outstanding Common
Shares that such Grandfathered Person beneficially owned on July 23, 2007,
plus
fifteen (15) percentage points.
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(m)
"Grandfathered Person" shall mean any Person who or which, together with all
Affiliates and Associates of such Person was, on July 23, 2007, the Beneficial
Owner of 15% or more of the Common Shares of the Company outstanding on such
date.
(n)
"Permitted Offer" shall mean a tender or exchange offer which is for all
outstanding Common Shares at a price and on terms determined, prior to the
purchase of shares under such tender or exchange offer, by at least a majority
of the members of the Board of Directors who are not officers of the Company
and
who are not Acquiring Persons or Affiliates, Associates, nominees or
representatives of an Acquiring Person, to be adequate (taking into account
all
factors that such directors deem relevant including, without limitation, prices
that could reasonably be achieved if the Company or its assets were sold on
an
orderly basis designed to realize maximum value) and otherwise in the best
interest of the Company and its shareholders (other than the Person or any
Affiliates or Associate thereof on whose behalf the offer is being made) taking
into account all factors that such directors may deem relevant.
(o)
"Person" shall mean any individual, firm, corporation, limited liability
company, trust, association, partnership, joint venture or other entity, and
shall include any successor (by merger or otherwise) of such
entity.
(p) "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.
(q)
"Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(r)
"Purchase Price" shall have the meaning set forth in Section 4
hereof.
(s) "Redemption
Date" shall have the meaning set forth in Section 7 hereof.
(t)
"Registered Common Shares" shall have the meaning set forth in Section 13(d)
hereof.
(u)
"Shares Acquisition Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation,
a
report filed pursuant to Section 13(d) of the Exchange Act) by the Company
or an
Acquiring Person that an Acquiring Person has become such or such earlier date
as a majority of the directors of the Company shall become aware of the
existence of an Acquiring Person.
(v)
"Spread" shall have the meaning set forth in Section 11(a)(iv)
hereof.
(w)
"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.
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(x)
"Substitution Period" shall have the meaning set forth in Section 11(a)(iv)
hereof.
(y)
"Trading Day" shall have the meaning set forth in Section 11(a)(iv)
hereof.
(z)
A
"Trigger Event" shall be deemed to have occurred upon any Person, together
with
all Affiliates and Associates of such Person, becoming an Acquiring
Person.
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SECTION 2.
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APPOINTMENT
OF RIGHTS AGENT
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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.
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SECTION 3.
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ISSUE
OF RIGHT CERTIFICATES
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(a)
Until
the earlier of the close of business on (i) the Shares Acquisition Date, or
(ii)
the date of the commencement by 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
any entity holding Common Shares for or pursuant to the terms of any such plan)
of, or of the first public announcement of the intention of 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 any entity holding Common Shares for or pursuant
to
the terms of any such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming the Beneficial Owner
of Common Shares aggregating 15% or more of the then outstanding Common Shares
(irrespective of whether any Common Shares are actually purchased pursuant
to
such offer) (including any such date which is after the date of this Agreement
and prior to the issuance of the Rights) (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person), (the earliest of such dates being herein referred
to as the "Distribution Date"), (x) the Rights will be evidenced (subject to
the
provisions of Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also
be
deemed to be Right Certificates) and not by separate Right Certificates, and
(y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of Common Shares. 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, 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
Right
Certificate, in substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As of the
Distribution Date, the Rights will be evidenced solely by such Right
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.
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(c) Certificates
for Common Shares which become outstanding (including, without limitation,
reacquired Common Shares referred to in the last sentence of this paragraph
(c))
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 a Rights Agreement between Bank of Marin Bancorp and Bank of Marin,
as Rights Agent, dated as of July 2, 2007 (the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of Bank
of Marin 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. Bank of Marin 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, 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.
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SECTION 4.
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FORM
OF RIGHT CERTIFICATES
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The
Right
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 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 Right 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.
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SECTION 5.
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COUNTERSIGNATURE
AND REGISTRATION
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The
Right
Certificates shall be executed on behalf of the Company by its Chairman of
the
Board, its Chief Executive Officer, its President, its Chief Financial 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 Right 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 Right Certificates shall cease to be such officer of
the
Company before countersignature by the Rights Agent and issuance and delivery
by
the Company, such Right Certificates, nevertheless, may be countersigned by
the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased
to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution
of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office designated for such purpose, books for registration and transfer of
the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date
of
each of the Right Certificates.
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SECTION 6.
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TRANSFER,
SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES; MUTILATED,
DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES
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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 Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become 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 Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Thereupon the Rights Agent shall countersign and
deliver to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may
be
imposed in connection with any transfer, split up, combination or exchange
of
Right Certificates.
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Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them and reimbursement to the Company and the Rights Agent
of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate if mutilated, the Company will
make and deliver a new Right Certificate of like tenor to the Rights Agent
for
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
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SECTION 7.
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EXERCISE
OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS
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(a)
The
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to
the
Rights Agent at the principal 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 July 23, 2017 (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 $125.00, shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable
at the sole election of the holder of the Right in lawful money of the United
States of America in accordance with paragraph (c) below.
(c)
Upon
receipt of a Right Certificate representing exercisable Rights, with the form
of
election to purchase duly executed, accompanied by payment of the Purchase
Price
for the shares to be purchased and an amount equal to any transfer applicable
tax or charge required to be paid by the holder of such Right 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) (A) requisition 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 to comply with all
such
requests, or (B) requisition 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 Right Certificate, registered in such name or names as may be designated
by
such holder and (iv) when appropriate, after receipt, deliver such cash to
or
upon the order of the registered holder of such Right
Certificate.
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(d) In
case the registered holder of any Right Certificate shall exercise less than
all
the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right 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 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.
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SECTION 8.
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CANCELLATION
AND DESTRUCTION OF RIGHT
CERTIFICATES
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All
Right
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 Right
Certificates shall be issued in lieu thereof except as expressly permitted
by
any of the provisions of this Rights Agreement. The Company shall deliver to
the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case
shall
deliver a certificate of destruction thereof to the Company.
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SECTION 9.
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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 and fully paid and nonassessable shares.
The
Company further covenants and agrees that it will pay when due and payable
any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
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 Right 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 Right
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 Right Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
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SECTION 10.
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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 Shares represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the 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 Right 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 right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings
of
the Company, except as provided herein.
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SECTION 11.
|
ADJUSTMENT
OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS
|
The
Purchase Price, the number of Preferred Shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i)
In
the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on 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 Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if
such
Right had been exercised immediately prior to such date and at a time when
the
Preferred Shares transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be
less
than the 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,
-10-
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 Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an Acquiring
Person or any Associate or Affiliate thereof whose Rights would be null and
void
pursuant to the preceding sentence; no Right Certificate shall be issued at
any
time upon the transfer of any Rights to an Acquiring Person or any Associate
or
Affiliate thereof whose Rights would be null and void pursuant to the preceding
sentence or to any nominee of such Acquiring Person, Associate or Affiliate;
and
any Right Certificate delivered to the Rights Agent for transfer to any such
Acquiring Person, Associate or Affiliate 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 Person and its Affiliates or Associates
at a
price and on terms 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; provided, however, 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"). To the extent that the
Company determines that action need 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. 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.
-11-
(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 of the
Preferred Shares (as defined in Section 11(d)) 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.
-12-
(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)
(i)
For the purpose of any computation hereunder, 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 such date; provided, however, that
in
the event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of
(A)
a dividend or distribution on such Security payable in shares of such Security
or securities convertible into such shares, or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration of 20 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the 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 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. 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.
-13-
(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 Right 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 Right shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as
practicable to the provisions with respect to the Preferred Shares contained
in
Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9,
10
and 13 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, 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), 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.
-14-
(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 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 Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment
of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause
to
be distributed to such holders of record in substitution and replacement for
the
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered
in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j)
Irrespective of any adjustment or change in the Purchase Price or the number
of
one one-hundredths of a Preferred Share issuable upon the exercise of the
Rights, the Right 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 Right Certificates issued
hereunder.
(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 non-assessable
Preferred Shares at such adjusted Purchase Price.
(l)
In
any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event,
the
Company may elect to defer until the occurrence of such event the issuing to
the
holder of any Right 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.
-15-
(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.
(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.
-16-
|
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 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 Right Certificate in accordance with Section 25 hereof.
|
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 (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).
-17-
(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
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 the Common Shares of which has 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 the Common Shares of which
has 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
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.
-18-
(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)
if
the Rights or the securities purchasable upon exercise of the Rights are subject
to the Securities Act of 1933, as amended, prepare and file a registration
statement under such act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act of 1933, as amended) 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 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.
-19-
(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
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the 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 Rights 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
Rights, the fair value of the Rights 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, 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 Right 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 the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
-20-
(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).
|
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 Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Shares); and any registered holder
of
any Right Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the holder of any other Right 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 Right Certificate in
the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights,
it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and 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 RIGHT 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;
(b)
after
the Distribution Date, the Right Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the principal 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 Right 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 Right 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.
-21-
|
SECTION 17.
|
RIGHT
CERTIFICATE HOLDER NOT DEEMED A
SHAREHOLDER
|
No
holder
of any Right Certificate, by reason of being a holder of such Right 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 Right Certificate be construed to
confer upon the holder of any Right Certificate, by reason of being a holder
of
such Right 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 Right Certificate shall have been exercised in accordance with the
provisions hereof.
|
SECTION 18.
|
CONCERNING
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, delivery, amendment, administration and execution
of this Agreement and the exercise and performance of its duties hereunder.
The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, damage, judgment, fine, penalty, claim, demand,
settlement, cost or expense (including, without limitation, the reasonable
fees
and expenses of legal counsel), incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for any action taken,
suffered or omitted by the Rights Agent in connection with the acceptance,
administration, exercise and performance of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises. The
Rights Agent shall be authorized and 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 and the exercise and
performance of its duties hereunder, in reliance upon any Right Certificate
or
certificate for the Preferred Shares or Common Shares or for other securities
of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, 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 stock transfer or shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time
such
successor Rights Agent shall succeed to the agency created by this Agreement
any
of the Right Certificates shall have been countersigned but not delivered,
any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in
the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
-22-
In
case
at any time the name of the Rights Agent shall be changed and at such time
any
of the Right Certificates shall have been countersigned but not delivered,
the
Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed name; and
in
all such cases such Right Certificates shall have the full force provided in
the
Right Certificates and in this Agreement.
|
SECTION 20.
|
DUTIES
OF RIGHTS AGENT
|
The
Rights Agent undertakes to perform 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 Right 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 or legal counsel for the Rights Agent), 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 be proved or
established by the Company prior to taking, suffering or omitting 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
Chief Executive Officer, the President, any Executive Vice President, or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
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 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 negligence, bad faith or willful misconduct. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Rights Agent
be
liable for special, indirect 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.
-23-
(d)
The
Rights Agent shall not be liable for or by reason of any of the statements
of
fact or recitals contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to verify the same, but
all
such statements and recitals are and shall be deemed to have been made by the
Company only.
(e)
The
Rights Agent shall not be under any responsibility in respect of the validity
of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be responsible
for
any change in the exercisability of the Rights (including the Rights becoming
null and 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 Section 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 Right 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 Right Certificate or as to whether any Preferred Shares will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f)
The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
(g)
The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, the Chief Financial
Officer, any Executive Vice President, or the Secretary of the Company, and
to
apply to such officers for instructions in connection with its duties, and
it
shall not be liable for any action taken, suffered or omitted by it in good
faith in accordance with the instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h)
The
Rights Agent and any shareholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent or any such shareholder,
director, officer or employee from acting in any other capacity for the Company
or for any other Person.
(i)
The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself (through its directors,
officers, or employees) or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default, neglect
or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment
thereof.
-24-
|
SECTION 21.
|
CHANGE
OF RIGHTS AGENT
|
The
Rights Agent or any successor Rights Agent may resign and be discharged from
its
duties under this Agreement upon 30 days' notice in writing mailed to the
Company and to each transfer agent of the Common Shares or Preferred Shares
by
registered or certified mail, and to the holders of the Right Certificates
by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent
shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. If the Company shall fail to
make
such appointment within a period of 30 days after giving notice of such removal
or after it has been notified in writing of such resignation or incapacity
by
the resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company
or by
such a court, shall be a Person (or an affiliate of a 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 authorized to do business as a banking
institution in the State of New York, is authorized under such laws to exercise
corporate trust or stock transfer powers, is in good standing, and is subject
to
supervision or examination by federal or state authority, and has at the time
of
its appointment as Rights Agent a combined capital and surplus of at least
$50
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 Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
|
SECTION 22.
|
ISSUANCE
OF NEW RIGHT CERTIFICATES
|
Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights
in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made
in
accordance with the provisions of this Agreement.
-25-
|
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 15% 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, 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
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 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.
-26-
(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 a holder 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; provided, however, that the failure to
give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of
the
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
Right 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 the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
|
SECTION 25.
|
NOTICE
OF CERTAIN EVENTS
|
(a)
In
case the Company shall propose (i) to 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) to 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)
to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to 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 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) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to 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 each holder of a Right 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, and 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.
-27-
(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
Right 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 Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent)
as
follows:
Bank
of
Marin Bank
000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
Attn: Chief
Executive Officer
Subject
to the provisions of Section 21 hereof, any notice or demand authorized by
this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
is
filed in writing with the Company) as follows:
-28-
000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx,
Xxxxxxxxxx 00000
Attn: Corporate
Secretary
Notices
or demands authorized by this Agreement to be given or made by the Company
or
the Rights Agent to the holder of any Right Certificate shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company.
|
SECTION 27.
|
SUPPLEMENTS
AND AMENDMENTS
|
The
Company may from time to time supplement or amend this Agreement without the
approval of any holders of Right 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,
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 may at any time prior to
such time as any Person becomes an Acquiring Person 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 the provision such definition) and (ii)
15%.
|
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 of 1933, as amended, 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. 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.
-29-
|
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 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.
|
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 or corporation other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common 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 Right 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 Right 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 and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State.
-30-
|
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.
|
By:
|
/s/ XXXXXXX
X. XXXXXXX
|
|
|
Xxxxxxx
X. Xxxxxxx,
President
and Chief Executive Officer
|
||
|
BANK
OF MARIN as
Rights Agent
|
||
|
By:
|
/s/ XXXXX
XXXXXXX XXXXXXXXX
|
|
|
Xxxxx
Xxxxxxx Xxxxxxxxx,
Corporate
Secretary
|
||
-31-
AND
BANK
OF
MARIN,
RIGHTS
AGENT
RIGHTS
AGREEMENT
DATED
AS
OF JULY 2, 2007
TABLE
OF CONTENTS
|
|
PAGE
|
|
|
Section
1.
|
Certain
Definitions
|
8
|
|
Section
2.
|
Appointment
Of Rights Agent
|
12
|
|
Section
3.
|
Issue
Of Right Certificates
|
12
|
|
Section
4.
|
Form
Of Right Certificates
|
13
|
|
Section
5.
|
Countersignature
And Registration
|
14
|
|
Section
6.
|
Transfer,
Split Up, Combination And Exchange Of Right Certificates; Mutilated,
Destroyed, Lost Or Stolen Right Certificates
|
14
|
|
Section
7.
|
Exercise
Of Rights; Purchase Price; Expiration Date Of Rights
|
15
|
|
Section
8.
|
Cancellation
And Destruction Of Right Certificates
|
16
|
|
Section
9.
|
Availability
Of Preferred Shares
|
16
|
|
Section
10.
|
Preferred
Shares Record Date
|
17
|
|
Section
11.
|
Adjustment
Of Purchase Price, Number Of Shares Or Number Of Rights
|
17
|
|
Section
12.
|
Certificate
Of Adjusted Purchase Price Or Number Of Shares
|
24
|
|
Section
13.
|
Consolidation,
Merger Or Sale Or Transfer Of Assets Or Earning Power
|
24
|
|
Section
14.
|
Fractional
Rights And Fractional Shares
|
27
|
|
Section
15.
|
Rights
Of Action
|
28
|
|
Section
16.
|
Agreement
Of Right Holders
|
28
|
|
Section
17.
|
Right
Certificate Holder Not Deemed A Shareholder
|
29
|
|
Section
18.
|
Concerning
The Rights Agent
|
29
|
|
Section
19.
|
Merger
Or Consolidation Or Change Of Name Of Rights Agent
|
29
|
|
Section
20.
|
Duties
Of Rights Agent
|
30
|
|
Section
21.
|
Change
Of Rights Agent
|
32
|
|
Section
22.
|
Issuance
Of New Right Certificates
|
32
|
|
Section
23.
|
Redemption
|
33
|
|
Section
24.
|
Exchange
|
33
|
|
Section
25.
|
Notice
Of Certain Events
|
34
|
|
Section
26.
|
Notices
|
35
|
|
Section
27.
|
Supplements
And Amendments
|
36
|
|
Section
28.
|
Registration
Of Securities
|
36
|
|
Section
29.
|
Determinations
And Actions By The Board Of Directors
|
37
|
|
Section
30.
|
Successors
|
37
|
|
Section
31.
|
Benefits
Of This Agreement
|
37
|
|
Section
32.
|
Severability
|
37
|
|
Section
33.
|
Governing
Law
|
37
|
|
Section
34.
|
Counterparts
|
38
|
|
Section
35.
|
Descriptive
Headings
|
38
|
i
EXHIBIT
A
CERTIFICATE
OF DETERMINATION
SERIES
A
JUNIOR PARTICIPATING PREFERRED SHARES
OF
Pursuant
to Section 401 of the Corporations Code of the State of
California:
We,
Xxxxxxx X. Xxxxxxx, President and Chief Executive Officer, Xxxxx Xxxxxxxxx,
Corporate Secretary, of Bank of Marin Bancorp, a corporation organized and
existing under the laws of California (hereinafter called the "Corporation"),
do
hereby certify as follows:
1. On
June 14, 2007, the Board of Directors of the Corporation adopted a resolution
designating 1,000,000 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 June 14, 2007 creating the series of Preferred Stock designated
as
Series A Junior
Participating Preferred Stock:
RESOLVED
FURTHER, That in order to implement the Rights, a series of Preferred Stock
of
the Corporation be and hereby is created, and that the determination of the
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
1,000,000 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.
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 Directorsout 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.
A-1
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).
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 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.
A-2
(B) Except
as otherwise provided herein, in any other Certificate ofAmendment 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. CERTAIN RESTRICTIONS.
(A) Whenever
quarterly dividends or other dividends or distributions payable on the Series
A
Preferred Stock as provided in Paragraph 2 are in arrears, thereafter and
until
all accrued and unpaid dividends and distributions, whether or not declared,
on
shares of Series A Preferred Stock outstanding shall have been paid in full,
the
Corporation shall not:
(i) declare
or pay dividends, or make any other distributions, on any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;
(ii) declare
or pay dividends, or make any other distributions, on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or
winding up) with the Series A Preferred Stock, except dividends paid ratably
on
the Series A Preferred Stock and all such parity stock on which dividends
are
payable or in arrears in proportion to the total amounts to which the holders
of
all such shares are then entitled;
(iii) redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding
up)
to the Series A Preferred Stock, provided that the Corporation may at any
time
redeem, purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior (either
as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv)
redeem or purchase or otherwise acquire for consideration any shares of Series
A
Preferred Stock, or any shares of stock ranking on a parity with the Series
A
Preferred Stock, except in accordance with a purchase offer made in writing
or
by publication (as determined by the Board of Directors) to all holders of
such
shares upon such terms as the Board of Directors, after consideration of
the
respective annual dividend rates and other relative rights and preferences
of
the respective series and classes, shall determine in good faith will result
in
fail and equitable treatment among the respective series or
classes.
A-3
(B) The
Corporation shall not permit any subsidiary of the Corporation to purchase
or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this Paragraph 4, purchase
or otherwise acquire such shares at such time and in such manner except in
connection with funding of any employee benefit plan of the Corporation or
any
such subsidiary.
Paragraph
5. REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and 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
6. 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 accrued and unpaid
dividends and distributions thereon, 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 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
7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares
of
Common Stock are exchanged for or changed into other stock or securities,
cash
and/or any other property, then in any such case 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 adjustmenthereinafter 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.
A-4
Paragraph
8. NO REDEMPTION. The shares of Series A Preferred Stock shall not be
redeemable.
Paragraph
9. 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
10. 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
11. 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."
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 July 2, 2007 at Novato, California
|
|
|
|
|
Xxxxxxx
X. Xxxxxxx
|
||
|
President
and Chief Executive Officer
|
||
|
|
|
|
|
Xxxxx
Xxxxxxx Xxxxxxxxx
|
||
|
Corporate
Secretary
|
A-5
EXHIBIT
B
FORM
OF
RIGHT CERTIFICATE
Certificate
No. R-_______Rights
NOT
EXERCISABLE AFTER JULY 23, 2017 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.
RIGHT
CERTIFICATE
BANK
OF
MARIN
BANCORP
This
certifies
that ,
or registered assigns, is theregistered 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 July 2, 2007
(the
"Rights Agreement"), between Bank of Marin Bancorp, a California corporation
(the "Company"), and Bank of Marin, a California corporation, as Rights Agent
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to
5:00 P.M., San Francisco time, on July 23, 2017 at the principal 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 $125.00 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
July 23, 2007, 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
Right Certificate is subject to all of the terms, provisions and conditions
of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, 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.
B-1
This
Right Certificate, with or without other Right Certificates, upon surrender
at
the principal office of the Rights Agent, may be exchanged for another Right
Certificate or Right 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 Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall
be
exercised in part, the holder shall be entitled to receive upon surrender
hereof
another Right Certificate or Right 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
Right 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 Right Certificate shall have been exercised as provided
in the
Rights Agreement.
This
Right Certificate shall not be valid or obligatory for any purpose until
it
shall have been countersigned by the Rights Agent.
WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal.
Dated
as
of _______,_____.
|
ATTEST:
|
BANK
OF MARIN BANCORP
|
||
|
By
|
|||
Countersigned:
|
By
|
||
|
Authorized
Signature
|
||
B-2
|
Form
of Reverse Side of Right Certificate
|
FORM
OF ASSIGNMENT
|
(To
be
executed by the registered holder if such holder desires to transfer the
Right
Certificate)
|
FOR
VALUE RECEIVED
|
|
hereby
sells, assigns and transfers unto
|
|
(Please
print name and address of transferee)
|
this
Right Certificate, together with all right, title and interest therein, and
does
hereby irrevocably
constitute and
appoint Attorney,
to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated:__________,_____.
|
Signature
|
Signature
Guaranteed:
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 Right 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 Right Certificate - continued
FORM
OF
ELECTION TO PURCHASE
(To
be
executed by the registered holder if such holder desires to exercise the
Right
Certificate.)
To
Bank
of Marin Bancorp:
The
undersigned hereby irrevocably elects to exercise ___________________
Rights represented
by this Right 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 of transferee)
|
If
such
number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right 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 of transferee)
|
Dated:_______,_____.
|
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 Right Certificate
are not beneficially owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
|
Signature
|
B-4
NOTICE
The
signature in the foregoing Forms of Assignment and Election must conform
to the
name as written upon the face of this Right 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
Right 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-5
EXHIBIT
C
SUMMARY
OF RIGHTS TO PURCHASE PREFERRED SHARES
On
June
14, 2007 the Board of Directors of Bank of Marin Bancorp (the "Company")
declared a dividend of one preferred share purchase right (a "Right") for
each
outstanding share of common stock, no par value (the "Common Shares"), of
the
Company. The dividend was declared subject to certain conditions that have
since
been satisfied. The dividend is payable on July 23, 2007 (the "Record Date")
to
the shareholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series
A
Junior Participating Preferred Stock, no par value (the "Preferred Shares"),
of
the Company at a price of $125.00 per one one-hundredth of a Preferred Share
(the "Purchase Price"), subject to adjustment. The description and terms
of the
Rights are set forth in a Rights Agreement dated as of July 2, 2007 (the
"Rights
Agreement") between the Company and Bank of Marin, as Rights Agent (the "Rights
Agent").
Initially,
the Rights will be evidenced by the certificates representing Common Shares
then
outstanding, regardless of whether any such certificate has a copy of this
Summary of Rights attached thereto, and no separate Right Certificates will
be
distributed. The Rights will separate from the Common Shares and a Distribution
Date will occur upon the earlier of (i) a public announcement that a person
or
group of affiliated or associated persons have acquired beneficial ownership
of
15% or more of the outstanding Common Shares (an "Acquiring Person"); provided,
however, a person or group holding 15% or more of the outstanding shares
as of
July 23, 2007 will become a "Grandfathered Person" and such Grandfathered
Person
will be treated as an Acquiring Person upon public announcement or knowledge
by
the Company's Board of Directors that such Grandfathered Person has acquired
beneficial ownership exceeding an additional 15% of the outstanding Common
Shares; or (ii) the commencement of, or announcement of an intention to make,
a
tender offer or exchange offer the consummation of which would result in
the
beneficial ownership by a person or group of 15% or more of such outstanding
Common Shares (unless the Company's Board of Directors has approved the offer)
(or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring
Person).
The
Rights Agreement provides that, until the Distribution Date, the Rights will
be
transferred with and only with the Common Shares. Until the Distribution
Date
(or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date, upon transfer or new issuance
of
Common Shares, will contain a notation incorporating the Rights Agreement
by
reference. Until the Distribution Date (or earlier redemption or expiration
of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of
this
Summary of Rights being attached thereto, will also constitute the transfer
of
the Rights associated with the Common Shares represented by such certificate.
As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record
of the Common Shares as of the close of business on the Distribution Date
and
such separate Right Certificates alone will evidence the Rights, The Rights
are
not exercisable until the Distribution Date. The Rights will expire on July
23,
2017 (the "Final Expiration Date"), unless the Rights are earlier redeemed
or
exchanged by the Company, in each case as described
below.
C-1
The
Purchase Price payable, and the number of Preferred Shares or othersecurities
or
property issuable, upon exercise of the Rights are subject to adjustment
from
time to time to prevent dilution (i) in the event of a stock dividend on,
or a
subdivision, combination or reclassification of, the Preferred Shares, (ii)
upon
the grant to holders of the Preferred Shares of certain rights or warrants
to
subscribe for or purchase Preferred Shares at a price, or securities convertible
into Preferred Shares with a conversion price, less than the then current
market
price of the Preferred Shares or (iii) upon the distribution to holders of
the
Preferred Shares of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Preferred Shares) or of subscription rights or warrants (other
than
those referred to above).
The
number of outstanding Rights and the number of one one-hundredths of a Preferred
Share issuable upon exercise of each Right are also subject to adjustment
in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or a subdivision, consolidation or combination
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
Preferred
Shares purchasable upon exercise of the Rights will not be redeemable Each
Preferred Share will be entitled to a minimum preferential dividend payment
of
100 times the dividend declared per Common Share. In the event of liquidation,
the holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100.00 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each Preferred Share
will have 100 votes, voting together with the Common Shares. Finally, in
the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive 100 times
the
amount received per Common Share. These rights are protected by customary
antidilution provisions.
Because
of the nature of the Preferred Shares' dividend, liquidation and voting rights,
the value of the one one-hundredth interest in a Preferred Share purchasable
upon exercise of each Right should approximate the value of one Common
Share.
In
the
event that (i) any person or group of affiliated or associated persons becomes
an Acquiring Person, or (ii) during such time as there is an Acquiring Person,
there shall be a reclassification of securities or a recapitalization or
reorganization of the Company or other transaction or series of transactions
involving the Company which has the effect 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 the Acquiring
Person (each a "flip-in" event), proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring
Person
(which will thereafter be void), will thereafter have the right to receive
upon
exercise that number of Common Shares (or, in the event that there are
insufficient authorized Common Shares, substitute consideration such as cash,
property, or other securities of the Company, such as Preferred Stock) having
a
market value of two times the exercise price of the Right In the event that
the
Company is acquired in a merger or other business combination transaction
or 50%
or more of its consolidated assets or earning power are sold (a "flip-over
event"), proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock
of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right.
C-2
At
any
time after the acquisition by a person or group of affiliated or associated
persons of beneficial ownership of 15% or more of the outstanding Common
Shares
and prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio of one Common Share, or
one
one-hundredth of a Preferred Share (or of a share of a class or series of
the
Company's preferred stock having equivalent rights, preferences and privileges),
per Right (subject to adjustment).
With
certain exceptions, no adjustment in the Purchase Price will be required
until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares will be issued (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 depository receipts) and in
lieu
thereof, an adjustment in cash will be made based on the market price of
the
Preferred Shares on the last trading day prior to the date of
exercise.
At
any
time before a person becomes an Acquiring Person, the Board of Directors
of the
Company may redeem the Rights in whole, but not in part, at a price of $0.001
per Right (the "Redemption Price"). After the redemption period has expired,
the
Company's rights of redemption may be reinstated if, prior to completion
of
certain recapitalizations, mergers or other business combinations, an Acquiring
Person reduces its beneficial ownership to less than 15% of the outstanding
Common Shares in a transaction or series of transactions not involving the
Company. The redemption of the rights 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. Immediately upon any redemption of the Rights,
the
right to exercise the Rights will terminate and the only right of the holders
of
Rights will be to receive the Redemption Price.
The
terms
of the Rights may be amended by the Board of Directors of the Company without
the consent of the holders of the Rights, including an amendment to lower
certain thresholds described above to not less than the greater of (i) any
percentage greater than the largest percentage of the outstanding Common
Shares
then known to the Company to be beneficially owned by any person or group
of
affiliated or associated persons (unless such person or group is excluded
from
the effect of such reduction) and (ii) 15%, except that from and after such
time
as any person becomes an Acquiring Person no such amendment may adversely
affect
the interests of the holders of the Rights.
Until
a
Right is exercised, the holder of a Right will not, by reason of being such
a
holder, have rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends.
A
copy of
the Rights Agreement has been filed with the Securities and Exchange Commission
as an Exhibit to a Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Company. This summary description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is hereby incorporated herein
by
reference.
C-3
