CPB INC.
the "Company"
and
ChaseMellon Shareholder Services, L.L.C.
the "Rights Agent"
RIGHTS AGREEMENT
Dated as of August 26, 1998
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . 4
Section 3. Issue of Right Certificates . . . . . . . . . . . . 4
Section 4. Form of Right Certificates . . . . . . . . . . . . .5
Section 5. Countersignature and Registration . . . . . . . . . 6
Section 6. Transfer, Split Up, Combination and
Exchange of Right
Certificates; Mutilated, Destroyed,
Lost, or Stolen Right
Certificates . . . . . . . . . . . . . . . . . . . .6
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights. . . . . . . . . . . . . . .7
Section 8. Cancellation and Destruction of Right Certificates. 8
Section 9. Availability of Preferred Shares . . . . . . . . . .8
Section 10. Preferred Shares Record Date . . . . . . . . . . . 8
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights . . . . . . . . . . . .9
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares . . . . . . . .. . . . . . . . 14
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . .. . . . . . . . . .. 15
Section 14. Fractional Rights and Fractional Shares . . . .. .15
Section 15. Rights of Action . . . . . . . . . . . . . . . . 16
Section 16. Agreement of Right Holders. . . . . . . . . . .. .17
Section 17. Right Certificate Holder Not Deemed a Stockholder.17
Section 18. Concerning the Rights Agent. . . . . . . . . . . 17
(i)
Section 19. Merger or Consolidation or Change of
Name of Rights Agent. . . . .. . . . . . 18
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . 18
Section 21. Change of Rights Agent. .. . . . . . . . . . . . 20
Section 22. Issuance of New Rights Certificates. . . . . .. 21
Section 23. Redemption. . . . . . . . . . . . . . . . . . . . 21
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . 21
Section 25. Notice of Certain Events . . . . . . . . . . . . .22
Section 26. Notices. . . . . . . . . . . . . . . . . . . . . .23
Section 27. Supplements and Amendments. . . . . . . . . . . . 24
Section 28. Successors. . . . . . . . . . . . . . . . . . . .24
Section 29. Benefits of this Agreement . . . . . . . . . . . .24
Section 30. Severability . . . . . . . . . . . . . . . . . . .24
Section 31. Governing Law . . . . . . . . . . . . . . . . . . 24
Section 32. Counterparts . . . . . . . . . . . . . . . . . . .24
Section 33. Descriptive Headings . . . . . . . . . . . . . . .25
(ii)
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of August 26, 1998 between
CPB INC., a corporation organized under the laws of the State of
Hawaii (the "Company"), and ChaseMellon Shareholder Services, a
limited liability company organized under the laws of the
State of New Jersey (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one preferred share purchase right (a
"Right") for each Common Share (as hereinafter defined) of the
Company outstanding on September 16, 1998 (the "Record Date"),
each Right representing the right to purchase one one-hundredth
(1/100th) of a Preferred Share (as hereinafter defined) upon the
terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding
between the Record Date and the earliest of the Distribution
Date, the Redemption Date, and the Final Expiration Date (as such
terms are hereinafter defined).
IN CONSIDERATION of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of fifteen percent (15%) or more of the
Common Shares of the Company then outstanding, but shall not
include the Company, any Subsidiary (as such term is hereinafter
defined) of the Company, any employee benefit plan of the Company
or any Subsidiary of the Company, or any entity holding Common
Shares for or pursuant to the terms of any such plan; provided,
however, that the term "Acquiring Person" does not include any
Grandfathered Person (as defined below), unless the Grandfathered
Person subsequently becomes the Beneficial Owner of more
than the Grandfathered Percentage (as defined below) of the
Common Shares of the Company. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to fifteen
percent (15%) (or, if applicable, the Grandfathered Percentage)
or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person shall become the Beneficial
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Owner of fifteen percent (15%) (or, if applicable, the Grandfathered
Percentage) or more of the Common Shares of the Company
then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company,
then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person, if required by the Board of
Directors in its sole discretion, divests as promptly as
practicable a sufficient number of Common Shares so that such
Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring Person" for
any purposes of this Agreement. The term "Acquiring Person"
shall also include an Adverse Person (as such term is hereafter
defined).
(b) "Adverse Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person (i)
becomes the Beneficial Owner of 10% or more of the Common Shares
then outstanding, and at least a majority of the Board of
Directors of the Company who are not officers of the Company,
after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem
appropriate, shall conclude that the effect of such stock
ownership, in the light of the actions which the Person proposes
or is likely to take, is potentially materially adverse to the
Company or the Company's business, assets, competitive position,
or prospects, or (ii) becomes the Beneficial Owner of 10% or more
of the Common Shares then outstanding, and at least a majority of
the Board of Directors of the Company who are not officers of the
Company, after reasonable inquiry and investigation, including
consultation with such persons as such directors shall deem
appropriate, that (A) such Beneficial Ownership by such Person is
intended to cause the Company to repurchase the Common Shares
beneficially owned by such Person or to cause pressure on the
Company to take any action or enter into a transaction or series
of transactions intended to provide such Person with short-term
financial gain or any economic benefit not otherwise available to
all shareholders pro-rata under circumstances where the Board of
Directors of the Company determines that the best long-term
interests of the Company and its stockholders would not be served
by taking such action or entering into such transactions or
series of transactions at that time or (B) such Beneficial
Ownership is causing or is reasonably likely to cause a material
adverse impact (including, but not limited to, impairment of
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relationships with customers and vendors) on the Company, or the
Company's business, assets, competitive position, or prospects.
(c) "Affiliate" and "Associate" shall have the meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement, or understanding
(other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights),
warrants, or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, (1) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, or (2) securities which a
Person or any of such Person's Affiliates or Associates may be
deemed to have the right to acquire pursuant to any merger or
other acquisition agreement between the Company and such Person
(or one or more of such Person's Affiliates or Associates) if
such agreement has been approved by the Board of Directors of the
Company prior to there being an Acquiring Person; or (B) the
right to vote pursuant to any agreement, arrangement, or
understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement, or understanding to vote
such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange
Act, and (2) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any
such Person's Affiliates or Associates has any agreement,
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arrangement, or understanding (other than customary agreements
with and between underwriters and selling group members with
respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(d)(ii)(B)) or disposing
of any securities of the Company. Notwithstanding anything in
this definition of Beneficial Ownership to the contrary, the
phrase "then outstanding" when used with reference to a Person's
Beneficial Ownership of securities of the Company shall mean the
number of such securities then issued and outstanding together
with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
(e) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in
Hawaii are authorized or obligated by law or executive order to
close.
(f) "Close of business" on any given date shall mean
5:00 p.m., Hawaii time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 p.m., Hawaii
time, on the next succeeding Business Day.
(g) "Common Shares" when used with reference to the
Company shall mean the shares of common stock, no par value per
share, of the Company. "Common Shares" when used with reference
to any Person other than the Company shall mean the capital stock
(or equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another
Person, the Person or Persons which ultimately control such
first-mentioned Person.
(h) "Distribution Date" shall have the meaning set forth
in Section 3 hereof.
(i) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(j) "Grandfathered Percentage" shall mean, with respect
to any Grandfathered Person (as defined below), the percentage
of the outstanding Common Shares that such Grandfathered Person
beneficially owned on the Record Date.
(k) "Grandfathered Person" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, was on the Record Date, the Beneficial Owner of ten
percent (10%) or more of the Common Shares of the Company
outstanding on such date. Any Grandfathered Person who,
4
together with all of its Affiliates and Associates, subsequently
becomes the Beneficial Owner of less than ten percent (10%) of
the Common Shares of the Company shall cease to become a Grand
fathered Person.
(l) "Person" shall mean any individual, firm,
corporation, or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Junior
Participating Preferred Stock, Series A, no par value per share,
having the rights and preferences set forth in the Certificate of
Designation attached as Exhibit A to this Agreement.
(n) "Redemption Date" shall have the meaning set forth
in Section 7 hereof.
(o) "Shares Acquisition Date" shall mean the first date
of public announcement by the Company or an Acquiring Person that
an Acquiring Person has become such.
(p) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby
appoints the Rights Agent to act as agent for the Company
in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable and, upon acceptance of
such appointment by a co-Rights Agent, the provisions of this
Agreement applicable to the Rights Agent shall be deemed also to
apply to such co-Rights Agent.
SECTION 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the
earlier of (i) the tenth (10th) day after the Shares Acquisition
Date, or (ii) the tenth (10th) Business Day (or such later date
as may be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person) after the
date of the commencement by any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention of
any Person (other than the Company, any Subsidiary of the
5
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan) to commence, a
tender or exchange offer the consummation of which would result
in any Person becoming the Beneficial Owner of Common Shares
aggregating fifteen percent (15%) (or in the case of a Grand
fathered Person, the Grand fathered Percentage) or more of the
then outstanding Common Shares (including any such date which is
after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the
right to receive Right Certificates will be transferable only in
connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will prepare
and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if
requested, send) by first-class, insured, postage-prepaid mail,
to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so
held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As soon as practicable after the adoption of this
Agreement, the Company will send a copy of a Summary of Rights to
Purchase Preferred Shares, in substantially the form of Exhibit C
hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of
business on such date (and, if such date is prior to the Record
Date, then on the Record Date to such holders as were not
included in such prior mailing), at the address of such holder
shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto.
Until the Distribution Date (or the earlier of the Redemption
Date or the Final Expiration Date), the surrender for transfer of
any certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby.
6
(c) Certificates for Common Stock which become
outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c))
after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, or the Final Expiration
Date shall have impressed on, printed on, written on or otherwise
affixed to such certificates the following legend:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between CPB Inc. and ChaseMellon
Shareholder Services dated as of August 26, 1998 (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 CPB Inc.
Under certain circumstances, as set forth in the Rights
Agreement, such rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. CPB Inc. will mail to the holder of this
certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor.
Under certain circumstances, as set forth in the Rights
Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement)
may become null and void.
With respect to such certificates containing the
foregoing legend, until the Distribution Date, the Rights
associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone, and
the surrender for transfer of any such certificates shall also
constitute the transfer of the Rights associated with the Common
Shares represented thereby. In the event that the Company
purchases or acquires any Common Shares after the Record Date but
prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the
Company shall not be entitled to exercise any Rights associated
with the Common Shares which are no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES. The Right
Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B hereto and may have such
marks of identification or designation and such legends,
summaries, or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
7
which the Rights may from time to time be listed, or to conform
to custom and common usage. Subject to the provisions of Section
22 hereof, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-hundredths of a
Preferred Share as shall be set forth therein at the price per
one one-hundredth (1/100th) of a Preferred Share set forth
therein (the "Purchase Price"), but the number of such one
one-hundredths of a Preferred Share and the Purchase Price shall
be subject to adjustment as provided herein.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. The Right
Certificates shall be executed on behalf of the Company by its
Chairman of the Board, any of its Vice-Chairman of the Board, its
President, any of its Vice Presidents, or its Treasurer, either
manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested
by the Secretary or any Assistant Secretary of the Company,
either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the
Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the
person who signed such Right Certificates had not ceased to be
such officer of the Company and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual
date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement
any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office, books for
registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST, OR STOLEN RIGHT
CERTIFICATES. Subject to the provisions of Section 14 hereof, at
any time after the close of business on the Distribution Date,
and at or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates
8
representing Rights that have become void pursuant to Section
11(a)(ii) hereof or that have been exchanged pursuant to Section
24 hereof) may be transferred, split up, combined or exchanged
for another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificates
surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make
such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal
office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange
of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to the Company and the Rights Agent of
the loss, theft, destruction or mutilation of the Right
Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to the Company and
the Rights Agent, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS. (a) The registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after
the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for
each one one-hundredth (1/100th) of a Preferred Share as to which
the Rights are exercised, at or prior to the earliest of (i) the
close of business on August 26, 2008 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or (iii)
the time at which such Rights are exchanged as provided in
Section 24 hereof.
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(b) The Purchase Price for each one one-hundredth
(1/100th) of a Preferred Share pursuant to the exercise of a
Right shall initially be $75.00, shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof, and
shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified
check, cashier's check, or money order payable to the order of
the Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares
certificates for the number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) requisition from the
depositary agent depositary receipts representing such number of
one one-hundredths of a Preferred Share as are to be purchased
(in which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the
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 fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates,
cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and (iv) when
appropriate after receipt, deliver such cash to or upon the order
of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
such person's duly authorized assigns, subject to the provisions
of Section 14 hereof.
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 canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Right Certificates shall be issued in lieu thereof
10
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates
to the Company, or shall, at the written request of the Company
destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
SECTION 9. AVAILABILITY OF PREFERRED SHARES. The Company
covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or
any Preferred Shares held in its treasury, the number of
Preferred Shares that will be sufficient to permit the exercise
in full of all outstanding Rights in accordance with Section 7.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such Preferred Shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued
and fully-paid and nonassessable shares.
The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares
upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect
of any transfer or delivery of Right Certificates to a person
other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Shares in a name other than
that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Preferred
Shares 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 reasonable satisfaction that no such
tax is due.
SECTION 10. PREFERRED SHARES RECORD DATE. Each person in
whose name any certificate for Preferred Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
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such surrender and payment is a date upon which the Preferred
Shares transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares
on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Shares transfer books of the
Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled
to any rights of a holder of Preferred Shares for which the
Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions, or to
exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number of Preferred
Shares covered by each Right, and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide the
outstanding Preferred Shares, copyright combine the outstanding
Preferred Shares into a smaller number of Preferred Shares, or
(D) issue any shares of its capital stock in a reclassification
of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as provided in
this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date and
at a time when the Preferred Shares transfer books of the Company
were open, such person would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the
event any Person becomes an Acquiring Person, each holder of a
Right shall thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price
12
multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such
number of Common Shares of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a
Right is then exercisable and dividing that product by (y) 50% of
the then current per share market price of the Company's Common
Shares (determined pursuant to Section 11(d) hereof) on the date
of the occurrence of such event. In the event that any Person
shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the
Rights.
From and after the occurrence of such event, any Rights that
are or were acquired or beneficially owned by any Acquiring
Person (or any Associate or Affiliate of such Acquiring Person)
shall be void and any holder of such Rights shall thereafter have
no right to exercise such Rights under any provision of this
Agreement. No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the transfer
of any Rights to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominees of such Acquiring Person, Associate,
or Affiliate; and any Right Certificate delivered to the Rights
Agent for transfer to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence shall be canceled.
(iii) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in
accordance with the foregoing paragraph (ii), the Company may
substitute, for each Common Share that would otherwise be
issuable upon exercise of a Right, a number of Preferred Shares
or fraction thereof such that the current per share market price
of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction
thereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options, or warrants to all holders of
Preferred Shares entitling such holders (for a period expiring
within 45 calendar days after such record date) to subscribe for
or purchase Preferred Shares or securities convertible into
13
Preferred Shares at a price per Preferred Share (or having a
conversion price per share, if a security convertible into
Preferred Shares) less than the then current per share market
price of the Preferred Shares (as defined in Section 11(d)) on
such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered)
would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on
such record date plus the number of additional Preferred Shares
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent. Preferred
Shares owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options, or
warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market
price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
14
in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one Preferred
Share and the denominator of which shall be such current per
share market price of the Preferred Shares; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon exercise
of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security"
for the purpose of this Section 11(d)) on any date shall be
deemed to be the average of the daily closing prices per share of
such Security for the thirty (30) consecutive Trading Days (as
such term is hereinafter defined) immediately prior to such date;
provided, however, that in the event that the current per share
market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B)
any subdivision, combination or reclassification of such Security
and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price shall
be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, 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 Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national
securities exchange the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by the Nasdaq or such other
system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
15
making a market in the Security selected by the Board of
Directors of the company. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a
Business Day. If the Preferred Shares are not publicly held or
so listed or traded, "current per share market price" shall be
conclusively deemed to be the current per share market price of
the Common Shares as determined pursuant to the foregoing
provisions of this Section 11(d) (appropriately adjusted to
reflect any stock split, stock dividend, or similar transaction
occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly
held or so listed or traded, "current per share market price"
shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one one-millionth (1/1,000,000th) of a Preferred Share or
to the nearest one ten-thousandth (1/10,000th) of any other share
as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment, or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital
stock of the Company other than Preferred Shares, thereafter the
number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in
Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
16
Price, the number of one one-hundredths of a Preferred Share
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in Sections
11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest
one one-millionth (1/1,000,000th) of a Preferred Share) obtained
by (i) multiplying (x) the number of one one-hundredths of a
share covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of one
one-hundredths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment
of the number of Rights shall be exercisable for the number of
one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one
ten-thousandth (1/10,000th)) 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 ten (10) days later than the
date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to
this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior
17
to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all
the Rights to which such holder shall be entitled after such
adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for
herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a Preferred
Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of one one-hundredths
of a Preferred Share which was expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredths
of the then par value, if any, of the Preferred Shares issuable
upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully-paid
and nonassessable Preferred Shares at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the
holder of any Right exercised after such record date of the
Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx
or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that (i) any consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of any
Preferred Shares at less than the current market price, (iii)
18
issuance wholly for cash of Preferred Shares or securities which
by their terms are convertible into or exchangeable for Preferred
Shares, (iv) dividends on Preferred Shares payable in Preferred
Shares, or (v) issuance of rights, options, or warrants referred
to hereinabove in Section 11(b), hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such
stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable in
Common Shares, or (ii) effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a
greater or lesser number of Common Shares, then in any such case
(A) the number of one one-hundredths of a Preferred Share
purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event
and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common
Share outstanding immediately after such event shall have issued
with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section
11(n) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or
consolidation is effected.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR
NUMBER OF SHARES. Whenever an adjustment is made as provided in
Sections 11 and 13 hereof, the Company shall promptly (a) prepare
a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 25 hereof.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER. In the event, directly or indirectly,
(a) the Company shall consolidate with, or merge with and into,
any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall
be the continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other securities
19
of any other Person (or the Company) or cash or any other
property, or (c) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person other than the Company or one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper
provision shall be made so that (w) each holder of a Right
(except as otherwise provided herein) shall thereafter have the
right to receive, upon the exercise thereof at the then current
Purchase Price multiplied by the number of one one-hundredths of
a Preferred Share for which a Right is then exercisable in
accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of such other
Person (including the Company as successor thereto or as the
surviving corporation) as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then
current per share market price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date
of consummation of such consolidation, merger, sale or transfer;
(x) the issuer of such Common Shares shall thereafter be liable
for, and shall assume, by virtue of such consolidation, merger,
sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (y) the term "the Company" shall
thereafter be deemed to refer to such issuer; and (z) such issuer
shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights. The Company shall not
consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental
agreement so providing. The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the
time of such transaction there are any rights, warrants,
instruments, or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The provisions
of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
20
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a)
The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid
to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined
in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions
of Preferred Shares (other than fractions which are integral
multiples of one one-hundredth (1/100th) of a Preferred Share)
upon exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-hundredths of a Preferred
Share). Fractions of Preferred Shares in integral multiples of
one one-hundredth (1/100th) of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have
all the rights, privileges, and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented
21
by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one one-hundredth
(1/100th) of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share.
For the purpose of this Section 14(b), the current market value
of a Preferred Share shall be the closing price of a Preferred
Share (as determined pursuant to the second sentence of Section
11(d) hereof) for the Trading Day immediately prior to the date
of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives such person's right to receive any fractional
Rights or any fractional shares upon exercise of a Right (except
as provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in such person's own behalf and
for such person's own benefit, enforce, and may institute and
maintain any suit, action, or proceeding against the Company to
enforce, or otherwise act in respect of, such person's right to
exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief
against actual or threatened violations of the obligations of any
Person subject to, this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a
Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Right will be
transferable only in connection with the transfer of the Common
Shares;
22
(b) after the Distribution Date, the Right Certificates
are transferable only on the registry books of the Rights Agent
if surrendered at the principal office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company 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 Shares certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends, or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company shall indemnify the Rights Agent
for, and hold it harmless against, any loss, liability, claim or expense
("Loss") arising out of or in connection with its duties under this Agreement,
including the costs and expenses of defending itself against any Loss, unless
such Loss shall have been determined by a court of competent jurisdiction
to be a result of the Rights Agent's gross negligence or intentional
misconduct.
23
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 the Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20
hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT. Any 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
stock transfer or corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement any
of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
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 the 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.
24
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter 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, any Vice-Chairman of the Board, the President, any Vice
President, the Secretary, or the Treasurer of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own gross negligence or willful
misconduct. In no case will the Rights Agent be liable for special,
indirect, incidental or consequential loss or damages of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has
been advised of the possibility of such damages. Any liability of the Rights
Agent will be limited to the amount of fees paid by the Company hereunder.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Sections 3, 11, 13, 23,
25
or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it
by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred
Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when
issued, be validly authorized and issued, fully-paid and non
assessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments, and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, any
Vice-Chairman of the Board, the President, any Vice President,
the Secretary, or the Treasurer of the Company, and to apply to
such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for
those instructions.
(h) The Rights Agent and any stockholder, director,
officer, or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company 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
any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect, or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect, or misconduct, provided reasonable care
was exercised in the selection and continued employment thereof.
26
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon thirty (30) days notice in
writing mailed to the Company and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified
mail, and to the holders of the Rights Certificates by first
class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit such holder's Right Certificate for
inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. After
appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties, and responsibilities as if it had
been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall
file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares or Preferred Shares,
and mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for
in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of
the Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement.
27
SECTION 23. REDEMPTION. (a) The Rights may be redeemed by
action of the Board of Directors pursuant to paragraph (b) of
this Section 23 and shall not be redeemed in any other manner.
(b) The Board of Directors of the Company may, at its
option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.02 per Right,
appropriately adjusted to reflect any stock split, stock
dividend, or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board
of Directors may be made effective at such time on such basis and
with such conditions as the Board of Directors in its sole
discretion may establish.
(c) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (b) of this Section 23 and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The
Company shall promptly give public notice of any such redemption;
provided, however, that the failure to give, or any defect in,
any such notice shall not affect the validity of such redemption.
Within ten (10) days after such action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (b),
the Company shall mail a notice of redemption to all the holders
of the then outstanding Rights at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to
the Distribution Date, on the registry books of the transfer
agent for the Common Shares. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights
at any time in any manner other than that specifically set forth
in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the
Distribution Date.
SECTION 24. EXCHANGE. (a) The Board of Directors of the
Company may, at its option, at any time after any Person becomes
an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock
28
split, stock dividend, or similar transaction occurring after the
date hereof (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at
any time after any person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any
such Subsidiary, or any entity holding Common Shares for or
pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Shares then outstanding.
(b) Immediately upon the effective date of the action of
the Board of Directors of the Company ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 and
without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that
number of Common Shares equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent on the effective date
of said action of the Board of Directors ordering the exchange of
Rights. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by
which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in
accordance with subsection (a) of this Section 24, the Company
may substitute, for each Common Share that would otherwise be
issuable upon exchange of a Right, a number of Preferred Shares
or fraction thereof such that the current per share market price
of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Shares or fraction
thereof.
29
(d) The Company shall not be required to issue fractions
of Common Shares or to distribute certificates which evidence
fractional Common Shares. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole Common
Share. For the purposes of this paragraph (d), the current
market value of a whole Common Share shall be the closing price
of a Common Share (as determined pursuant to the second sentence
of Section 11(d) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to subsection (a) of this Section
24.
SECTION 25. NOTICE OF CERTAIN EVENTS. (a) In case the
Company shall propose (i) to pay any dividend payable in stock of
any class to the holders of its Preferred Shares or to make any
other distribution to the holders of its Preferred Shares (other
than a regular quarterly cash dividend), (ii) to offer to the
holders of its Preferred Shares rights or warrants to subscribe
for or to purchase any additional Preferred Shares or shares of
stock of any class or any other securities, rights, or options,
(iii) to effect any reclassification of its Preferred Shares
(other than a reclassification involving only the subdivision of
outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and it Subsidiaries
(taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination, or
consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) then, in
each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the
purpose of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution
or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares or Common Shares,
as the case may be, 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 ten (10) days prior to the
record date for determining holders of the Preferred Shares or
Common Shares, as the case may be, for purposes of such action,
and in the case of any such other action, at least ten (10) days
30
prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Preferred
Shares or Common Shares, as the case may be.
(b) In case any of the events set forth in Section
11(a)(ii) hereof shall occur, then the Company shall as soon as
practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such events which notice shall describe such
event and the consequences of such event to holders of Rights
under Section 11(a)(ii) hereof.
SECTION 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail,
postage-prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
CPB Inc.
000 Xxxxx Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxx 00000
Attention: Chairman and Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice
or demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, addressed (until another
address is filed in writing with the Company) as follows:
ChaseMellon Shareholder Services
000 Xxxxx Xxxx Xxxxxx
Xxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xx. Xxx X. Xxxx
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right
Certificate shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the
Company (or the Rights Agent on and after the Distribution Date).
SECTION 27. SUPPLEMENTS AND AMENDMENTS. The Company may
from time to time supplement or amend this Agreement without the
approval of any holders of Right Certificates (or, prior to the
Distribution Date, the Common Shares) to make any provision with
31
respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be evidenced by a
writing signed by the Company and the Rights Agent whether or not
it would adversely affect the holders of Right Certificates;
provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended
in any manner which would adversely affect the interests of the
holders of Rights. Notwithstanding the foregoing, the Company
may at any time prior to such time as any Person becomes an
Acquiring Person amend this Agreement to lower the thresholds set
forth in Sections 1(a) and 3(a).
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.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy, or
claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent, and
the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares).
SECTION 30. SEVERABILITY. If any term, provision,
covenant, or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants,
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
However, in the event that any such provision, covenant, or
restriction of this Agreement, or any portion thereof, shall be
declared unenforceable because of its scope, breadth, or
duration, then it shall be modified to the scope, breadth, or
duration permitted by law and shall continue to be fully
enforceable in such jurisdiction as so modified.
SECTION 31. GOVERNING LAW. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Hawaii and for all purposes
shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State, without regard to any conflicts of
laws principles thereof; provided, however, that all provisions regarding
the rights, duties and obligations of the Rights Agent shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such State.
32
SECTION 32. COUNTERPARTS. This Agreement may be executed
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same
instrument.
SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of
the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and
year first above written.
CPB INC. Attest:
By: -------------------------------- By: -------------------------------
Chairman of the Board Vice President and Secretary
and Chief Executive Officer
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: -------------------------------- By: --------------------------------
Authorized Officer Authorized Officer
33
EXHIBIT A
34
CERTIFICATE OF DESIGNATION
OF
JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
CPB INC.
(Pursuant to Section 415-16 of the Hawaii Business
Corporation Act)
CPB Inc., a corporation organized and existing under the
laws of the State of Hawaii (herein referred to as the
"Company"), in accordance with the provisions of Section 415-16
of the Hawaii Business Corporation Act and ARTICLE IV of the
Restated Articles of Incorporation of the Company, does hereby
CERTIFY:
I. The Restated Articles of Incorporation of the Company
fixes the total number of shares of all classes of capital stock
which the Company shall have the authority to issue as Fifty-one
Million (51,000,000) shares, of which One Million (1,000,000)
shares shall be shares of preferred stock of no par value per
share ("Preferred Stock"), and Fifty Million (50,000,000) shares
shall be shares of common stock of no par value per share
("Common Stock").
II. The Restated Articles of Incorporation of the Company
expressly grants to the Board of Directors of the Company
authority to issue, from time to time, stock of the Company at
such price, and upon such terms as the Board of Directors shall
determine to be in the best interests of the Corporation. The
Restated Articles of Incorporation of the Company also provide
that the Company shall have the power from time to time to create
an additional class or additional classes of shares of capital
stock with such preferences, voting powers, restrictions, and
qualifications thereof as shall be fixed by the resolution
authorizing the issuance thereof.
III. Pursuant to authority conferred upon the Board of
Directors by the Restated Articles of Incorporation of the
Company, the Board of Directors, by actions taken on August 26,
1998, duly authorized and adopted the following resolution
providing for an issue of a series of its preferred stock to be
designated "Junior Participating Preferred Stock, Series A":
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of the Company in accordance
with the provisions of its Restated Articles of Incorporation,
the Board of Directors hereby creates a series of Preferred
Stock, no par value per share, of the Company and hereby states
35
the designation and number of shares, and fixes the relative
rights, preferences and limitations thereof as follows:
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Junior Participating Preferred Stock, Series A" (the "Series A
Preferred Stock"), and the number of shares constituting the Series A
Preferred Stock shall be Five Hundred Thousand (500,000). Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series A
Preferred stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights, or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Series A
Preferred Stock.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of Common Stock of
the Company, and of any other junior stock, shall be entitled to receive,
when, as, and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the first
day of March, June, September, and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject
to the provision for adjustment hereinafter set forth, one hundred (100) times
the aggregate per share amount of all cash dividends, and one hundred (100)
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series A Preferred Stock. In the event the Company
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
36
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share
on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares, unless the date
of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
37
of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60
days prior to the date fixed for the payment thereof.
SECTION 3. VOTING RIGHTS. The holders of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to one hundred (100) votes on all matters submitted to a vote of the
stockholders of the Company. In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the number of votes
per share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any similar
Stock, or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any other capital stock of the Company
having general voting rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock
38
provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock of
the Company ranking junior (as to dividends and upon dissolution, liquidation
or winding up) to the Series A Preferred; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall
be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of the Preferred
Stock subject to the conditions and restrictions on issuance set forth herein,
in the Restated Articles of Incorporation of the Company, or in any other
Certificate of Designation creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment provided that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
one hundred (100) times the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (B) to the holders of shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series A Preferred Stock, except distributions made
ratable on the Series A Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (A) of
the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
39
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Company shall
enter into any consolidation, merger, combination, or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash, and/or any other property, then in any such case each
share of Series A Preferred Stock shall at the same time be similarly exchanged
or changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to one hundred (100) times the aggregate amount
of stock, securities, cash, and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is changed
or exchanged. In the event the Company shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
SECTION 8. NO REDEMPTION. The shares of Series A Preferred Stock
shall not be redeemable.
SECTION 9. RANK. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Company's Preferred Stock.
SECTION 10. AMENDMENT. The Restated Articles of Incorporation of the
Company shall not be amended in any manner which would materially alter or
change the powers, preferences, or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series A Preferred
Stock, voting together as a single class.
40
THE UNDERSIGNED, being officers of CPB Inc. do hereby certify that the
facts stated herein are true and correct to their best knowledge, information,
and belief, and, accordingly, have executed the foregoing this 26th day of
August, 1998.
Signed: /s/Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Title: Chairman of the Board
and Chief Executive Officer
Signed: /s/Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President and Xxxxxxxxx
00
XXXXX XX XXXXXX )
) ss.
CITY AND COUNTY OF HONOLULU )
On this ____ day of _________, 1998, before me personally appeared and
_____________________, to me known to be the ___________________________and
______________________, respectively, of CPB Inc. and who executed the
foregoing instrument, and acknowledged that they executed the same of their
free act and deed.
_________________________________
Notary Public
My commission expires _______________________________
42
Exhibit B
Form of Right Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER _________ __, 2008 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AND EXCHANGE ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
CPB INC.
This certifies that __________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of _________ __, 1998 (the "Rights Agreement"),
between CPB INC., a corporation organized under the laws of the State of
Hawaii (the "Company"), and [RIGHTS AGENT], a Colorado corporation (the
"Rights Agent"), to purchase from the Company at any time after Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 p.m.,
Hawaii time, on ___________ __, 2008, at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one one-hundredth
(1/100th) of a share of the Company's Junior Participating Preferred Stock
Series A, no par value per share ("Preferred Shares"), of the Company, at a
purchase price of $_________ per one one-hundredth (1/100th) of a Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number
of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of ___________, 1998, based on the Preferred
Shares as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of one one-hundredths of a Preferred Share which
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties, and immunities hereunder
of the Rights Agent, the Company, and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices
of the Company and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
43
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price
of $0.02 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or Common Shares.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth (1/100th) of a Preferred Share and which may,
at the election of the Company, be evidenced by depositary receipts), but in
lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings of other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________________.
ATTEST: CPB INC.
By:____________________________
Countersigned:
[RIGHTS AGENT]
By: _____________________________
Authorized Signature
44
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 CPB INC., with full power of
substitution.
Dated: _____________________,
______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement.)
_______________________________
Signature
By: ____________________________
Authorized Signature
45
Form of Reverse Side of Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights
represented by the Right Certificate.)
To: CPB INC.
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security
or other identifying number ________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number __________
(Please print name and address)
Dated: __________________.
________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
46
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
_______________________________
Signature
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, CPB INC. and the Rights Agent will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
47
