EXHIBIT 1
JUNIATA VALLEY FINANCIAL CORP.
and
THE JUNIATA VALLEY BANK
---------------------------
Rights Agreement
Dated as of September 1, 2000
TABLE OF CONTENTS
Section Page Numbers
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1. Certain Definitions.........................................................................1
2. Appointment of Rights Agent.................................................................6
3. Issuance of Right Certificates..............................................................7
4. Form of Right Certificates................................................................. 8
5. Countersignature and Registration...........................................................9
6. Transfer, Split-up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Certificates......................................................9
7. Exercise of Rights, Purchase Price, Expiration Date of Rights..............................10
8. Cancellation and Destruction of Right Certificates.........................................12
9. Reservation, Registration and Listing......................................................13
10. Effective Date of Rights Exercise..........................................................14
11. Adjustment of Purchase Price, Number of Shares or Number of Rights.........................15
12. Certificate of Adjusted Purchase Price or Number of Shares.................................25
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.......................25
14. Fractional Rights and Fractional Shares....................................................28
15. Rights of Action...........................................................................29
16. Agreement of Right Holder..................................................................29
17. Right Certificate Holder Not Deemed a Stockholder..........................................30
18. Concerning the Rights Agent................................................................31
19. Merger or Consolidation or Change of Name and Rights Agent.................................31
20. Duties of Rights Agent.....................................................................32
21. Change of Rights Agent.....................................................................34
22. Issuance of New Right Certificates.........................................................35
23. Redemption and Termination.................................................................35
24. Notice of Certain Events...................................................................37
25. Notices....................................................................................38
26. Supplements and Amendments.................................................................39
27. Successors.................................................................................40
28. Determinations and Actions by the Board of Directors, etc..................................40
29. Benefits of this Agreement.................................................................40
30. Severability...............................................................................41
31. Governing Law..............................................................................41
32. Counterparts...............................................................................41
33. Descriptive Headings.......................................................................41
i
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 1, 2000, (the "Agreement") between
JUNIATA VALLEY FINANCIAL CORP., a corporation organized and existing under the
laws of the Commonwealth of Pennsylvania (the "Company") and THE JUNIATA VALLEY
BANK, a banking institution organized under the laws of the Commonwealth of
Pennsylvania (the "Rights Agent").
WITNESSETH:
WHEREAS, on August 21, 2000, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right for each share of
Common Stock of the Company outstanding at the close of business on August 21,
2000, each Right representing the right to purchase one share of Common Stock,
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 share of
Common Stock that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (all capitalized terms have the meanings hereinafter set forth).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, and intending to be legally bound hereby, the parties agree as
follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of ten
(10%) percent or more of the shares of Common Stock then outstanding, but shall
not include the Company, any Subsidiary (as hereinafter defined) of the Company,
any employee benefit plan of the Company or any Subsidiary of the Company, or
any Person or entity holding shares of Common Stock for or pursuant to the terms
of any such plan. Notwithstanding the foregoing, no person shall become an
"Acquiring Person" as the result of an acquisition of shares of Common Stock by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such person to ten (10%)
percent or more of the shares of Common Stock of the Company then outstanding;
provided, however, that if a person becomes the Beneficial Owner of ten (10%)
percent or more of the
shares of Common Stock 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 shares of Common Stock of the
Company, then such person shall be deemed to be an "Acquiring Person".
(b) "Adjustment Shares" means that number of shares of Common Stock which
each holder of a Right is entitled to receive upon exercise of a Right, as
adjusted from time to time in the manner set forth in Section 11.
(c) "Affiliate"and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended, as in effect on the date of this
Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) which 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 (whether or not in writing) (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,
(A) securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Persons Affiliates or Associates
until such tendered securities are accepted for purchase or exchange; or
(B) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) securities issuable upon exercise
of Rights from and after the occurrence of a Triggering Event which Rights
were acquired by such Person or any of such Persons Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (the "Original Rights")
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or pursuant to Section 11(i) hereof in connection with an adjustment made
with respect to any Original Rights;
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
Exchange Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to "beneficially own," any
security under this subparagraph (iii) as a result of an agreement,
arrangement or understanding to vote such security (1) which 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 of the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iv) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Persons Affiliates or
Associates has any agreement, arrangement or understanding (whether or not
in writing) (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 subparagraph (iii) of this paragraph)
of disposing of any securities of the Company.
(e) "Board" means the Board of Directors of the Company.
(f) "Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in the Commonwealth of Pennsylvania are authorized
or obligated by law or executive order to close.
(g) "Close of Business" on any given date means 5:00 P.M. Mifflintown,
Pennsylvania time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Mifflintown, Pennsylvania time, on the
next succeeding Business Day.
(h) "Common Stock", when used with reference to the Company means the
shares of common stock, $1.00 par value per share of the Company. "Common Stock"
when used with reference to any Person other than
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the Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person or, the equity securities or other equity
interest having power to control or direct the management of such Person.
(i) "Common Stock Equivalents" means securities of the Company, which
either (i) have the same rights, privileges and preferences as Common Stock or
(ii) securities which the Board of Directors of the Company have deemed to have
the same per share value as Shares of Common Stock.
(j) "Company" means Juniata Valley Financial Corp.
(k) "Continuing Director" means (i) any member of the Board of Directors of
the Company, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, or otherwise
affiliated with an Acquiring Person or of any such Affiliate or Associate, and
was a member of the Board prior to the date of this Agreement, or (ii) any
Person who subsequently becomes a member of the Board, while such Person is a
member of the Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of an Acquiring Person or
of any such Affiliate or Associate or otherwise affiliated with an Acquiring
Person or of any such Affiliate or Associate, if such Persons nomination for
election or election to the Board is recommended or approved by a majority of
other members of the Board who are also Continuing Directors.
(l) "Distribution Date" means the earlier of (i) the tenth day after the
Shares Acquisition Date (or, if the tenth day after the Shares Acquisition Date
occurs before the Record Date, the close of business on the Record Date) or (ii)
the tenth day after the date of a tender or exchange offer by any Person is
first published or sent or given within the meaning of Rule 14d-2(a) of the
Exchange Act, the consummation of which would result in any Person becoming the
beneficial Owner of Common Stock aggregating ten (10%) percent or more of the
then outstanding shares of Common Stock. If any such tender or exchange offer is
cancelled, terminated or otherwise withdrawn prior to the Distribution Date, the
Board may, in its sole discretion deem such offer never to have been made.
(m) "Final Expiration Date" means August 31, 2000.
(n) "Pennsylvania Business Corporation Law" means the Act of December 21,
1988, P.L. 1444, No. 177, as amended from time to time.
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(o) "Person" means any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity, excluding
the Company or any Related Party.
(p) "Principal Party" means (i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation; and (ii) in
the case of any transaction described in clause (iii) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case, (1) if the Common Stock
or other securities of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value.
(q) "Purchase Price" means the price to be paid for one share of Common
Stock upon exercise of a Right, subject to adjustment as provided in this
Agreement.
(r) "Record Date" means August 21, 2000.
(s) "Related Party" means any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, any investment
plan sponsored or operated by the Company or a Subsidiary of the Company (but
not the participants in such plan), or any entity or person organized, appointed
or established by the Company or any Subsidiary of the Company for or pursuant
to the terms of any such plan.
(t) "Rights Dividend Declaration Date" means the date the Board authorized
and declared a dividend distribution of one Right for each share of Common Stock
outstanding at the close of business on the Record Date.
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(u) "Redemption Date" means the time at which the Rights are redeemed as
provided in Section 23.
(v) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii)(A), (B) or (C) hereof.
(w) "Section 11(a)(ii) Trigger Date" means the later of (i ) the first
occurrence of a Section 11(a)(ii) Event and (ii) the date on which the Company's
right of redemption pursuant to Section 23(a) expires.
(x) "Section 13 Event" means any event described in clauses (i), (ii) or
(iii) of Section 13(a) hereof.
(y) "Share" means a share of the Common Stock, par value $1.00 per share,
of the Company and also means, if the context requires, a share of any other
class of the capital stock of the Company which may be authorized and
outstanding.
(z) "Shares Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that a Person has become an Acquiring Person.
(aa) "Subsidiary" of any Person means 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.
(bb) "Trading Day" means a day on which the principal national securities
exchange on which a 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.
(cc) "Transferee" means a Person to whom an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, transferred Rights, if such
transfer occurred (i) after the transferor of the Rights became an Acquiring
Person (or an Associate or Affiliate of the Acquiring Person), or (ii) prior to
or concurrently with the transferor of the Rights becoming an Acquiring Person
(or an Associate or Affiliate of the Acquiring Person) if the transferee
received the Rights (A) pursuant to a transfer from the Acquiring Person to
holders of equity interests in such Acquiring Person, (B) pursuant to a
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (C) pursuant to a transfer
6
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has a primary purpose or effect to avoid the
purposes or effect of this Agreement, including but not limited to Section 7(e).
(dd) "Triggering Event" means any Section 11(a)(ii) Event or any Section 13
Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights 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.
Section 3. Issuance of Right Certificates.
(a) Until the Distribution Date:
(i) The Rights will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates evidencing the Common Stock registered in the names
of the holders thereof (which certificates for Common Stock shall also be deemed
to be Right Certificates) and not by separate Right Certificates, and
(ii) The right to receive Right Certificates will be transferable only in
connection with the transfer of the underlying shares of Common Stock. 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,
postage- prepaid mail, to each record holder of the Common Stock 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 A hereto (a "Right Certificate"), evidencing one Right for each share of
Common Stock so held, subject to adjustments as provided herein. On and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As soon as possible after the Record Date the Company will send a copy
of a Summary of Rights, in substantially the form of Exhibit B hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each record
holder of the Common Stock as of the close of business on the Record Date, at
the address of such holder shown on the records of the Company. Common Stock
certificates outstanding as of the Record Date (and until the Distribution Date)
will, together with the Summary of Rights, also evidence the Rights. Until
7
the Distribution Date (or the earlier of the Redemption Date or Final Expiration
Date), the surrender for transfer of any certificate for shares of Common Stock
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 Stock represented thereby.
(c) Certificates of Common Stock which are issued (including, without
limitation, reacquired Common Stock referred to in the last sentence of this
subparagraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Juniata Valley Financial Corp. and The Juniata
Valley Bank dated as of September 1, 2000 (the "Rights
Agreement"), the terms of which are incorporated herein by
reference and a copy of which is on file at the principal
executive offices of Juniata Valley Financial Corp. 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. Juniata
Valley Financial Corp. will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. As described in
the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person (as defined in the Rights
Agreement) shall become null and void.
Certificates containing the foregoing legend, until the earlier of the
Distribution Date or the Final Expiration Date, shall represent both shares of
Common Stock and the Rights associated therewith and the surrender for transfer
of any such certificate shall constitute the transfer of the Rights associated
with such Common Stock. In the event that the Company purchases or acquires any
shares of Common Stock after the Record Date but prior to the Distribution Date,
any Rights associated with Common Stock shall be deemed cancelled and retired.
The Company shall not be entitled to exercise any Rights associated with Common
Stock which is no longer outstanding.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase Common
Stock and of assignment to be printed on the reverse thereof) shall be
8
substantially the same as Exhibit "A" hereto. Such certificates 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
conform to usage, to comply with any applicable law, rule or regulation, or with
any rule or regulation of any stock exchange on which the Rights may from time
to time be listed. Subject to the provisions of Section 11 and Section 22
hereof, the Right Certificates shall entitle the holders thereof to purchase
such number of shares of Common Stock as are set forth therein at the Purchase
Price inscribed thereon, but the Purchase Price and amount and type of
securities purchased upon exercise of Rights is subject to modification as
provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, or by a Transferee, and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the Rights represented
hereby may become null and void in the circumstances specified in Section 7(e)
of such Agreement.
Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Company by its Chairman of the Board, President, or
any Vice President, 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 an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. If
any officer of the Company who signed any of the Right Certificates ceases 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 the 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
9
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 Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the close of business on the Distribution Date, and at
or prior to the close of business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates 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
shares of Common Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Right Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
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 a
Right Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or
10
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, 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 lost, stolen, destroyed or mutilated
Right Certificate.
Section 7. Exercise of Rights, Purchase Price Expiration Date of Rights.
(a) Subject to Sections 7(e), 9(d), 11(a)(ii) and 23(a), the registered
holder of any Right Certificate may exercise the Rights evidenced thereby 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 aggregate Purchase Price with respect to the
total number of shares of Common Stock (or other securities, cash or other
assets, as the case may be) as to which the Rights are exercised, at or prior to
the earliest of (i) the close of business on the Final Expiration Date and (ii)
the Redemption Date.
(b) The Purchase Price for each share of Common Stock pursuant to the
exercise of a Right shall initially be Twenty-six Dollars and Twenty-five Cents
($26.25) and shall be subject to adjustment from time to time as provided in
Sections 11 and 13(a). The Purchase Price shall be payable in lawful money of
the United States of America, or if permitted by the Board, shares of Common
Stock of the Company, 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 of Common Stock (or other shares, securities,
cash or other assets, as the case may be) to be purchased and an amount equal to
any applicable transfer tax required to be paid by the holder of such Right
Certificate, the Rights Agent shall promptly:
(i) Requisition from any transfer agent of the Common Stock
(including itself) certificates for the number of shares of Common
Stock to be purchased (the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests); and
11
(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; and
(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.
All payments made by holders of Rights Certificates shall be made by
certified check, cashiers check, bank draft or money order payable to the order
of the Company, unless the Board, in its sole discretion, permits payment of the
Purchase Price by delivery of certificate(s) (with appropriate stock power
executed in blank attached thereto) for whole numbers of shares of Common Stock
of the Company which shall be credited at the current market value thereof
(determined pursuant to Section 11(d) hereof).
In the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Triggering Event, any Rights beneficially owned
by an Acquiring Person, an Associate or Affiliate of an Acquiring Person, or a
Transferee, shall become null and void without any further action and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to insure that the provisions of this Section 7(e)
and Section 4(b) hereof are complied with, but shall have no liability to any
holder of Rights Certificates or other Person as a result of its failure
12
to make any determinations with respect to any Acquiring Person or its
Affiliates, Associates or Transferees.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have:
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise; and
(ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
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 cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation Registration and Listing.
(a) Except as provided in Section 11(a)(iii) hereof, and without
consideration of the adjustments provided by Section 11(a)(ii), the Company
covenants and agrees that, prior to the latter of the Distribution Date and the
occurrence of a Triggering Event, it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock or out of
its authorized and issued shares held in its treasury, the number of shares of
Common Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.
13
(b) The Company shall use its best efforts promptly to cause, from and
after such time as the Rights become exercisable, all shares of Common Stock and
other securities reserved for issuance upon exercise of Rights to be listed with
any system or on any securities exchange on which the Company's Common Stock
then trades.
(c) The Company shall use its best efforts:
(i) To file, as soon as practical after the first occurrence of a
Section 11(a)(ii) Event (and the determination of the securities or
property to be delivered upon exercise of the Rights), or as soon as is
required by law following the Distribution Date, an appropriate
registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to the securities purchasable upon exercise of the
Rights;
(ii) Cause such registration statement to become effective as soon as
practical after the filing; and
(iii) Cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable
for such securities and (B) the Final Expiration Date.
The Company will also take all action necessary to ensure compliance with
the securities laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statements and to permit them to become
effective. Upon any suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in that jurisdiction shall have been obtained.
(d) 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 shares of Common Stock upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may
14
be payable in respect of any transfer or delivery of Right Certificates to a
Person other than, or the issuance or delivery of certificates for the Common
Stock 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 for Common Stock upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Effective Date of Rights Exercise. Each person in whose name
any certificate for securities issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of such securities, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made. Provided, however, that if the
date of such surrender and payment is a date upon which the 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 Common Stock 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 stockholder of the
Company with respect to shares for which the Rights are exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions, 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 shares of Common Stock 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) If the Company, after the date of this Agreement (A) declares
a dividend on the Common Stock payable in shares of Common Stock, (B)
subdivides the outstanding Common Stock, (C) combines the outstanding
Common Stock into a smaller number of shares of Common Stock, or (D) issues
any shares of its capital stock in a reclassification of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
then except as otherwise provided in this Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the time of the Record Date for
such dividend or of the effective date of such subdivision,
15
combination or reclassification, and/or the number and kind of shares of
Common Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind
of Shares which, if such Right had been exercised immediately prior to such
date and at a time when the transfer books of the Company were open, the
holder of the Right would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly,
(1) shall merge into the Company or otherwise combine with the
Company or a Subsidiary and the Company or the Subsidiary shall be the
continuing of surviving corporation of such merger or combination and
the Common Stock of the Company shall remain outstanding and
unchanged, or
(2) shall effect a statutory share exchange with the Company,
after which the Company is not a Subsidiary of any Acquiring Person or
any Associate or Affiliate of any Acquiring Person, or
(3) shall, in one or more transactions, other than in connection
with the exercise or conversion of securities exercisable or
convertible into capital stock of the Company or any of its
Subsidiaries, transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for shares of any
equity security of the Company or for securities exercisable for or
convertible into shares of any equity security of the Company or
otherwise obtain
16
from the Company, with or without consideration, any additional shares
of any equity security of the Company or securities exercisable for or
convertible into shares of any equity security of the Company (other
than as part of a pro rata distribution to all holders of Common
Stock), or
(4) shall receive any compensation from the Company or any of the
Company's Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or
(5) shall receive the benefit, directly or indirectly (except
proportionately as a stockholder and except if resulting from a
requirement of law or governmental regulation), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantage provided by the Company or any of its
Subsidiaries, or
(6) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose, in one or more transactions, to, from
or with, as the case may be, the Company or any of its Subsidiaries,
assets on terms and conditions less favorable to the Company than the
Company would be able to obtain in arm's length negotiation with an
unaffiliated third party,
(B) any Person, alone or together with its Affiliates and Associates,
shall, at any time after the Rights Dividend Declaration Date, become the
Beneficial Owner of ten (10%) percent or more of the shares of Common Stock then
outstanding, unless the event causing the ten (10%) percent threshold to be
crossed is a transaction set forth in Section 13(a) hereof, or is an acquisition
of shares of Common Stock pursuant to a tender offer or exchange offer for all
outstanding shares of Common Stock at a price and on terms determined by at
least a majority of the Continuing Directors, after receiving advice from one or
more investment banking firms, to be (a) at a price which is fair to
17
stockholders (taking into account all factors which such members of the
Board deem relevant) and (b) otherwise in the best interests of the
Company and its stockholders, taking into consideration all relevant
factors including but not limited to those set forth in the
Pennsylvania Business Corporation Law,
(C) at any time after a Shares Acquisition Date and during such time
as there is an Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or recapitalization of the
Company (whether or not such reclassification or recapitalization occurs in a
merger in which the Company survives), or any repurchase by the Company or any
of its Subsidiaries of shares of Common Stock, or any other class or series of
securities issued by the Company) or any merger or consolidation of the Company
with any of its Subsidiaries or other transaction or series of transactions
involving the Company (whether or not with or into or otherwise involving an
Acquiring Person or any Affiliate or Associate thereof but excluding a tender
offer or exchange offer of the nature described in clause (A) above) which has
the effect, directly or indirectly, of increasing by more than one (1%) percent
the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries which is directly or
indirectly beneficially owned by an Acquiring Person or any Associate or
Affiliate of any Acquiring Person,
then, promptly following the occurrence of a Section 11(a)(ii) Event,
proper provision shall be made so that each holder of a Right (except as
provided below) shall thereafter have the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of shares of Common Stock of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the
then number of shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y)
dividing that product (which, following such first occurrence, shall thereafter
be referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by fifty (50%) percent of the current market price (determined
pursuant to Section 11(d)(i) hereof) per share of Common Stock on the date of
such first occurrence (such number of shares, the "Adjustment Shares").
18
(iii) If the number of shares of Common Stock which are authorized by the
Company's articles of incorporation but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights are insufficient to permit
the exercise in full of the Rights in accordance with this Agreement, the
Company shall:
(A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess, the "Spread"), and
(B) with respect to each Right, make adequate provision to substitute
for the Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Common Stock or Common Stock
Equivalents, (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board of Directors
of the Company based upon the advice of an investment banking firm selected by
the Board of Directors of the Company; Provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to this clause (B)
within thirty (30) days following the Section 11(a)(ii) Trigger Date, then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the "Substitution Period").
To the extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the
19
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof per share of the Common Stock on the Section
11(a)(ii) Trigger Date) and the value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Stock on such date.
(b) If the Company fixes a record date for the issuance of rights, options
or warrants to all holders of Common Stock entitling them (for a period expiring
within forty (45) calendar days after such record date) to subscribe for or
purchase shares of Common Stock (or Common Stock Equivalents) or securities
convertible into Common Stock or Common Stock Equivalents at a price per share
of Common Stock or Common Stock Equivalents (or having a conversion price per
share, if a security convertible into Common Stock or Common Stock Equivalents)
less than the then current per share market price of the Common Stock
(calculated in the manner set forth in Section 11(d) hereof) on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding on such record date plus the number of shares of
Common Stock which the aggregate offering price of the total number of Common
Stock and/or Common Stock Equivalents to be offered (and/or the aggregate
initial conversion price of the convertible securities to be offered) would
purchase at such current market price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of additional shares of Common Stock and/or Common Stock Equivalents to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). If the 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, whose determination shall be described in a statement filed with the
Rights Agent. Common Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so
20
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 Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) or evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend payable in Common
Stock) or subscription rights or warrants (excluding those referred to in
Section 11 (b)), 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 Common Stock (as defined in Section 11(d) hereof)
on such record date, less the fair market value (as determined in good faith by
the Board, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Common Stock and the denominator of which shall be such current per share
market price of the Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than computations
made pursuant to Section 11(a)(iii) hereof, the "current market price" of any
security, (a "Security" for the purpose of this Section 11(d)(i)), on any date
shall be deemed to be the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days immediately prior to such
date. For purposes of computations made pursuant to Section 11(a)(iii) hereof,
the "current market price" per share of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of such Common Stock for
the ten (10) consecutive Trading Days immediately following such date, provided,
however, if the current market price per share 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
of securities convertible into such shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of the requisite thirty (30) Trading Days or ten (10) Trading Days,
as set forth above, or 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 market price" shall
be
21
appropriately adjusted to reflect the ex-dividend trading. The closing price for
each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, 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 on the principal national securities
exchange on which the Security is listed or admitted to trading or, if the
Security if not listed or admitted to trading on any national securities
exchange, the last closing price or, if no such sale takes place on such day,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. If on such date no market maker is making a market in the Security, the
fair value of each share of such Security on such date shall be determined in
good faith by the Board.
If the Security is not publicly held or so listed or traded, "current
market price" per share shall mean the fair value per share as determined in
good faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) No adjustment in the Purchase Price shall be required unless it would
require an increase or decrease of at least one (1%) percent in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
share of Common Stock or any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) 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) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
22
respect to the Common Stock contained in Section 11(a), (b), (c), (e), (g), (h),
(i), (j), (k) and (m), and the provisions of Sections 7, 9, 10, 13, and 14 with
respect to the shares of Common Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
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 shares of Common Stock
(calculated to the nearest one ten-thousandth) obtained by
(i) Multiplying (x) the number of shares 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 shares of Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of shares of Common Stock 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) 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 date
thereafter, but, if the Right Certificates have been issued, shall be at least
ten (10) days later than the date of the
23
public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
and the Rights Agent shall, as promptly as practical, distribute 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 distribute to such holders of record in substitution and replacement for
the Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Such Right Certificates 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 shares of Common Stock 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 shares of Common Stock which were expressed in
the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Common Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non- assessable shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 requires an adjustment in the
Purchase Price to be effective as of a record date for a specified event, the
Company may defer until the occurrence of such event the issuance of Common
Stock and other capital stock or securities of the Company, if any, issuable
upon the exercise of a Right over and above the shares of Common Stock and other
capital stock or securities of the Company, if any, which were 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
24
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion determines advisable in order to avoid
the occurrence of a taxable event to its shareholders upon the consolidation or
subdivision of the Common Stock, issuance of any Common Stock for cash at less
than the current market price, issuance of Common Stock or securities for cash
which by their terms are convertible into or exchangeable for Common Stock,
issuance of stock dividends or issuance of rights, options or warrants referred
to in this Section 11.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date,
(i) consolidate with;
(ii) merge with or into; or
(iii) sell or transfer to, in one or more transactions, assets or
earning power aggregating more than fifty (50%) percent of the assets or
earning power of the Company and its Subsidiaries taken as a whole,
any other Person if (x) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments outstanding
or agreements in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y) the
shareholders of the Person who constitutes, or would constitute the "Principal
Party" for purposes of Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company covenants and agrees that, after the Shares Acquisition
Date, it will not, except as permitted by Section 23 or Section 26 hereof, take
any action the purpose or effect of which is to substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, unless
such action is approved by a majority of the Continuing Directors.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date:
(i) declare a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock;
25
(ii) subdivide the outstanding shares of Common Stock; or
(iii) combine the outstanding shares of Common Stock into a smaller
number of shares,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event.
Section 12. 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
Stock a copy of each certificate; and
(c) Mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following a Shares Acquisition Date, directly or
indirectly,
(i) the Company shall consolidate with, or merge with and into, any
other Person, and the Company shall not be the continuing or surviving
corporation;
(ii) any Person shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or
26
surviving corporation and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other Person or cash or
any other property; or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power aggregating more
than fifty (50%) percent of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or Persons, then, and in
each such case (except as contemplated by Section 13(c) hereof), proper
provision shall be made so that:
(A) Each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of
this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of shares of
Common Stock for which a Right is exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of such shares of Common Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior to such
first occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by (2) fifty
(50%) percent of the current market price (determined pursuant to Section
11(d) hereof) per share of the Common Stock or other securities of such
Principal Party on the date of consummation of such Section 13 Event;
(B) Such Principal Party shall thereafter be liable for, and
shall automatically assume by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement;
27
(C) The term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the
first occurrence of a Section 13 Event;
(D) Such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof shall thereafter
be applicable, as nearly as reasonably may be, in relation to its shares of
Common Stock or other securities thereafter deliverable upon the exercise
of the Rights; and
(E) The provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
(b) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraph (a) of this Section 13 and
further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) Prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Final Expiration Date; and
(ii) Will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
28
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(c) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraphs (i) and (ii)
of Section 13(a) if
(i) such transaction is consummated with a Person or Persons who
acquired shares of Common Stock pursuant to a tender offer or exchange
offer for all outstanding shares of Common Stock which complies with the
provisions of Section 11(a)(ii)(B) hereof (or a wholly owned subsidiary of
Any such Person or Persons),
(ii) The price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender
offer or exchange offer, and
(iii) The form of consideration being offered to the remaining holders
of shares of Common Stock pursuant to such transaction is the same as the
form of consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by the Section
13(c), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(p) hereof, 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 Date 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
29
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 shares of
Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock, and in lieu thereof, 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 share of Common Stock. For purposes
of this Section 14(b), the current market value of one share of Common Stock
shall be the closing price of one share of Common Stock (as determined pursuant
to Section 11(d) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
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 Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the
30
Company to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of shares of Common Stock, and the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of the Common Stock;
(b) After the Distribution Date, 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;
(c) Subject to Section 7(e) hereof, the Company and the Rights Agent may
deem and treat the person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have
31
any such order, decree or ruling lifted or otherwise overturned as soon as
possible.
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 a share of Common Stock 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 24 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.
32
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent and its directors, officers, employees, agents and
attorneys (collectively, the "Indemnified Party") for, and to hold it and them
harmless against, any loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Indemnified Party, for
anything done or omitted by the Indemnified Party in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, 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
33
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 that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes 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) The Rights Agent shall not be deemed to have knowledge of any fact or
matter pertaining to the performance of its duties under this Agreement, except
such facts or matters as are evidenced by records which are required to be
created and maintained by it hereunder, until it shall have been advised thereof
in writing by the Company or by a holder of Rights. Whenever in the performance
of its duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact of 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 any one of the
Chairman of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
34
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own negligence, bad faith or willful misconduct.
(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 of
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 Section 11 or Section 13 hereof 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 shares of' Common Stock to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Common Stock will, when issued, be validly authorized and issued, fu11y 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 any
one of the Chairman of the Board, the President, or any Vice President, of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.
35
(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 for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided, reasonable care was exercised in the selection
and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days, notice in writing mailed to the Company and to each
transfer agent of the Common Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 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 Stock 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 his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or of the Commonwealth of
Pennsylvania (or of any other state in the United States so long as such
corporation is authorized to do business as a banking institution in the
Commonwealth of Pennsylvania), in good standing, having an office in the
Commonwealth of Pennsylvania, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
36
appointment as Rights Agent a combined capital and surplus of at least Ten
Million ($10,000,000.00) Dollars. 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 Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by the Board to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Agreement.
Section 23. Redemption and Termination.
(a) The Board may, at its option, at any time prior to the earlier of
(i) The close of business on the fifteenth (15th) day following the
Shares Acquisition Date (or, if the Shares Acquisition Date shall have
occurred prior to the Record Date, the close of business on the fifteenth
(15th) day following the Record Date); or
(ii) The Final Expiration Date, redeem all but not less than all the
then outstanding Rights at a redemption price of $.001 per Right, subject
to appropriate adjustment to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
hereinafter referred to as the "Redemption Price").
Notwithstanding the foregoing, if:
(i) A Person becomes an Acquiring Person; or
37
(ii) A change resulting from a Solicitation (as hereinafter defined)
occurs in a majority of the directors in office at the commencement of such
Solicitation,
then redemption of the Rights may only be authorized by a majority of Continuing
Directors then in office.
Notwithstanding the foregoing, if, following the occurrence of a Shares
Acquisition Date and following the expiration of the right of redemption
hereunder, but prior to any Triggering Event:
(i) A Person who is an Acquiring Person shall have transferred or
otherwise disposed of a number of shares of Common Stock in one transaction
or series of transactions, not directly or indirectly involving the Company
or any of its Subsidiaries, such that such Person is thereafter a
Beneficial Owner of five (5%) percent or less of the outstanding shares of
Common Stock; and
(ii) There are no other Persons, immediately following the occurrence
of the event described in clause (i), who are Acquiring Persons,
then the right of redemption shall be reinstated and thereafter be subject to
the provisions of this Section 23.
Notwithstanding anything contained in this Agreement to the contrary, the
Rights shall not be exercisable after the first occurrence of a Section
11(a)(ii) Event until such time as the Company's right of redemption hereunder
has expired. As used in this Section 23, the term "Solicitation" means a proxy
or consent solicitation by a Person participating in such solicitation who has
stated (or, if upon the commencement of such solicitation, a majority of the
Board of Directors of the Company has determined in good faith) that such Person
(or any of its Affiliates or Associates) intends to take, or may consider
taking, any action which would result in such Person becoming an Acquiring
Person or which would cause the occurrence of a Triggering Event, but does not
include a solicitation by any Person (or one or more of its Affiliates or
Associates) concurrent with a cash tender offer pursuant to Schedule 14D-1 (or
any successor form) filed with the Securities and Exchange Commission for all
outstanding shares of Common Stock not beneficially owned by such Person (or by
its Affiliates or Associates).
38
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been filed
with the Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
Section 24. Notice-of-Certain Events.
(a) In case the Company shall propose at any time after the Distribution
Date:
(i) To pay any dividend payable in stock of any class to the holders
of its Common Stock or to make any other distribution to the holders of its
Common Stock (other than a regular quarterly cash dividend);
(ii) To offer to all of the holders of its outstanding shares of
Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any class or any
other securities, rights or options;
(iii) To effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Common Stock);
(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 fifty
(50%) percent or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(o) hereof);
39
(v) To effect the liquidation, dissolution or winding up of the
Company; or
(vi) To declare or pay any dividend on the Common Stock payable in
shares of Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise that by
payment of dividends in Common Stock),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (i) or
(ii) above at least twenty (20) days prior to the record date for determining
holders of the Common Stock for purposes of such action, and in the case of any
other such action, at least twenty (20) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
Common Stock, whichever shall be the earlier.
(b) In case a Section 11(a)(ii) Event shall occur, then the Company shall
as soon as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of the occurrence of such event,
which notice shall describe the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demand 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:
Juniata Valley Financial Corp.
X.X. Xxx 00
Xxxxxx xxx Xxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
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
40
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:
The Juniata Valley Bank
P. 0. Box 00
Xxxxxx xxx Xxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
Attention: President
Notices or demand authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 26. Supplements and Amendments. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of shares of Common Stock for which a Right is exercisable
without the approval of a majority of the Continuing Directors. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Right Certificates in order:
(i) To cure any ambiguity;
(ii) To correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein;
(iii) To shorten or lengthen any time period hereunder (which
lengthening or shortening, following the first occurrence of any event set
forth in clauses (i) and (ii) of the first proviso to Section 23(a) hereof,
shall be effective only if there are Continuing Directors and shall require
the concurrence of a majority of such Continuing Directors); or
41
(iv) To change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right Certificates;
provided, this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence,
(A) A time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable; or
(B) Any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights.
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 26, the Rights Agent shall execute such supplement or
amendment.
Section 27. 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 28. Determinations and Actions by the Board of Directors, etc. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which-any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the Continuing Directors)
or to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to:
(i) Interpret the provisions of this Agreement; and
42
(ii) Make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem the
Rights or to amend the Agreement).
All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board (with, where specifically
provided for herein, the concurrence of the Continuing Directors) in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject the Board (or
the Continuing Directors) to any liability to the holders of the Rights.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, registered holders
of the Common Stock).
Section 30. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable present or future laws, but if any provision of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
illegal or unenforceable, in any respect under any such applicable law, such
invalidity, illegality or unenforceability will not affect the remaining
provisions of this Agreement, but this Agreement will be reformed, construed,
and enforced in such jurisdiction or by such authority as if such invalid,
illegal, or unenforceable provision had never been contained herein.
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
Commonwealth of Pennsylvania 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.
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.
43
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 date and year first above written.
ATTEST: JUNIATA VALLEY FINANCIAL
By: By:
-------------------------------- ------------------------------------
ATTEST: THE JUNIATA VALLEY BANK
By: By:
-------------------------------- ------------------------------------
EXHIBIT A
FORM OF RIGHT CERTIFICATE
Certificate No. R- Rights
NOT EXERCISABLE AFTER AUGUST 31, 2010 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
Juniata Valley Financial Corp.
This certifies that ____________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of September 1, 2000, (the
44
"Rights Agreement"), between Juniata Valley Financial Corp., a Pennsylvania
corporation (the "Company"), and The Juniata Valley Bank (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to, Mifflintown, Pennsylvania
time, on August 31, 2010 at the principal office of the Rights Agent or at the
office of its successor as Rights Agent, one fully paid non-assessable share of
Common Stock ("Common Stock") of the Company, at a purchase price of $26.25 per
share of Common Stock (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 shares
of Common Stock 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
__________ ____, ______, based on the Common Stock as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Common Stock 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 Right Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
The 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 like aggregate number of
shares of Common Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
any such Acquiring Person (as such terms are defined in the Rights
45
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such
Rights shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment may 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 shares of Common Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of Directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive 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 ______________ ___, 2000.
ATTEST: JUNIATA VALLEY FINANCIAL CORP.
By:
------------------------------------- ----------------------------------
Secretary President
46
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer Right Certificate)
FOR VALUE RECEIVED ______________________________________________________
hereby sells, assigns and transfers unto ______________________________________
(Please print name and address of transferee)
--------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: , 2000
------------------
-------------------------------------
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Right evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Associate or
Affiliate of an Acquiring Person.
Dated: , 2000.
-----------------
-------------------------------------------
Signature
Signature Guaranteed:
47
NOTICE
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.
48
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right represented
by the Right Certificate)
To: Juniata Valley Financial Corp.
The undersigned hereby irrevocably elects to
exercise __________________________ Rights represented by this Right Certificate
to purchase the shares of Common Stock issuable upon the exercise of such Rights
and requests that certificates for such shares of Common Stock be issued in the
name of:
Please insert social security
or other identifying number
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new 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: , 2000
---------------------
--------------------------------------
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.
49
Form of Reverse Side of Right Certificate -- continued
--------------------------------------------------------------------------------
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Right evidenced by this Right Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Associate or
Affiliate of an Acquiring Person.
Dated: , 2000
-------------------
--------------------------------
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
50
EXHIBIT "B"
JUNIATA VALLEY FINANCIAL CORP.
SUMMARY OF RIGHTS AGREEMENT
The following is a summary description of the Rights and the Rights
Agreement. This description does not purport to be complete, is intended to
provide a general description only, and is qualified in its entirety by the
Rights Agreement between Juniata Valley Financial Corp. and The Juniata Valley
Bank, as Rights Agent dated as of September 1, 2000. A copy of the Rights
Agreement is available free of charge from the Rights Agent.
On August 18, 2000, the Board of Directors of Juniata Valley Financial
Corp. (the "Company") declared a distribution of one Right (a "Right") for each
outstanding share of common stock, par value $1.00 per share, of the Company
(the "Common Stock") to shareholders of record at the close of business on
August 21, 2000 (the "Record Date").
Purchase Price. Each Right initially entitles the registered holder to
purchase from the Company one (1) share of Common Stock at a purchase price of
$26.25 (the "Purchase Price"), subject to adjustment as provided in the Rights
Agreement. The Purchase Price is payable in cash, certified check, cashier's
check, bank draft or money order unless the Board of Directors in its sole
discretion, permits payment of the Purchase Price in whole shares of the
Company's Common Stock having an equivalent market value.
Issuance of Separate Rights Certificates. Initially, the Rights will be
attached to all Common Stock certificates representing Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will the earlier of (i) ten (10) days following the date (the "Shares
Acquisition Date") of a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") has(10%) percent or more of such
outstanding shares of Common Stock, or (ii) ten (10) days following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning ten (10%) percent or more of such outstanding
shares of Common Stock.
Until the Distribution Date: (i) The Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after the Record Date
and
51
prior to the Distribution Date will contain a notation incorporating the Rights
Agreement by reference, and (iii) the surrender for transfer of any certificates
for Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. As soon as
practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone will
represent the Rights.
Exercise of Rights. The Rights are not exercisable until the Distribution
Date and will expire at the close of business on August 31, 2010, unless earlier
redeemed by the Company as described below.
Adjustments to Prevent Dilution. The Purchase Price and the number of
shares of Common Stock or other securities or property issuable upon exercise of
the Rights, and, in certain circumstances, the number of Rights associated with
each share of Common Stock, are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Stock, (ii) if holders of the
Common Stock are granted certain rights or warrants to subscribe for Common
Stock or convertible securities at less than the current market price of the
Common Stock, or (iii) upon the distribution to holders of the Common Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least one (1%) percent of the
Purchase Price.
The Company is not required to issue fractional shares and, in lieu
thereof, an adjustment in cash may be made based on the market price of the
Common Stock on the last trading date prior to the date of exercise.
Triggering Events
Section 11(a)(ii)Event. If (i) the Company or any Acquiring Person publicly
announces that a person has become the beneficial owner of ten (10%) percent or
more of the then outstanding shares of Common Stock (except
52
pursuant to an offer for all outstanding shares of Common Stock which the
Board of Directors determines
to be fair to and otherwise in the best interests of the Company and its
shareholders), (ii) at any time after a Shares Acquisition Date, the Company is
the surviving corporation in a merger, or the Company is the acquiring
corporation in a statutory share exchange with an Acquiring Person in which the
Common Stock of the Company is not changed or exchanged, (iii) at any time after
a Shares Acquisition Date, an Acquiring Person engages in any one of a number of
self-dealing transactions specified in the Rights Agreement, or (iv) during a
time that there is an Acquiring Person, one or more specified events occur that
result in such Acquiring Person's ownership interest in the Company being.
increased by more than one (1%) percent, the Rights Agreement provides that each
holder of a Right will thereafter have-the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the exercise price of the
Right. Any of these events are referred to as a "Section 11(a)(ii) Event."
Upon the occurrence of a Section 11(a)(ii) Event or a Section 13 Event
(described below), all Rights that are, or (under circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or certain
related parties will be null and void.
Rights are not exercisable following the occurrence of a Section 11(a)(ii)
Event or a Section 13 Event until such time as the Rights are no longer
redeemable by the Company.
For example, at an exercise price of $35.00 per Right, each Right not owned
by an Acquiring Person (or by certain related parties) following a Section
11(a)(ii) Event would entitle its holder to purchase $70.00 worth of Common
Stock (or other consideration, as noted above) for $35.00. Assuming that the
Common Stock had a per share value of $35.00 at such time, the holder of each
valid Right would be entitled to purchase two shares of Common Stock for $35.00.
The Board of Directors may, in its sole discretion, at any time after any
person becomes an Acquiring Person and the Rights become exercisable and prior
to the time that any person becomes the beneficial owner of fifty (50%) percent
or more of the Company's Common Stock, exchange all of the then
53
outstanding and exercisable Rights (except Rights which have been voided as set
forth above) for Common Stock at an exchange ratio of one share of Common Stock
per Right, subject to adjustment in accordance with the terms of the Rights
Agreement.
Section 13 Event. If at any time on or after a Shares Acquisition Date, (i)
the Company is acquired in a merger or other business combination or share
exchange transaction (other than a merger which follows a Section 11(a)(ii)
Event), or (ii) fifty (50%) percent or more of the Company's assets or earning
power is sold or transferred, then each holder of a Right (except Rights which
have been voided as set forth above) shall thereafter have the right to receive,
upon exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right. A Section 11(a)(ii) Event and a Section
13 Event are sometimes referred to as "Triggering Events."
Redemption of Rights. In general, the Company may redeem the Rights in
whole, but not in part, at a price of $.001 per Right, at any time until fifteen
(15) business days following Shares Acquisition Date. After the redemption
period has expired, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to less than five (5%) percent
of the outstanding shares of Common Stock in a transaction or series of
transactions not involving the Company. Generally, immediately upon the action
of the Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
$.001 per Right redemption price.
Under certain circumstances set forth in the Rights Agreement, the decision
to redeem and certain other decisions shall require the concurrence of a
majority of the Continuing Directors. The term "Continuing Directors" means any
member of the Board of Directors of the Company who was a member of the Board
prior to the date of the Rights Agreement, and any person who is subsequently
elected to the Board if such person is recommended or approved by a majority of
the Continuing Directors, but shall not include an Acquiring Person or an
affiliate, associate or representative of any such person.
Rights of Holders of Rights Certificates. Until a Right is exercised, the
holder thereof, as such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends. While
the distribution of the Rights will not be taxable to shareholders or to the
Company for federal income tax purposes, shareholders may, depending upon the
circumstances,
54
recognize taxable income in the event that the Rights become exercisable for
Common Stock (or other consideration) of the Company or for common stock of the
acquiring company as set forth above.
Amendment of Rights Agreement. Any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company prior to the
Distribution Date. However, no supplement or amendment may be made, without the
approval of a majority of the Continuing Directors, that changes the Redemption
Price, the Final Expiration Date or the Purchase Price or that reduces the
number of shares of Common Stock for which a Right is exercisable. From and
after the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person or any affiliate or associate of such person), or to
shorten or lengthen any time period under the Rights Agreement. However, on or
after the Distribution Date, no amendment to lengthen the time periods governing
redemption may be made at such time as the Rights are not redeemable or to
lengthen any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or benefits to, the
holders of Rights.
Filing With Securities and Exchange Commission. A copy of the Rights
Agreement has been filed with the Securities and Exchange Commission as an
Exhibit to a Registration Statement on Form 8-A dated August 29, 2000, and is
available free of charge from the Rights Agent.
55
