CITY HOLDING COMPANY
and
SUNTRUST BANK
(Rights Agent)
Rights Agreement
Dated as of June 13, 2001
TABLE OF CONTENTS
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Page
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Section 1. Certain Definitions..................................................................... 1
Section 2. Appointment of Rights Agent............................................................. 6
Section 3. Issue of Right Certificates............................................................. 6
Section 4. Form of Right Certificates.............................................................. 8
Section 5. Countersignature and Registration....................................................... 9
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.................................... 10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights........................... 11
Section 8. Cancellation and Destruction of Right Certificates...................................... 13
Section 9. Reservation and Availability of Capital Stock........................................... 13
Section 10. Preferred Stock Record Date............................................................ 14
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights..................... 15
Section 12. Certification of Adjusted Purchase Price or Number of Shares........................... 22
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning
Power...................................................................................... 22
Section 14. Fractional Rights, and Fractional Shares............................................... 26
Section 15. Rights of Action....................................................................... 27
Section 16. Agreement of Right Holders............................................................. 27
Section 17. Right Certificate Holder Not Deemed a Shareholder...................................... 28
Section 18. Concerning the Rights Agent............................................................ 28
Section 19. Merger or Consolidation or Change of Name of Rights Agent.............................. 29
Section 20. Duties of Rights Agent................................................................. 29
Section 21. Change of Rights Agent................................................................. 32
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Section 22. Issuance of New Right Certificates.................................................... 32
Section 23. Redemption............................................................................ 33
Section 24. Exchange.............................................................................. 34
Section 25. Notice of Certain Events.............................................................. 35
Section 26. Notices............................................................................... 36
Section 27. Supplements and Amendments............................................................ 37
Section 28. Successors............................................................................ 37
Section 29. Determinations and Actions Taken by the Board of Directors............................ 38
Section 30. Benefits of this Agreement............................................................ 38
Section 31. Severability.......................................................................... 38
Section 32. Governing Law......................................................................... 39
Section 33. Counterparts.......................................................................... 39
Section 34. Descriptive Headings.................................................................. 39
Exhibit A Form of Articles of Amendment to Articles of Incorporation, as amended................. A-1
Exhibit B Form of Right Certificate.............................................................. B-1
Exhibit C Summary of Rights to Purchase Preferred Stock.......................................... C-1
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RIGHTS AGREEMENT
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This Agreement, dated as of June 13, 2001, between City Holding Company,
a West Virginia corporation (the "Company"), and SunTrust Bank, a Georgia
banking corporation (the "Rights Agent"), recites and provides:
RECITALS:
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A. On June 13, 2001, the Board of Directors of the Company determined it
desirable and in the best interests of the Company and its shareholders for the
Company to adopt a shareholder rights plan; and
B. On June 13, 2001 (the "Rights Dividend Declaration Date"), the Board
of Directors of the Company authorized and declared a dividend distribution of
one Right (as hereinafter defined) for each share of common stock of the Company
(the "Common Stock") outstanding upon the Close of Business (as hereinafter
defined) on July 1, 2001 (the "Record Date"), and has authorized the issuance of
one Right (as such number may hereinafter be adjusted pursuant to the provisions
of Section 11(n) hereof) for each share of Common Stock issued between the
Record Date and the Distribution Date (as hereinafter defined) and in certain
other circumstances provided herein, each Right initially representing the right
to purchase one one-thousandth (1/1000th) of a share of Junior Participating
Cumulative Preferred Stock Series A of the Company having the rights, powers and
preferences set forth in the form of Articles of Amendment to the Articles of
Incorporation, as amended, attached hereto as Exhibit A, upon the terms and
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subject to the conditions hereinafter set forth (the "Rights").
AGREEMENT:
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The parties hereby agree as follows:
Section 1. Certain Definitions.
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For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "1933 Act" shall have the meaning assigned to it in Section 9(d).
(b) "Acquiring Person" shall mean any Person who or that, together
with all Affiliates and Associates of such Person, is the Beneficial Owner of a
Substantial Block, but shall not include (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan or employee stock plan of the
Company, or of any Subsidiary of the Company, or any Person organized,
appointed, established or holding Voting Stock by, for or pursuant to, the terms
of any such plan, (iv) any Person who becomes the Beneficial Owner of a
Substantial Block solely as a result of a reduction in the number of shares of
Voting Stock outstanding due to the repurchase of shares of Voting Stock by the
Company unless and until such Person, after becoming aware that such Person has
become the Beneficial Owner of a Substantial Block of the
then outstanding shares of Voting Stock, acquires beneficial ownership of
additional shares of Voting Stock representing one percent (1%) or more of the
shares of Voting Stock then outstanding, or (v) any such Person who has reported
or is required to report such ownership on Schedule 13G under the Securities and
Exchange Act of 1934, as amended and in effect on the date of this Agreement
(the "Exchange Act") (or any comparable or successor report) or on Schedule 13D
under the Exchange Act (or any comparable or successor report) which Schedule
13D does not state any intention to or reserve the right to control or influence
the management or policies of the Company or engage in any of the actions
specified in Item 4 of such schedule (other than the disposition of the Common
Stock) and, within 10 Business Days of being requested by the Company to advise
it regarding the same, certifies to the Company that such Person acquired shares
of Common Stock in excess of 15% inadvertently or without knowledge of the terms
of the Rights and who, together with all Affiliates and Associates, thereafter
does not acquire additional shares of Common Stock while the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding; provided, however,
that if the Person requested to so certify fails to do so within 10 Business
Days (unless extended by the Board of Directors of the Company), then such
Person shall become an Acquiring Person immediately after such 10-Business-Day
period (or if extended by the Board of Directors of the Company, immediately
after such extension).
(c) "Adjustment Shares" shall have the meaning assigned to it in
Section 11(a)(ii).
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act.
(e) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "Beneficially Own," any securities:
(i) that such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, within the meaning of
Rule 13d-3 of the General Rules and Regulations under the Exchange Act;
(ii) that 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 (whether or not in writing), or upon the
exercise of any conversion, exchange or purchase rights (other than the
Rights), warrants or options, or otherwise, provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to "Beneficially
Own," (I) 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, (II) securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event (as hereinafter defined), or
(III) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to the Distribution
Date (as hereinafter defined) or pursuant to Section
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3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section
11(a)(i) hereof in connection with an adjustment made with respect to any
Original Rights; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; or
(iii) that 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 for the purpose
of acquiring, holding, voting or disposing of any securities of the
Company;
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 arises solely from a revocable proxy given to such Person
in response to a public proxy solicitation made pursuant to and in accordance
with, the applicable General Rules and Regulations under the Exchange Act, and
provided, further, that nothing in this paragraph (e) shall cause a Person
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engaged in business as an underwriter of securities to be the Beneficial Owner
of, or to Beneficially Own, any securities acquired through such Person's
participation in good faith in a firm commitment underwriting pursuant to an
underwriting agreement with the Company.
(f) "Business Day" shall mean any day other than a Saturday, Sunday
or day on which banking institutions in the State of West Virginia are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Charleston, West Virginia time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Charleston, West Virginia
time, on the next succeeding Business Day.
(h) "Common Stock" shall have the meaning assigned to it in the
second recital of this Agreement, and "common stock" (i) when used with
reference to any Person other than the Company shall mean the capital stock with
the greatest voting power of such Person or, if such Person is a Subsidiary of
another Person, the Person that ultimately controls such first-mentioned Person
and (ii) when used with reference to any Person other than the Company that
shall not be organized in corporate form shall mean units of beneficial interest
that (A) shall represent the right to participate generally in the profits and
losses of such Person (including, without limitation, any flow-through tax
benefits resulting from an ownership interest in such Person) and which (B) one
is entitled to exercise the greatest voting power of such Person or, in the case
of a limited partnership, shall have the power to remove the general partner or
partners.
(i) "Common Stock Equivalents" shall have the meaning assigned to it
in Section 11(a)(iii).
(j) "Company" shall have the meaning assigned to it in the first
paragraph of this Agreement.
(k) "Continuing Director" shall mean (i) any member of the Board of
Directors of the Company, while such Person is a member of the Board of
Directors of the
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Company, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and was a member of the Board of Directors of the
Company on the date of this Agreement, or (ii) any Person who subsequently
becomes a member of the Board of Directors of the Company, while such Person is
a member of the Board of Directors of the Company, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, if such Person's
nomination for election or election to the Board of Directors of the Company is
recommended or approved by a majority of the Continuing Directors.
(l) "Current Market Price" shall have the meaning assigned to it in
Section 11(c)(i).
(m) "Current Value" shall have the meaning assigned to it in Section
11(a)(iii).
(n) "Distribution Date" shall have the meaning assigned to it in
Section 3(a).
(o) "Equivalent Preferred Stock" shall have the meaning assigned to
it in Section 11(b).
(p) "Equivalent Stock" shall have the meaning assigned to it in
Section 7.
(q) "Exchange Act" shall have the meaning assigned to it in Section
1(b).
(r) "Exchange Ratio" shall have the meaning assigned to it in Section
24.
(s) "Expiration Date" shall have the meaning assigned to it in
Section 7(a).
(t) "Final Expiration Date" shall have the meaning assigned to it in
Section 7(a).
(u) "Nasdaq" shall have the meaning assigned to it in Section 9.
(v) "Person" shall mean any individual, corporation, partnership,
limited liability company, or other entity and shall include any successor by
merger or otherwise of such entity, and any particular Person shall include any
"group" acting as described in Section 13(d)(3) of the Exchange Act.
(w) "Preferred Stock" shall mean shares of Junior Participating
Cumulative Preferred Stock Series A, without par value, of the Company
(including any authorized fraction of a share of Preferred Stock) and, to the
extent that there are not a sufficient number of shares of
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Junior Participating Cumulative Preferred Stock Series A authorized to permit
the full exercise of the Rights, any other series of preferred stock of the
Company designated for such purpose containing terms substantially similar to
the terms of the Junior Participating Cumulative Preferred Stock Series A.
(x) "Principal Party" shall have the meaning assigned to it in
Section 13.
(y) "Purchase Price" shall have the meaning assigned to it in
Section 4.
(z) "Record Date" shall have the meaning assigned to it in the
second recital of this Agreement.
(aa) "Redemption Price" shall have the meaning assigned to it in
Section 23.
(bb) "Right Certificate" shall have the meaning assigned to it in
Section 3.
(cc) "Rights" shall have the meaning assigned to it in the second
recital to this Agreement.
(dd) "Rights Agent" shall have the meaning assigned to it in the
first paragraph of this Agreement.
(ee) "Rights Dividend Declaration Date" shall have the meaning
assigned to it in the second recital to this Agreement.
(ff) "Section 11(a)(ii) Event" shall have the meaning assigned to it
in Section 7(e).
(gg) "Section 11(a)(ii) Trigger Date" shall have the meaning assigned
to it in Section 11(a)(iii).
(hh) "Section 13 Event" shall have the meaning assigned to it in
Section 7(e).
(ii) "Spread" shall have the meaning assigned to it in Section
11(a)(iii).
(jj) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
(kk) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other
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persons performing similar functions are at the time directly or indirectly
owned by such Person and any Affiliate of such Person.
(ll) "Substantial Block" shall mean either (i) a number of shares of
Voting Stock having in the aggregate 15% or more of the general voting power or
(ii) 15% or more of the Rights.
(mm) "Substitution Period" shall have the meaning assigned to it in
Section 11(a)(iii).
(nn) "Summary of Rights" shall have the meaning assigned to it in
Section 3(b).
(oo) "Trading Day" shall have the meaning assigned to it in Section
11(c)(i).
(pp) "Triggering Event" shall mean a Section 11(a)(ii) Event or
Section 13 Event.
(qq) "Voting Stock" shall mean shares of the Company's capital stock
having general voting power. For the purposes hereof, "voting power," when used
with reference to the capital stock of, or units of equity interests in, any
Person shall mean the power under ordinary circumstances (and not merely upon
the happening of a contingency) to vote in the election of directors of such
Person (if such Person is a corporation) or to participate in the management and
control of such Person (if such Person is not a corporation).
Section 2. Appointment of Rights Agent.
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The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3, shall
prior to the Distribution Date also be the holders of Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agent or Agents as it may deem necessary or desirable. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for, the
acts or omissions of any such Co-Rights Agent. In the event the Company appoints
one or more Co-Rights Agents, the respective duties of the Rights Agents and any
Co-Rights Agents will be as the Company may determine.
Section 3. Issue of Right Certificates.
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(a) The "Distribution Date" shall mean the earlier of (i) the Close
of Business on the tenth Business Day (or such later date as may be determined
by the Board of Directors of the Company) after the date of the commencement of
a tender or exchange offer (as determined by reference to Rule 14d-2(a) (or any
successor rule) under the Exchange Act) by any Person (other than the Company,
any Subsidiary of the Company, or any employee benefit plan or
6
employee stock plan of the Company or any Subsidiary of the Company) for a
number of shares of the outstanding Voting Stock having 15% or more of the
general voting power (or, if the tenth Business Day after such date occurs
before the Record Date, the Close of Business on the Record Date), or (ii) the
Close of Business on the tenth Business Day after a Stock Acquisition Date (or,
if the tenth Business Day after such date occurs before the Record Date, the
Close of Business on the Record Date). Up to and including the Distribution
Date, (x) the Rights shall be evidenced by the certificates for Common Stock
registered in the names of the holders of Common Stock (which certificates for
Common Stock shall be deemed also to be Right Certificates) and not by separate
Right Certificates, and (y) the right to receive Right Certificates shall be
transferable only in connection with the transfer of Common Stock. As soon as
practicable after the Distribution Date, the Rights Agent shall mail, by first-
class, insured, postage prepaid mail, to each holder of Common Stock as of the
Close of Business on the Distribution Date, as shown by the records of the
Company at the Close of Business on the Distribution Date, at the address of
such holder shown on such records, a Right Certificate (the "Right
Certificate"), in substantially the form of Exhibit B hereto, evidencing one
Right for each share of Common Stock so held. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to Section
11(n) hereof, at the time of distribution of the Right Certificates, the Company
may make the necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Right Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any fractional Rights. As
of and after the Distribution Date, the Rights shall be evidenced solely by such
Right Certificates.
(b) The Company shall make available, as promptly as practicable
following the Record Date, a copy of a Summary of Rights, in substantially the
form attached hereto as Exhibit C (the "Summary of Rights"), to any holder of
Rights who may so request from time to time prior to the Expiration Date. With
respect to certificates for the Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights shall be evidenced by such certificates
for the Common Stock and the holders of the Common Stock shall also be the
holders of the associated Rights. Until the earlier of the Distribution Date or
the Expiration Date, the transfer of any certificates representing shares of
Common Stock in respect of which Rights have been issued shall also constitute
the transfer of the Rights associated with such shares of Common Stock.
(c) Unless the Board of Directors of the Company by resolution
adopted at or before the time of the issuance (including pursuant to the
exercise of rights under the Company's stock option, stock purchase or other
benefit plans) of any shares of Common Stock specifies to the contrary, Rights
shall be issued in respect of all shares of Common Stock that are issued after
the Record Date but prior to the earlier of the Distribution Date, the
Expiration Date or the date, if any, on which the Rights are redeemed.
Certificates representing shares of Common Stock outstanding prior to the Record
Date that are issued upon transfer or exchange of such Common Stock, shall also
be deemed to be certificates for Rights, and these Certificates, as well as
Certificates representing shares of Common Stock to be issued after the Record
Date, shall bear the following legend:
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This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between City Holding
Company and the Rights Agent thereunder (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 City Holding
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. City Holding Company
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 set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement) or one of certain transferees
thereof, whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void, as provided in
Section 7(e) of the Rights Agreement.
With respect to such certificates containing the foregoing legend, until the
Distribution Date or the Expiration Date, the Rights associated with Common
Stock 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 Stock
certificate.
(d) Until the Distribution Date, the surrender for transfer of any
of the certificates for Common Stock outstanding on or after the Close of
Business on July 1, 2001, shall also constitute the transfer of the Rights
associated with Common Stock represented by such certificates. After the
Distribution Date, the Rights shall be evidenced solely by the Right
Certificates.
Section 4. Form of Right Certificates.
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(a) The Right Certificates (and the forms of assignment and of
election to purchase shares to be printed on the reverse thereof) shall be in
substantially the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Section 11, Section
13 and Section 22, the Right Certificates, whenever issued, shall be dated as of
the Record Date and on their face shall entitle the holders thereof to purchase
such number of shares of Preferred Stock as shall be set forth therein at the
price per one one-thousandth (1/1000/th/) of a share set forth therein as
prescribed by
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Section 7(b) (the "Purchase Price"), but the number and type of such shares and
the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a), Section
11(h), or Section 22 that represents Rights Beneficially Owned by: (i) an
Acquiring Person or any Associate or Affiliate of such Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer that the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(e), and any Right Certificate
issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement
or adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible and reasonably identifiable as such) the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) or one of certain transferees
thereof. Accordingly, under certain circumstances as provided in the
Rights Agreement, this Right Certificate and the Rights represented
hereby may have become null and void as provided in Section 7(e) of
such Agreement.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board of Directors of the Company, its President
or any Vice President, either manually or by facsimile signature, and have
affixed thereto the Company's seal or a facsim ile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent, either manually or by facsimile signature,
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, issued and delivered
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
9
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Right Certificates upon exercise or transfer,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each Right
Certificate, the date of each Right Certificate and the number of each Right
Certificate.
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
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Mutilated, Destroyed, Lost or Stolen Right Certificates.
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(a) Subject to the provisions of Section 4(b), Section 7(e) and
Section 14, at any time after the Close of Business on the Distribution Date,
and at or prior to the Close of Business on the Expiration Date or the day prior
to the day, if any, on which the Rights are to be redeemed pursuant to Section
23, any Right Certificate or Certificates may be transferred, split up, combined
or exchanged for another Right Certificate or Right Certificates, entitling the
holder to purchase such number of shares of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities, cash or other assets, as the
case may be) as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing,
signed by the holder with such signature guaranteed in such manner as is
reasonably satisfactory to the Rights Agent, delivered to the Rights Agent, and
shall surrender the Right Certificate or Right Certificates to be transferred,
split up, combined or exchanged at the principal stock transfer office of the
Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate until the holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14, 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 by the holders of Rights of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
(b) Subject to Section 7(e), 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 execute and deliver a new
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Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) Subject to Section 7(e), at any time after the Distribution Date,
the holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein including, without limitation, the
restrictions on exercisability set forth in Xxxxxxx 0, Xxxxxxx 00(x)(xx),
Section 11(a)(iii), Section 13, Section 23 and Section 24) in whole or in part
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
stock transfer office of the Rights Agent, together with payment of the Purchase
Price for each one one-thousandth (1/1000/th/) of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) as to which the
Rights are exercised, at or prior to the earlier of (i) the Close of Business on
June 12, 2011 or such later date as may be established by the Board of Directors
of the Company prior to the expiration of the Rights (such date being
hereinafter referred to as the "Final Expiration Date") or (ii) the time at
which the Rights are redeemed or exchanged as provided in Section 23 or Section
24 (the earlier of (i) and (ii) being herein referred to as the "Expiration
Date"). If at any time after the Rights become exercisable hereunder but prior
to the Expiration Date the Company is prohibited by its Articles of
Incorporation, as amended, from issuing Preferred Stock upon the exercise of all
of the outstanding Rights, the Company may issue upon the exercise of the Rights
shares of stock or other securities of the Company of equivalent value to the
Preferred Stock ("Equivalent Stock"), as determined by the Board of Directors of
the Company.
(b) The Purchase Price for each one one-thousandth (1/1000/th/) of a
share of Preferred Stock pursuant to the exercise of a Right shall initially be
$40, shall be subject to adjustment from time to time as provided in Sections 11
and 13 and to increase pursuant to Section 27, and shall be payable in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax in cash, or by certified check or
money order payable to the order of the Company, the Rights Agent shall, subject
to this Section 7 and Section 20(l), thereupon promptly (i) (A) requisition from
any transfer agent of Preferred Stock (or any Equivalent Stock then issuable) a
certificate for the number of shares of Preferred Stock (or any Equivalent Stock
then issuable) to be purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Company shall
have elected to deposit the total number of shares of Preferred Stock issuable
upon exercise of the Rights hereunder with a depositary agent, requisition from
the depositary agent depositary receipts representing such number of one one-
thousandths (1/1000/ths/) of a share of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the
11
depositary 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 a
fractional share in accordance with Section 14 and (iii) promptly after receipt
of such certificate, cause the same to be delivered to or upon the order of the
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, and, when appropriate, after receipt promptly deliver
such cash to or upon the order of the holder of such Right Certificate. The
payment of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified bank check or bank
draft payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate. The Company reserves the right to require prior to the
occurrence of a Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock would be
issued.
(d) In case the holder of any Right Certificate shall exercise less
than all the Rights evidenced thereby, a new Right Certificate evidencing a
number of Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to, or upon the order of, the holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14.
(e) Notwithstanding any provision of this Agreement to the contrary,
upon the occurrence of any of the events described in Section 11(a)(ii) (a
"Section 11(a)(ii) Event") or in clauses (a), (b), (c) or (d) of the first
sentence of Section 13 (a "Section 13 Event"), any Rights that are at the time
of the occurrence of such Section 11(a)(ii) Event or Section 13 Event, as the
case may be, Beneficially Owned by (i) an Acquiring Person or any Associate or
Affiliate of such Acquiring Person or (ii) a transferee of an Acquiring Person
or of any Associate or Affiliate of such Acquiring Person (A) who becomes a
transferee after the Acquiring Person becomes such, or (B) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (1) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (2) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) are complied
with, but shall have no liability to any holder of Right Certificates or other
Person as a result of its making or failing to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
12
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such holder shall have (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Right Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
---------------------------------------------------
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or to any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
----------------------------------------------
The Company covenants and agrees that it will (a) cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities), the number of shares
of Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that will be sufficient to permit the exercise in
full of all outstanding Rights, (b) take all such action as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) delivered upon exercise
of Rights shall, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable, (c) pay when due and payable any and
all federal and state transfer taxes and charges that may be payable in respect
of the issuance or delivery of the Right Certificates or of any shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) upon the exercise of Rights and (d) take all such
action, from and after the date the Rights become exercisable hereunder, as may
be necessary to permit the exercise of the Rights for Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities), including any required registration under the Securities Act of
1933, as amended (the "1933 Act"), and, in connection therewith and if deemed
desirable by the Company, use its reasonable best efforts to list (or continue
the listing of) the Preferred Stock on a national securities exchange or the
Nasdaq Stock Market, Inc. ("Nasdaq"), and to cause all shares of Preferred Stock
reserved for issuance upon exercise of Rights to be listed on such exchange or
Nasdaq upon
13
official notice of issuance upon such exercise. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) calendar days, the exercisability of the Rights in order to
comply with all applicable Federal and state securities laws. Upon any such
suspension, the Company shall issue a public announcement (and shall provide
written notice to the Rights Agent) 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 shall have
been obtained and until a registration statement has been declared effective.
Notwithstanding the provisions of clause (c) of the first sentence of this
Section 9, the Company shall not be required to pay any transfer tax that may be
payable in respect of any transfer involved in the transfer or delivery of Right
Certificates or the issuance or delivery of certificates for Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) in a name other than that of the holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date.
----------------------------
Each Person in whose name any certificate for shares of Preferred
Stock (and, following the occurrence of a Triggering Event, Common Stock and/or
other securities) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) 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 transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (and, following the occurrence
of a Triggering Event, Common Stock and/or other securities) transfer books of
the Company are closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) 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 shareholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
14
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
-------------------------------------------------------------------
(a) The Purchase Price, the number and kind of shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock payable in
shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock,
(C) combine the outstanding Preferred Stock into a smaller number of shares
or (D) issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e), then and in each such event, the number of shares of
Preferred Stock issuable upon the exercise of a Right and the Purchase
Price payable after such event shall be the number of shares of Preferred
Stock issuable immediately prior to such event multiplied by a fraction the
numerator of which is the number of Rights outstanding immediately prior to
such event and the denominator of which is the number of Rights outstanding
immediately after such event and the Purchase Price after such event shall
be the Purchase Price in effect immediately prior to such event multiplied
by such fraction. If an event occurs that would require an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event that any Person shall, at any time after the
Rights Dividend Declaration Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a transaction
set forth in Section 13(a) hereof, then, and in each such case, proper
provision shall be made so that each holder of a Right, except as provided
below and in Section 7(e), shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one one-thousandths
(1/1000/ths/) of a share of Preferred Stock, such number of shares of
Common Stock as shall, equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-thousandths
(1/1000/ths/) of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which, following such first
occurrence, shall thereafter be the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(c) hereof) per share of Common Stock on
the date of such first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of Common Stock that
are authorized by the Company's Articles of Incorporation, as amended, but
are not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights,
15
are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), and
subject to such limitations as are necessary to prevent a default under any
agreement for money borrowed as presently constituted to which the Company
is a party and subject to any limitations contained in Sections 31-1-99 and
31-1-100 of the West Virginia Corporation Act, the Company shall: (A)
determine the value of the Adjustment Shares issuable upon the exercise of
a Right (the "Current Value"), and (B) with respect to each Right (subject
to Section 7(e) hereof), make adequate provision to substitute for the
Adjustment Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock, such as
the Preferred Stock, that the Board of Directors of the Company has deemed
to have essentially the same value or economic rights as shares of Common
Stock (such shares of preferred stock being referred to as "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to
the Current Value (less the amount of any reduction in the Purchase Price),
where such aggregate value has been determined by the Board of Directors of
the Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 calendar days
following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of redemption pursuant
to Section 23(a) expires (the later of (x) and (y) being referred to herein
as the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of the Right and
without requiring payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term "Spread" shall mean the excess of (i) the
Current Value over (ii) the Purchase Price. If the Board of Directors of
the Company determines in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights, the 30 calendar day period set forth above
may be extended to the extent necessary, but not more than 90 calendar days
after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek shareholder approval for the authorization of such additional shares
(such 30 calendar day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that action is to be taken pursuant
to the first and/or third sentences of this Section 11(a)(iii), the Company
(1) shall provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights, and (2) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek such shareholder approval for such 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
16
Section 11(a)(iii), the value of each Adjustment Share shall be the Current
Market Price per share of the Common Stock on the Section 11(a)(ii) Trigger
Date and the per share or per unit value of any Common Stock Equivalent
shall be deemed to equal the Current Market Price per share of the Common
Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock (or having a conversion
price per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the Current Market Price per share of Preferred Stock
(as defined in Section 11(c)) 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 shares of Preferred Stock outstanding
on such record date plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock 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
shares of Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
to be offered are initially convertible). In case such subscription price may be
paid in a consideration part or all of which may be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Preferred Stock owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price that would
then be in effect if such record date had not been fixed.
(c) In the event the Company shall fix a record date for the making
of a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation, merger or share exchange
in which the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend of the Company
in compliance with Sections 31-1-99 and 31-1-100 of the West Virginia
Corporation Act), or other assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than Preferred Stock)
or evidences of indebtedness, or of subscription rights or warrants (excluding
those referred to in this Section 11(c)), 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, of which the
numerator shall be the Current Market Price per share of Preferred Stock (as
defined in Section 11(c)(i)) on such record date, less the fair market value (as
determined in good
17
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
cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Preferred Stock, and
of which the denominator shall be such Current Market Price per share of
Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so made,
the 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.
(i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii), the "current market
price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
30 consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of such stock is determined during a period
following the announcement by the issuer of such stock of (A) a dividend or
distribution on such stock payable in shares of such stock or securities
convertible into shares of such stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and the
ex-dividend date for such dividend or distribution, or the record date for
such subdivision, combination or reclassification shall not have occurred
prior to the commencement of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, then, and in each such case, the Current Market
Price shall be appropriately adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of such stock 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 shares of such
stock are listed or admitted to trading or, if the shares of such stock are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices as reported on the Nasdaq, or such other system then in use,
or if on any such date the shares of such stock are not quoted by any such
organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Common Stock selected
by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of such shares
on such date as determined in good faith by the Board of Directors of the
Company shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange or Nasdaq, as the case may be, on
which the shares of such stock are listed or admitted to trading is open
for the transaction of business or, if
18
the shares of such stock are not listed or admitted to trading on any
national securities exchange or Nasdaq, a Business Day. If such stock is
not publicly held or not so listed or traded, "Current Market Price" per
share 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 and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in clause (i) of this
Section 11(c) (other than the last sentence thereof). If the Current Market
Price per share of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed or
traded in a manner provided above, the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1000
(as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied by the Current
Market Price per share of the Common Stock. If neither the Common Stock nor
the Preferred Stock is publicly held or so listed or traded, Current Market
Price per share of the Preferred Stock 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
and shall be conclusive for all purposes. For all purposes of this
Agreement, the Current Market Price of one one-thousandth (1/1000/th/) of a
share of Preferred Stock shall be equal to the Current Market Price of one
share of Preferred Stock divided by 1000.
(d) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided, however, that any
adjustments that by reason of this Section 11(d) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or other share or one-ten-
millionth of a share of Preferred Stock, as the case may be. Notwithstanding the
first sentence of this Section 11(d), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which mandates such adjustment or (ii) the Expiration Date.
(e) In the event that at any time, as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capita1 stock of the
Company other than shares of Preferred Stock, 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 Stock contained in
Sections 11(a), (b), (c), (d), (f), (g), (h), (i) and (k), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the shares of Preferred Stock shall
apply on like terms to any such other shares.
19
(f) 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-thousandths
(1/1000/ths/) of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(g) Unless the Company shall have exercised its election as provided
in Section 11(h), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths
(1/1000/ths/) of a share of Preferred Stock (calculated to the nearest one-ten-
millionth) obtained by (i) multiplying (x) the number of one one-thousandths
(1/1000/ths/) of a share covered by a Right immediately prior to such 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.
(h) 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 an
adjustment in the number of shares of Preferred Stock 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 shares of Preferred
Stock to which a Right related 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 ten-thousandth) 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 calendar 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(h) 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, 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 may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths (1/1000/ths/) of a share of Preferred Stock
issuable upon the
20
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price per one one-thousandth (1/1000/th/)
share and the number of shares that were expressed in the initial Right
Certificates issued hereunder.
(j) 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
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock 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 shal1 deliver to such
holder a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) or securities upon
the occurrence of the event requiring such adjustment.
(k) 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 in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the Current Market Price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to hereinabove
in this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such shareholders.
(l) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(m)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(m) hereof), (iii)
effect a statutory share exchange with any Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(m) hereof) or (iv)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions each
of which complies with Section 11(m) hereof), if (x) at the time of or
immediately after such consolidation, merger, statutory share exchange 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 or (y) prior to,
simultaneously with or immediately after such consolidation, merger, statutory
share exchange or sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(A) hereof shall
have received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
21
(m) 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 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.
(n) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certification of Adjusted Purchase Price or Number of Shares.
-------------------------------------------------------------
Whenever an adjustment is made as provided in Sections 11 or 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and Common Stock, a copy of such certificate and (c) if a Distribution Date has
occurred, mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 26. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment therein contained and shall not be
obligated or responsible for calculating any adjustment nor shall it be deemed
to have knowledge of any such adjustment unless and until it shall have received
such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or
-----------------------------------------------------------------
Earning Power.
-------------
In the event that on or at any time after a Stock Acquisition Date,
directly or indirectly, (a) the Company shall 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(m) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (b)
any Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m) hereof) shall consolidate with, merge with or into,
the Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other
22
Person or cash or any other property, (c) the Company shall be a party to a
statutory share exchange with any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(m) hereof) after which
the Company is a Subsidiary of any other Person, or (d) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(m), then, and in each such case:
(A) proper provision shall be made so that (i) each holder of a
Right (except as provided in Section 7(e) shall thereafter have the
right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and
freely tradeable shares of common stock of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the
number of one one-thousandths (1/1000/ths/) of a share of Preferred
Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-thousandths (1/1000/ths/) of a
share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence) and dividing that product
(which , following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by (2) 50% of the Current Market Price (determined
pursuant to Section 11(c)(i) hereof) per share of the Common Stock of
such Principal Party, on the date of consummation of such Section 13
Event; (ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first occurrence
of a Section 13 Event; (iv) the Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number
of shares of its Common Stock) 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
shares of its Common Stock thereafter deliverable upon the exercise of
the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be
of no effect following the first occurrence of any Section 13 Event.
23
(B) "Principal Party" shall mean:
(1) in the case of any transaction described in (a), (b) or
(c) of the first sentence of this Section 13, (i) the Person that is
the issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation or exchanged in
such statutory share exchange, or, if there is more than one such
issuer, the issuer the common stock of which has the greatest market
value or (ii) if no securities are so issued, (x) the Person that is
the other party to the merger or consolidation or statutory share
exchange and that survives said merger or consolidation or that is the
acquiring corporation in a statutory share exchange or, if there is
more than one such Person, the Person the common stock of which has
the greatest market value or (y) if the Person that is the other party
to the merger or consolidation or statutory share exchange does not
survive the merger or consolidation or statutory share exchange, the
Person that does survive the merger or consolidation or statutory
share exchange (including the Company if it survives);
(2) in the case of any transaction described in clause (d)
of the first sentence of this Section 13, the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power so transferred or the
Person receiving the greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as is the issuer of
common stock having the greatest market value of shares outstanding;
provided, however, that in any such case, (w) if the common stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another corporation the common stock of which
is and has been so registered, "Principal Party" shall refer to such other
corporation, (x) if the common stock of such Person is not and has not been so
registered and such Person is not a direct or indirect Subsidiary of another
corporation the common stock of which is and has been so registered, "Principal
Party" shall refer to the corporation that ultimately controls such Person, (y)
in case such Person is a Subsidiary, directly or indirectly, of more than one
corporation, the common stocks of all of which are and have been so registered,
"Principal Party" shall refer to whichever of such corporations is the issuer of
the common stock having the greatest market value of shares held by the public,
and (z) in case such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in (w) - (y) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such party
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct or indirect interests in such Person bear
to the total of such interests.
24
The Company shall not consummate any such consolidation, merger, sale,
statutory share exchange or transfer unless prior thereto the Company and such
issuer shall have executed and delivered to the Rights Agent a supplemental
agreement making valid provision for the results described in subsections (A)
and (B) above and further providing that, as soon as practicable after the date
of any consolidation, merger, statutory share exchange or sale of assets
mentioned in this Section 13, the Principal Party shall:
(i) prepare and file a registration statement under
the 1933 Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the 1933 Act) until the
Expiration Date; and
(ii) take all such other action as may be necessary to
enable the Principal Party to issue the securities purchasable
upon exercise of the Rights, including but not limited to the
registration or qualification of such securities under all
requisite securities laws of jurisdictions of the various states
and the listing of such securities on such exchanges and trading
markets as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements for
registration on Form 10 under the Exchange Act;
provided, however, that in no case may the Company consummate any such
consolidation, merger, statutory share exchange, sale or transfer if (i) at the
time of or immediately after such transaction 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 or (ii) prior to, simultaneously with or immediately
after such transaction, the shareholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13 shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or statutory share exchanges or sales or
other transfers. In the event that a Section 13 Event shall occur at any time
after the occurrence of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).
25
Section 14. Fractional Rights, and Fractional Shares.
----------------------------------------
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(n)
hereof, or to distribute Right Certificates that evidence fractional Rights. If
the Company shall determine not to issue such fractional Rights, in lieu of such
fractional Rights, there shall be paid to the 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 Nasdaq National Market or, if the Rights are not listed or
admitted to trading on the Nasdaq National Market, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price, or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by 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 shares
of Preferred Stock (other than fractions that are integral multiples of the
fraction of a share for which a Right is then exercisable) upon exercise of the
Rights or to distribute certificates that evidence fractional shares (other than
fractions that are integra1 multiples of the fraction of a share for which a
Right is exercisable). In lieu of fractional shares that are not integral
multiples of the fraction for which a Right is then exercisable, the Company may
pay to the holders of Right Certificates at the time such Right Certificates are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share of Preferred Stock. For purposes of this Section
14, the current market value of a share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant to the second
sentence of Section 11(c)) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates that evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the 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 (1) share of Common Stock. For purposes of this Section
14(c), the current market value of one share of Common Stock shall be the
closing price of one
26
share of Common Stock (as determined pursuant to Section 11(c) hereof) for the
Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Right or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action.
----------------
All rights of action in respect of this Agreement are vested in the
respective holders of the Right Certificates (and prior to the Distribution
Date, the holders of the Common Stock); and any holder of any Right Certificate
(or, prior to the Distribution Date, any holder of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, any holder of the Common Stock), may, on
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 hereunder, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Right Holders.
--------------------------
(a) Every holder of a Right by accepting the same, consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right that:
(i) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(ii) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent and then if
surrendered at the principal stock transfer office of the Rights Agent,
duly endorsed or accompanied by a proper instrument of transfer and with
the appropriate forms and certificates fully executed; and
(iii) subject to Sections 6(a) and 7(f), the Company and the
Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificate or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, subject to the
last
27
sentence of Section 7(e), shall be required to be affected by any notice to
the contrary.
(b) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder.
--------------------------------------------------
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of Preferred Stock or
any other securities of the Company that may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote at 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), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
----------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent, its directors, officers, employees
and agents for, and to hold each of them harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for anything done or omitted by the Rights
Agent or such other indemnified party in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, instruction, certificate,
statement, or other paper or
28
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons.
(c) The indemnity provided in this Section 18 shall survive the
expiration of the Rights, the resignation or removal of the Rights Agent and the
termination of this Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
----------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust, stock transfer or other shareholder services business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
--------
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. 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.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates, either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
Section 20. Duties of Rights Agent.
-----------------------
(a) The Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates by their acceptance
thereof, shall be bound:
(b) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice or opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
29
(c) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of Current Market Price) be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board of Directors of the Company, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(d) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(e) 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, or be required to verify the same (except its
countersignature thereof), but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(f) 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 adjustment required under the provisions of
Sections 11, 13 or 24 or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(g) 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.
(h) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board of Directors of the Company, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be liable for any
action
30
taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while awaiting
instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Agreement
and the date on or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted; provided, such proposal is submitted in good faith and is not
inconsistent with any instructions previously received from any officer of the
Company.
(i) 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 from acting
in any other capacity for the Company or for any other legal entity.
(j) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided the Rights Agent was not grossly negligent in
the selection and continued employment thereof.
(k) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(l) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(m) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or obligations
shall be read into this Agreement against the Rights Agent.
31
(n) 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).
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 calendar days' notice in writing
mailed to the Company and to each transfer agent of Common Stock and Preferred
Stock by registered or certified mail, and, if such resignation occurs after the
Distribution Date, 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
calendar days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of Common Stock and
Preferred Stock by registered or certified mail, and, if such removal occurs
after the Distribution Date, 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
calendar 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 any
holder of any Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a legal business
entity organized and doing business under the laws of the United States or of a
state of the United States in good standing, that is authorized under such laws
to exercise corporate trust or stock transfer or shareholders services powers
and that has at the time of its appointment as Rights Agent a combined capital
and surplus of at least $100,000,000 or (b) an affiliate of a legal business
entity described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of Common Stock and Preferred Stock, and, if such
appointment occurs after the Distribution Date, mail a notice thereof in writing
to the 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
32
may be approved by its Board of Directors of the Company to reflect any
adjustment or change in the Purchase Price per share and in the number or kind
or class of shares of stock or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption.
-----------
The Board of Directors of the Company may, at its option, at any time prior
to the earlier of (i) the Close of Business on the tenth Business Day following
the Stock Acquisition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the Close of Business on the tenth Business
Day following the Record Date), and (ii) the Final Expiration Date, and as
provided herein, elect to redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any combination or subdivision of the
outstanding Common Stock, any dividend payable in Common Stock in respect of the
outstanding Common Stock or any other similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, if the Board of Directors of the Company
authorizes redemption of the Rights in either of the circumstances set forth in
clauses (i) and (ii) below, then there must be Continuing Directors then in
office and such authorization shall require the concurrence of a majority of
such Continuing Directors where: (i) such authorization occurs on or after the
time a Person becomes an Acquiring Person, or (ii) such authorization occurs on
or after the date of a change (resulting from a proxy solicitation) in a
majority of the directors in office at the commencement of such solicitation if
any Person who is a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of Directors of the
Company has determined in good faith) that such Person (or any of its Affiliates
or Associates) intends to take, or may consider taking, any action that would
result in such Person becoming an Acquiring Person or that would cause the
occurrence of a Triggering Event. Immediately upon the action of the Board of
Directors of the Company electing to redeem the Rights, evidence of which shall
have been filed with the Rights Agent, without any further action and without
any further notice, the only right of the holders of Rights shall be to receive
the Redemption Price and such holders shall have no right to exercise the
Rights. Promptly after the action of the Board of Directors of the Company
ordering the redemption of the Rights, the
33
Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent, or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until the expiration of the Company's right of
redemption hereunder. The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the Current Market Price, as defined
in Section 11(c)(i) hereof, of the Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by the Board of Directors of
the Company.
Section 24. Exchange.
---------
(a) The Board of Directors of the Company may, at its option, at
any time (including any time after any Person becomes an Acquiring Person),
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to the provisions of Section
7(e) hereof) for Common Stock at an exchange ratio of one share of Common Stock
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors of the Company shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Stock for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board 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 shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
that 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 Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights that will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights that have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
34
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Stock (or Equivalent Preferred Stock, as
such term is defined in paragraph (b) of Section 11 hereof) for Common Stock
exchangeable for Rights, at the initial rate of one one-thousandth (1/1000th) of
a share of Preferred Stock (or Equivalent Preferred Stock) for each share of
Common Stock, as appropriately adjusted to reflect stock splits, stock dividends
and other similar transactions after the date hereof.
(d) In the event that there shall not be sufficient shares of
Common Stock authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates that evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, there
shall be paid to the holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this subsection (e), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of Section 11(c)(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, at any time after the Distribution
Date, shall propose to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend not in excess of
150% of the rate of the last cash dividend theretofore paid and made in
compliance with Sections 31-1-99 and 31-1-100 of the West Virginia Corporation
Act), or to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or to effect
any reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding shares of Preferred Stock), or to
effect any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(m)
hereof), or to effect a statutory share exchange with any Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(m)
hereof), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or a series of
related transactions, of more than 50% of the assets, cash flow or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than a Subsidiary of the Company in one or more transactions that
complies with Section 11(m) hereof), or to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, to the extent feasible and in accordance with Section
26, a notice of such proposed action, which shall specify the record date for
the
35
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, statutory share exchange,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty days prior to the record
date for determining holders of Preferred Stock for purposes of such action, and
in the case of any such other action, at least twenty days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in
any such case, (i) the Company shall as soon as practicable thereafter give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
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, or via facsimile transmission, addressed (until another address is
filed in writing with the Rights Agent) as follows:
City Holding Company
00 Xxxxxxxxx Xxxx
Xxxxx Xxxxx, Xxxx Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, or via facsimile transmission,
addressed (until another address is filed in writing with the Company) as
follows:
SunTrust Bank
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Stock Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if prior
to the Distribution Date, to the holder of certificates representing shares of
Common Stock) shall be sufficiently given or made
36
if sent by first-class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Rights Agent.
Section 27. Supplements and Amendments.
---------------------------
Prior to the Distribution Date and subject to the last sentence of this
Section 27, the Company may, and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the sentence immediately
prior to the penultimate sentence of this Section 27, the Company may, and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder (which lengthening or
shortening, under the circumstances described in the provisions to Section
23(a)(i) hereof, shall be effective only if there are Continuing Directors and
shall require the concurrence of a majority of such Continuing Directors), or
(iv) to change or supplement the provisions hereunder in any manner that the
Company may deem necessary or desirable and that shall not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person); provided, that this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits, to the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company that
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding the foregoing, no supplement or amendment shall be made that
changes the Redemption Price, the Final Expiration Date, the Purchase Price or
the number of shares of Common Stock for which a Right is exercisable; provided,
however, that at any time prior to the Distribution Date, the Board of Directors
of the Company may amend this Agreement to increase the Purchase Price or extend
the Final Expiration Date. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock. Notwithstanding anything herein to the contrary, this Agreement
may not be amended at a time when the Rights are not redeemable, and no
supplement or amendment that changes the rights or duties of the Rights Agent
under this Agreement shall be effective without the consent of the Rights Agent.
Section 28. Successors.
-----------
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
37
Section 29. Determinations and Actions Taken by the Board of Directors.
-----------------------------------------------------------
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock or of any other class of capital stock outstanding at any
particular time, including for purposes of determining the particular percentage
of the outstanding Common Stock of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) (as in
effect on the date of this Agreement) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company (and, where specifically
provided for herein, the Continuing Directors) 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, where specifically
provided for herein, the Continuing Directors), or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend this 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
(or, where specifically provided for herein, the Continuing Directors) in good
faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the
Board of Directors of the Company, or any of the directors on the Board of
Directors of the Company to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
---------------------------
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the holders of the Right Certificates
(and, prior to the Distribution Date, holders of Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
holders of the Right Certificates (and, prior to the Distribution Date, holders
of the Common Stock).
Section 31. Severability.
-------------
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the Close of Business on the tenth Business Day following
the date of such determination by the Board of Directors of the Company. Without
limiting the foregoing, if any
38
provision requiring a specific group of Directors of the Company to act is held
to by any court of competent jurisdiction or other authority to be invalid, void
or unenforceable, such determination shall then be made by the Board of
Directors of the Company in accordance with applicable law and the Company's
Articles of Incorporation, as amended, and Bylaws.
Section 32. Governing Law.
--------------
This Agreement, each Right and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of West
Virginia and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts made and to be performed
entirely within such State.
Section 33. Counterparts.
-------------
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
---------------------
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
CITY HOLDING COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
SUNTRUST BANK
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxx
--------------------------------
Title: Assistant Vice President
--------------------------------
40
Exhibit A
---------
FORM OF
ARTICLES OF AMENDMENT
TO ARTICLES OF INCORPORATION
OF
CITY HOLDING COMPANY
1. The name of the corporation is CITY HOLDING COMPANY.
2. The text of the amendment adopted is as follows:
The Rights Divided Declaration Date (April 4, 1991) in the 33d line of
subsection (a) of Appendix I of the Articles of Serial Designation fixing the
terms of the Junior Participating Cumulative Preferred Stock, Series A, filed
May 6, 1991, is struck, and the following date is substituted therefore: June
13, 2001
3. The amendment was adopted by the Board of Directors on June 13, 2001.
Shareholder approval was not required pursuant to West Virginia Corporation Act
ss. 31-1-106(n) and Article VI. Preferred Stock, of the corporation's Articles
---------------
of Incorporation.
4. These Articles of Amendment were prepared by Hunton & Xxxxxxxx, Riverfront
Plaza, East Tower, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000.
CITY HOLDING COMPANY
By:_______________________________
Xxxxxx X. Xxxxxxx, President
By:_______________________________
Xxxxxxxx X. Xxxxx, Secretary
A-1
Exhibit B
---------
[Form of Right Certificate]
---------------------------
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER JUNE 12, 2011, UNLESS
EXTENDED PRIOR THERETO BY THE BOARD OF
DIRECTORS OR EARLIER IF REDEEMED OR EXCHANGED
BY THE COMPANY. THE COMPANY, AT ITS OPTION, MAY
REDEEM THE RIGHTS EVIDENCED BY THIS CERTIFICATE
AT A REDEMPTION PRICE OF $.01 PER RIGHT OR
EXCHANGE THE RIGHTS FOR SHARES OF COMMON
STOCK ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS
OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL
AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT./1/
__________________________
/1/ The Portion of the legend in brackets shall be inserted only if
applicable and shll replace the preceding sentence.
B-1
RIGHT CERTIFICATE
-----------------
CITY HOLDING COMPANY
--------------------
This certifies that ________________________________ , or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of June 13, 2001 (the "Rights
Agreement"), between City Holding Company, a West Virginia corporation (the
"Company"), and SunTrust Bank, a Georgia banking corporation (the "Rights
Agent"), to purchase from the Company, at any time prior to 5:00 P.M.
(Charleston, West Virginia time) on June 12, 2011 (unless such time is extended
prior thereto by the Board of Directors) at the principal stock transfer office
of the Rights Agent, or its successor as Rights Agent, one one-thousandth
(1/1000/th/) of a fully paid and nonassessable share of the Junior Participating
Cumulative Preferred Stock Series A of the Company ("Preferred Stock"), at a
purchase price of $40 per one one-thousandth (1/1000/th/) of a share (the
"Purchase Price") upon presentation and surrender of this Right Certificate with
the Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Right Certificate (and the number of shares
that may be purchased upon exercise thereof) set forth above, and the Purchase
Price per one one-thousandth (1/1000/th/) of a share set forth above, are the
number and Purchase Price as of June 13, 2001, based on the shares of Preferred
Stock of the Company as constituted at such date. The Company reserves the right
to require prior to the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement) that a number of Rights be exercised so that
only whole shares of Preferred Stock will be issued. All capitalized terms not
defined herein shall have the meaning set forth in the Rights Agreement
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities that 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, including
Triggering 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, which
limitations of
B-2
rights include the temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights Agreement. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and at the principal office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer 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 such number of shares of
Preferred Stock 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 may be redeemed by the Company at its option at a redemption
price of $.01 per Right at any time prior to the earlier of (i) the Close of
Business on the tenth Business Day following the Stock Acquisition Date (or, if
the Stock Acquisition Date shall have occurred prior to the Record Date, the
Close of Business on the tenth Business Day following the Record Date), and (ii)
the Final Expiration Date (as such terms are defined in the Rights Agreement).
In addition, under certain circumstances, the Rights may be exchanged, in whole
or in part, for shares of the Common Stock, or for one one-thousandth
(1/1000/th/) of a share of Preferred Stock or of a share of a class of series of
preferred stock of the Company having equivalent rights, preferences and
privileges, per Right (subject to adjustment). Immediately upon the action of
the Board of Directors of the Company authorizing any such exchange, and without
any further action or any notice, the Rights (other than Rights that are not
subject to such exchange) will terminate and the Rights will only enable holders
to receive the shares issuable upon such exchange.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of the fraction of a share for which a Right is then
exercisable) will be issued upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof a cash payment shall 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 Preferred Stock or of any
other securities of the Company that 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
consent to or withhold consent from 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.
B-3
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of __________ __, 2001.
Attest: CITY HOLDING COMPANY
By: __________________________________ By:
______________________________
Name: __________________________________ Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: President and Chief
Executive Officer
Countersigned:
SUNTRUST BANK
By:
__________________________________
Name:
Title:
B-4
[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 Rights
Agent, with full power of substitution.
Dated: ___________, ____ _________________________________
Signature
Signature Guaranteed:
B-5
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [____] is [____] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[____] did [____] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ___________, ____ ____________________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
B-6
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: CITY HOLDING COMPANY
The undersigned hereby irrevocably elects to exercise ____________________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of such Rights (or such other securities of the
Company or of any other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares (or other securities) be
issued in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _________, ____ ____________________________________
Signature
Signature Guaranteed:
B-7
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [____] are [____] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[____] did [____] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: __________________ ____________________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-8
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
---------------------------------------------
On June 13, 2001 (the "Rights Authorization Date"), the Board of Directors
of City Holding Company, a West Virginia corporation (the "Company"), approved a
Rights Agreement, dated as of and to be effective as of June 13, 2001 (the
"Rights Agreement"), between the Company and SunTrust Bank, as Rights Agent,
having the principal terms summarized below. In accordance with the Rights
Agreement, the Board also declared a dividend distribution of one right
("Right") for each outstanding share of common stock of the Company (the "Common
Stock") to shareholders of record at the close of business on July 1, 2001 (the
"Record Date").
Each Right entitles the holder to purchase from the Company one one-
thousandth (1/1000/th/) of a share of a series of the Company's preferred stock
designated as Junior Participating Cumulative Preferred Stock Series A
("Preferred Stock") at a price of $40 per one one-thousandth (1/1000/th/) of a
share, subject to adjustment (the "Purchase Price"). Each one one-thousandth of
a share of Preferred Stock is structured to be the equivalent of one share of
Common Stock of the Company ("Common Stock"). Shareholders will receive one
Right per share of Common Stock held of record at the close of business on the
Record Date.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. Subject to certain exceptions specified in the Rights Agreement,
the Rights will separate from the Common Stock and a distribution of the Rights
Certificates will occur ("Distribution Date") upon the earlier of (i) the Close
of Business on the tenth Business Day following a public announcement that a
person or group of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding shares of Common Stock (the "Stock Acquisition Date"), other
than as a result of repurchases of stock by the Company or through inadvertance
by certain institutional shareholders or (ii) the Close of Business on the tenth
Business Day (or such later date as the Board shall determine) following the
commencement of a tender offer or exchange offer that would result in a person
or group becoming an Acquiring Person. Until the Distribution Date, (i) the
Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Record Date will contain a legend
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. Pursuant to the Rights Agreement, the Company reserves the right to
require prior to the occurrence of a Triggering Event (as defined below) that,
upon any exercise of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will expire
at 5:00 P.M. (Charleston, West Virginia time) on June 12, 2011 (the "Expiration
Date"), unless such date is extended or the Rights are earlier redeemed or
exchanged by the Company as described below.
C-1
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Right
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors of the Company or as provided in the Rights Agreement,
only shares of Common Stock issued prior to the Distribution Date will be issued
with Rights.
In the event that a Person becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the purchase price of the Right.
Notwithstanding any of the foregoing, following the occurrence of the event set
forth in this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void. However, Rights are not exercisable following the
occurrence of the event set forth above until such time as the Rights are no
longer redeemable by the Company as set forth below.
For example, at an exercise price of $40 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following an event set forth
in the preceding paragraph would entitle its holder to purchase $80 worth of
Common Stock (or other consideration, as noted above) for $40. Assuming that the
Common Stock had a per share value of $10 at such time, the holder of each valid
Right would be entitled to purchase eight shares of Common Stock for an
aggregate of $40.
In the event that, on or at any time after a Stock Acquisition Date, the
Company (i) engages in a merger, statutory share exchange, or other business
combination transaction in which the Company is not the surviving corporation,
(ii) the Company engages in a merger, statutory share exchange, or other
business combination transaction in which the Company is the surviving
corporation and any shares of the Company's Common Stock are changed into or
exchanged for other securities or assets or (iii) 50% or more of the assets,
cash flow or earning power of the Company and its subsidiaries (taken as a
whole) are sold or transferred, each holder of a Right (except as noted below)
shall thereafter have the right to receive, upon the exercise thereof at the
then current purchase price of the Right, that number of shares of common stock
of the acquiring company which at the time of such transaction would have a
market value (determined as provided in the Rights Agreement) of two times the
purchase price of the Right. The events set forth in this paragraph and in the
second preceding paragraph are referred to as the "Triggering Events."
Upon the occurrence of a Triggering Event that entitles Rights holders to
purchase securities or assets of the Company, Rights that are or were owned by
the Acquiring Person, or any affiliate or associate of such Acquiring Person, on
or after such Acquiring Person's Stock Acquisition Date shall be null and void
and shall not thereafter be exercised by any person (including subsequent
transferees). Upon the occurrence of a Triggering Event that entitles Rights
holders to purchase common stock of a third party, or upon the authorization of
an Exchange (as defined below), Rights that are or were owned by any Acquiring
Person or any affiliate or associate of any Acquiring Person on or after such
Acquiring Person's Stock
C-2
Acquisition Date shall be null and void and shall not thereafter be exercised by
any person (including subsequent transferees).
The Purchase Price payable, and the number of shares of Preferred Stock,
Common Stock or other securities or property issuable upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution.
At any time (including a time after any person becomes an Acquiring
Person), the Company may exchange all or part of the Rights (except as set forth
below) for shares of Common Stock (an "Exchange") at an exchange ratio of one
share per Right, as appropriately adjusted to reflect any stock split or similar
transaction.
At any time prior to the earlier of (i) ten days following the Stock
Acquisition Date, and (ii) the Expiration Date, or said later date as the Board
may set, the Company may redeem the Rights in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price"). Immediately upon the action of the
Board ordering redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company or in the event of the redemption of the
Rights, as set forth above.
Other than certain provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, to make certain other changes that do not adversely affect the
interests of holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the Rights Agreement;
provided, however, no amendment to adjust the time period governing redemption
may be made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
June __, 2001 and a Current Report on Form 8-K dated June __, 2001. 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
