SECOND NATIONAL FINANCIAL CORPORATION
and
REGISTRAR AND TRANSFER COMPANY
Rights Agent
Rights Agreement
Dated as of September 10, 1998
Table of Contents
Page
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Section 1. Certain Definitions....................................................... 1
Section 2. Appointment of Rights Agent............................................... 5
Section 3. Issue of Rights and Rights Certificates................................... 5
Section 4. Form of Rights Certificates............................................... 7
Section 5. Countersignature and Registration......................................... 8
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.............................................................. 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights;
Restriction on Transfer of Rights......................................... 9
Section 8. Cancellation and Destruction of Rights Certificates....................... 11
Section 9. Reservation and Availability of Preferred Stock........................... 11
Section 10. Preferred Stock Record Date............................................... 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights.......................................................... 13
Section 12. Certificates of Adjusted Purchase Price or Number
of Shares................................................................. 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.......................................................... 20
Section 14. Fractional Rights and Fractional Shares................................... 22
Section 15. Rights of Action.......................................................... 23
Section 16. Agreement of Rights Holders............................................... 23
Section 17. Rights Certificate Holder Not Deemed a Shareholder........................ 24
Section 18. Concerning the Rights Agent............................................... 24
Page
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Section 19. Merger or Consolidation or Change of Name of
Rights Agent.............................................................. 25
Section 20. Duties of Rights Agent.................................................... 25
Section 21. Change of Rights Agent.................................................... 27
Section 22. Issuance of New Rights Certificates....................................... 28
Section 23. Redemption and Termination................................................ 28
Section 24. Exchange.................................................................. 30
Section 25. Notice of Certain Events.................................................. 31
Section 26. Notices................................................................... 31
Section 27. Supplements and Amendments................................................ 32
Section 28. Successors................................................................ 33
Section 29. Determinations and Actions by the Board of Directors, etc. ............... 33
Section 30. Benefits of this Agreement................................................ 33
Section 31. Severability.............................................................. 33
Section 32. Governing Law............................................................. 34
Section 33. Counterparts.............................................................. 34
Section 34. Descriptive Headings...................................................... 34
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
RIGHTS AGREEMENT
This Agreement, dated as of September 10, 1998 (the "Agreement"),
between SECOND NATIONAL FINANCIAL CORPORATION, a Virginia corporation (the
"Company"), and REGISTRAR AND TRANSFER COMPANY, a New Jersey corporation (the
"Rights Agent"), provides as follows:
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend distribution of one Right (as hereinafter defined) for
each outstanding share of Common Stock of the Company to shareholders of
record at the Close of Business (as hereafter defined) on the Record Date
(as hereinafter defined) and has authorized the issuance of one Right (as
such number may hereinafter be adjusted as provided herein) for each share
of Common Stock that shall be issued between the Record Date and the earliest of
the Distribution Date, the Redemption Date or the Expiration Date (as such
terms are hereinafter defined) unless the Board of Directors provides to
the contrary before or at the time of issuance of any such Common Stock,
each Right initially representing the right to purchase one Unit of Preferred
Stock, (as hereinafter defined), and being in the form of the Rights
Certificate attached hereto as Exhibit A, upon the terms and subject to the
conditions hereof (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, alone or together with all Affiliates and Associates of such
Person, shall at any time be the Beneficial Owner of any or all of
(i) 15% or more of the shares of Common Stock then outstanding,
(ii) 15% or more of the Rights then outstanding, or (iii) 15% or
more of the total voting power in an election of directors of the
Company but shall not include (a) the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan or, (b) any such Person who has become and is such a
Beneficial Owner solely because (1) of a reduction in the aggregate
number of shares of Common Stock outstanding due to a repurchase of
shares of Common Stock by the Company since the last date on which
such Person acquired Beneficial Ownership of any shares of Common
Stock or (2) it acquired such Beneficial Ownership in the good faith
belief that such acquisition would not (A) cause such Beneficial
Ownership to equal or exceed 15% of the shares of Common Stock or
Rights then outstanding or 15% or more of the total voting power in
an election of directors of the Company, and such Person relied in
good faith in computing the percentage of its Beneficial Ownership
on publicly filed reports or documents of the Company that are
inaccurate or out-of-date or (B) otherwise cause a Distribution
Date or the adjustment provided for in Section 11(a) to occur.
Notwithstanding clause (b)(2) of the preceding sentence, if any
Person that is not an Acquiring Person due to such clause (b)(2)
does not reduce its percentage of Beneficial Ownership of shares of
Common Stock to less than 15% by the Close of Business on the twentieth
Business Day after notice from the Company (the date of notice
being the first day) that such Person's Beneficial Ownership of
shares of Common Stock so equals or exceeds 15%, such Person shall, at
the end of such twenty Business Day period, become an Acquiring
Person (and such clause (b)(2) shall no longer apply to such Person).
For purposes of this definition, the determination whether any
Person acted in good faith shall be conclusively determined by the
Board of Directors of the Company, acting by a vote of those directors
of the Company whose approval would be required to redeem the Rights
under Section 23.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of,
and shall be deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's
Affiliates or Associates is deemed to "beneficially own"
within the meaning of Rule 13d-3 of the General Rules and
Regulations under the Exchange Act;
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed
to be the "Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted
for purchase or exchange or (B) securities issuable upon
exercise of the Rights.
(iii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right to vote, 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 if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy given in response
to a public proxy solicitation made pursuant to, and
in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and
(B) the beneficial ownership of such security is not also
then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iv) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (iii) of this paragraph (c)) or disposing of any
voting securities of the Company; provided, however, that
notwithstanding any provision of this Section 1(c), any Person
engaged in business as an underwriter of securities who
acquires any securities of the Company through such Person's
participation in good faith in a firm commitment
underwriting registered under the Securities Act of 1933,
as amended (the "Act"), shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," such securities until
the expiration of 40 days after the date of acquisition; and
provided, further, that in no case shall an officer or
director of the Company be deemed (x) the beneficial owner of
any securities beneficially owned by another officer or
director of the Company solely by reason of actions
undertaken by such persons in their capacity as officers or
directors of the Company; or (y) the beneficial owner of
securities held of record by the trustee of any employee
benefit plan of the Company or any Subsidiary of the Company
for the benefit of any employee of the Company or any
Subsidiary of the Company, other than the officer or
director, solely by reason of any influence that such
officer or director may have over the voting of the securities
held in the plan.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which national banking institutions in the
Commonwealth of Virginia are authorized or obligated by law or
executive order to close.
(e) "Close of Business" on any given date shall mean 5:00
P.M., Richmond, Virginia time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M.,
Richmond, Virginia time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock of the
Company, except that "Common Stock" when used with reference to any
Person other than the Company, if such Person is a corporation,
shall mean the capital stock of such Person with the greatest voting
power, or the equity securities or other equity interest in such
Person having power to control or direct the management of such
Person, or any shares of capital stock or other equity interests
into which the foregoing shall be reclassified or changed.
(g) "Continuing Director" shall mean any member of the Board
of Directors of the Company, while 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, and (i) who is a member of the Board on the
date of this Agreement or (ii) whose subsequent nomination for
election or election to the Board was recommended or approved by a
majority of the Continuing Directors serving at the time of such
nomination or election.
(h) "Distribution Date" shall mean the earlier of (i) the
Close of Business on the tenth day after the Stock Acquisition Date
(as hereinafter defined) or (ii) the Close of Business on the tenth
business day after the date that a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established
by the Company for or pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act if, upon
consummation thereof, such Person would be an Acquiring Person
(irrespective of whether any shares were actually purchased
pursuant to any such offer).
(i) "Equivalent Shares" shall mean shares of Preferred Stock
(as hereinafter defined) and any other class or series of capital
stock of the Company that is entitled to participate in dividends
and other distributions, including distributions upon the
liquidation, dissolution or winding up of the Company, on a
proportional basis with the Common Stock. In calculating the number of
any class or series of Equivalent Shares for purposes of Section 11
hereof, the number of shares, or fractions of a share, of such class
or series of capital stock that is entitled to the same dividend
or distribution as a whole share of Common Stock shall be deemed to
be one share.
(j) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement, unless
a different date is otherwise specifically provided herein.
(k) "Exchange Date" shall mean the date on which the Board of
Directors authorizes the exchange of Rights for shares of Common Stock
pursuant to Section 24 hereof.
(l) "Expiration Date" shall mean the earliest of (i) the
Close of Business on the Final Expiration Date, or (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof, or
(iii) the Exchange Date.
(m) "Final Expiration Date" shall mean September 9, 2008.
(n) "Person" shall mean any individual, firm, corporation,
partnership or other entity and any particular Person shall include any
"group" acting as described in Section 13(d)(3) of the Exchange Act.
(o) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $100 per share, of the
Company.
(p) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof, as adjusted in accordance with this Agreement
and as in effect from time to time.
(q) "Record Date" shall mean the Close of Business on
September 28, 1998.
(r) "Rights" shall mean the rights to purchase Preferred Stock
(or other securities) as provided in this Agreement and "Rights
Certificate" shall have the meaning set forth in Section 3(a) hereof.
(s) "Section 11(a)(ii) Event" shall mean any occurrence
of the event described in the first sentence of Section 11(a)(ii)
hereof.
(t) "Section 13 Event" shall mean any event described in
clause (w), (x),(y) or (z) of Section 13(a) hereof.
(u) "Stock Acquisition Date" shall mean the first date of
public announcement by the Company that an Acquiring Person has
become such.
(v) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which an amount of voting securities
sufficient to elect a majority of the directors or Persons having
similar authority of such corporation or other entity is beneficially
owned, directly or indirectly, by such Person, or otherwise controlled
by such Person.
(w) Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(x) "Unit" shall mean one one-thousandth of a share of
Preferred Stock.
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 (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be holders of Common Stock) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issue of Rights and Rights Certificates.
(a) Until the Distribution Date, (x) the Rights shall be
evidenced (subject to the provisions of paragraphs (b) and (c) of this
Section 3) by the certificates for the Common Stock registered in
the names of the holders of the Common Stock (which certificates for
Common Stock shall be deemed also to be certificates for Rights) and
not by separate certificates, and (y) the Rights shall be
transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). Subject
to the provisions of Section 7(e) hereof, as soon as practicable after
the Company has notified the Rights Agent of the occurrence of a
Distribution Date, the Rights Agent shall, at the expense of the
Company, send by first-class, insured, postage prepaid mail, to
each such record holder of shares 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, one or more rights certificates,
in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock
has been made pursuant to Section 11(n) hereof, at the time of
distribution of the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of
any fractional Rights. As of and after the Distribution Date, the
Rights shall be evidenced solely by such Rights Certificates.
(b) A Summary of Rights, in substantially the form attached
hereto as Exhibit B (the "Summary of Rights"), shall be sent by the
Company by first-class, postage prepaid mail, to each record holder of
the Common Stock on the Record Date, at the address of each such
holder shown on the records of the Company. Until the Distribution
Date, the Rights shall be evidenced by such certificates evidencing
the Common Stock, and the
registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of any
certificates evidencing shares of Common Stock in respect of which
Rights have been issued shall also constitute, subject to the
provisions of Section 7(e) hereof, the transfer of the Rights
associated with such shares of Common Stock.
(c) Unless the Board of Directors by resolution adopted at
or before the time of the issuance (including pursuant to the exercise
of rights under the Company's stock option or other benefit plans)
of any shares of Common Stock specifies to the contrary, Rights shall
be issued in respect of all shares of Common Stock that are issued
after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing shares of
Common Stock outstanding prior to the Record Date that are issued
upon transfer or exchange of such Common Stock, shall also be
deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement
between the Company and Registrar and Transfer Company (the
"Rights Agent") dated as of September 10, 1998 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will
no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights
Agreement, Rights that are owned or that were previously
owned by a Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate of an Acquiring
Person may become null and void.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone and
registered holders of Common Stock shall also be the registered holders of
the associated Rights, and the transfer of any of such certificates shall
also constitute, subject to the provisions of Section 7(e) hereof, the
transfer of the Rights associated with the Common Stock represented by such
certificates.
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 such shares of Common Stock shall be deemed canceled
and retired so that the Company shall not be entitled to exercise any Rights
associated with the shares of Common Stock that are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in Exhibit A hereto
and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto
or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be dated as of the
Distribution Date, and on their face shall entitle the holders thereof
to purchase such number of Units of Preferred Stock as shall be set
forth therein at the price set forth therein (such exercise
price per unit, being hereinafter referred to as the "Purchase
Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or to any
Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or
(B) a transfer that the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which
has a primary purpose or effect avoidance of Section 7(e) hereof,
and any Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain
(to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a person who was or became an
Acquiring Person or an Affiliate or an Associate of an
Acquiring Person. Accordingly, this Rights Certificate and
the Rights represented hereby are or may become void as
specified in Section 7(e) of the Rights Agreement.
The Company shall notify the Rights Agent, and, if such notification
is given orally, the Company shall confirm promptly the same in writing, at
such time as the Company has notice that any Person constitutes an Acquiring
Person or an Affiliate or Associate of an Acquiring Person, and until such
notice is received by the Rights Agent the Rights Agent may conclusively
presume for all purposes that the foregoing legend need be imprinted only
on Right Certificates beneficially owned by Persons that the Company has
previously identified to the Rights Agent as constituting an Acquiring
Person or an Affiliate or Associate of an Acquiring Person and transferees of
any such Persons.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Rights Certificates
shall be countersigned manually or by facsimile by the Rights
Agent and shall not be valid for any purpose unless so
countersigned. The Rights Certificates shall be countersigned by
an authorized signatory of the Rights Agent but it shall not be
necessary for the same signatory to countersign all of the Rights
Certificates issued hereunder. In case any officer of the Company
who shall have signed any of the Rights Certificates shall cease to be
such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect
as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificates
may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be
a proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Agreement any such
person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of
the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(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 Expiration Date, any Rights Certificate or Certificates may
be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, (other than Rights Certificates that
have become void pursuant to Section 7(e) hereof or that have been
exchanged pursuant to Section 24 hereof) entitling the registered
holder to purchase a like number of Units of Preferred Stock (or,
following a Triggering Event, Common Stock, other securities, cash
or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitle such holder (or former holder in
the case of a transfer) to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged at
the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer
of any such surrendered Rights Certificate until the registered
holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights
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 countersign and deliver
to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment from the holder of the Rights of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Subject to Section 7(e) hereof, upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Rights Certificate if mutilated, the Company
will execute and deliver a new Rights Certificate of like tenor to
the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights; Restriction on Transfer of Rights.
(a) Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including,
without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(ii), Section 11(a)(iii), Section 13,
Section 23(a), and Section 24 hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such
purpose, together, except as otherwise provided in Section 11(a)(ii)
hereof, with payment of the aggregate Purchase Price with respect to
the total number of Units of Preferred Stock (or Common Stock or other
securities or property, as the case may be) as to which surrendered
Rights are then exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each Unit of Preferred Stock
pursuant to the exercise of a Right shall initially be $120.00 and
shall be subject to adjustment from time to time as provided in
Section 11 hereof and shall be payable in accordance with paragraph (c)
below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per Unit of Preferred
Stock (or Common Stock, other securities or property, as the case
may be) to be purchased as set forth below and an amount equal
to any applicable transfer tax, the Rights Agent shall, subject to
Section 20(k) hereof, thereupon promptly, (i) (A) requisition from
any transfer agent of the Units of Preferred Stock (or make
available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of Units of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of Units of
Preferred Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of Units of Preferred
Stock as are to be purchased (in which case certificates for the Units
of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will
direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in
lieu of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder
of such Rights Certificate, registered in such name or names as
may be designated by such holder, and (iv) after receipt thereof,
deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. The payment of the Purchase Price
(as such amount may be reduced (including to zero) pursuant to Section
11(a)(iii) hereof) may be made in cash or by certified bank check or
bank draft payable to the order of the Company. In the event that the
Company is obligated to issue other securities of the Company, pay
cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, 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 Section 11(a)(ii)
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has
any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance
of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company shall use all
reasonable efforts to ensure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or any other Person as
a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates or Associates, or any transferee
thereof, hereunder.
(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 Rights 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 Rights
Certificates. All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered to
the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to
be reserved and kept available out of its authorized and unissued
shares of Preferred Stock (or, following the occurrence of a
Triggering Event, out of its authorized and unissued Preferred Stock
or other securities, as the case may be), the number of shares of
Preferred Stock (or such other securities) that, except as
provided in Section 11(a)(iii) hereof, will be sufficient from
time to time to permit the exercise in full of all outstanding
Rights and all Rights that are at the time issuable, in accordance
with the provisions of this Agreement.
(b) So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, any other
securities) issuable and deliverable upon the exercise of the Rights
may be listed on any national securities exchange, the Company shall
use its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance.
(c) The Company shall use its best efforts (i) to file, as
soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration
to be delivered by the Company upon exercise of the Rights has been
determined in accordance with Section 11(a)(ii) and (iii) hereof,
or as soon as is required by law following the Distribution Date,
as the case may be, a registration statement under the Act on an
appropriate form, with respect to the securities purchasable upon
exercise of the Rights, (ii) to cause such registration statement to
become effective as soon as practicable after such filing, and (iii)
to 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 Expiration Date. The
Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or "blue sky" laws
of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of
time not to exceed ninety 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 statement
and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating, and notify the
Rights Agent, that the exercisability of the Rights has been
temporarily suspended. The Company shall also issue a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of
Preferred Stock (or other securities, as the case may be) delivered
upon exercise of the Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase
Price), be duly authorized, validly issued, fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes
and charges that may be payable in respect of the issuance or delivery
of the Rights Certificates and of any certificates for shares of
Preferred Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to
pay any transfer tax that may be payable in respect of any transfer
or delivery of Rights Certificates to a Person other than, or
the issuance or delivery of a number of shares of Preferred Stock
(or other securities, as the case may be) in respect of a name other
than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or deliver any
certificates for a number of shares of Preferred Stock (or other
securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax
shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose
name any certificate for a number of Units of Preferred Stock (or other
securities, as the case may be) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of such
Units of Preferred Stock (or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date
upon which the Preferred Stock (or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on, and
such certificate shall be dated, the next succeeding Business Day on which
such transfer books are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate as such shall not be entitled to
any rights of a shareholder of the Company with respect to shares for
which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, and the number and kind of
shares covered by each Right and the number of Rights outstanding are subject
to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into
a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any
such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price
in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred
Stock or the number and kind of shares of other 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, upon payment of the
Purchase Price then in effect, the aggregate number of shares of
Preferred Stock or the number and kind of shares of other capital
stock, as the case may be, that, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs
that 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) Subject to Section 23 and Section 24 hereof, in the
event any Person becomes an Acquiring Person, then, proper provision
shall be made by the Company so that each record holder of each Right
(except as provided in Section 7(e) hereof) shall thereafter have the
right to receive, upon exercise thereof for the Purchase Price in
accordance with terms of this Agreement, such number of Units of
Preferred Stock (or, in lieu of Preferred Stock, at the option of the
Company and to the extent available, such number of shares of Common
Stock) as shall equal the result obtained by multiplying the Purchase
Price by a fraction, the numerator of which is the number of Units of
Preferred Stock for which a Right is then exercisable and the
denominator of which is 50% of the current market price of a share of
Common Stock (determined pursuant to Section 11(d) hereof) on the
date of the first occurrence of a Section 11(a)(ii) Event (such result
being hereinafter referred to as the "Adjustment Shares").
(iii) To the extent that the number of shares of Preferred
Stock that 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 is not sufficient to permit the exercise
in full of the Rights in accordance with the foregoing subparagraph
(ii) of this Section 11(a), and subject to such limitations as are
necessary to prevent a default under any agreement for money borrowed
as presently constituted to which the Company is a party and subject
to any limitations contained in Section 13.1-653 of the Virginia
Stock Corporation Act, the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), over (2) the Purchase
Price (such excess being hereinafter referred to as the "Spread"),
and (B) with respect to each Right, make adequate provision to
substitute for such unavailable Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) other equity securities of the Company, (4) debt
securities of the Company, (5) other assets, or (6) any combination
of the foregoing, having, together with the Adjustment Shares issued
upon exercise of such Right, an aggregate value equal to the Current
Value, where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a
nationally recognized 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
clause (B) above within 30 days following the first occurrence of a
Section 11(a)(ii) Event, 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 preferred stock
of the Company or Common Stock (to the extent such securities are
available) and then, if necessary, cash, which securities and/or
assets in the aggregate are 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 preferred stock of the
Company or Common Stock could be authorized for issuance upon
exercise in full of the Rights, the 30 day period set forth above
may be extended to the extent necessary, but not more than 90 days
following the first occurrence of a Section 11(a)(ii) Event, in
order that the Company may seek shareholder 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 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 date of the first occurrence of a Section 11(a)(ii) Event.
(b) If at any time after the date of this Agreement the
Company shall fix a record date for the issuance of rights, options
or warrants to all holders of Common Stock or of any class or
series of Equivalent Shares entitling such holders (for a period
expiring within 45 calendar days after such record date) to
subscribe for or to purchase Common Stock or Equivalent Shares
(or securities convertible into Common Stock or Equivalent Shares)
at a price per share (or having a conversion price per share, if a
security convertible into Common Stock or Equivalent Shares)
less than the current market price of such Common Stock or Equivalent
Shares on such record date, then, in each such case, each Right
outstanding immediately prior to such record date shall thereafter
evidence the right to purchase, for the Purchase Price, that number
of Units of Preferred Stock or Equivalent Shares obtained by
multiplying the number of Units of Preferred Stock issuable upon
exercise of a Right immediately prior to such record date by a
fraction, the numerator of which shall be the total number of
shares of Common Stock and Equivalent Shares (if any) outstanding
on such record date plus the number of additional shares of
Common Stock and Equivalent Shares (if any) to be offered for
subscription or purchase (or into which the convertible securities
so to be offered are initially convertible) and the denominator of
which shall be the total number of shares of Common Stock and
Equivalent Shares (if any) outstanding on such record date plus the
number of shares of Common Stock or Equivalent Shares, as the case
may be, that the aggregate offering price of the total number of
shares of Common Stock or Equivalent Shares, as the case may be,
so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such
current market price. In case such subscription price may be paid
in a consideration, part or all of which shall be in a form other
than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent. Common Stock and Equivalent Shares owned by or held
for the account of the Company or any Subsidiary of the Company
shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights,
options or warrants are not so issued, each Right shall be adjusted
to evidence the right to receive that number of Units of Preferred
Stock that such Right would have entitled the holder to receive,
for the Purchase Price, if such record date had not been fixed.
(c) If at any time after the date of this Agreement the
Company shall fix a record date for the making of a distribution to
all holders of Common Stock or of any class or series of Equivalent
Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of cash (other than a regular quarterly cash
dividend of the Company in compliance with Section 13.1-653 of the
Virginia Stock Corporation Act), evidences of indebtedness,
assets, securities (other than Common Stock or any Equivalent
Shares) or subscription rights, options or warrants (excluding those
referred to in Section 11(b) hereof), then, in each such case, each
Right outstanding immediately prior to such record date shall
thereafter evidence the right to purchase, for the Purchase Price,
that number of Units of Preferred Stock obtained by multiplying the
number of Units of Preferred Stock issuable upon exercise of a Right
immediately prior to such record date by a fraction, the numerator
of which shall be the current market price of a share of Common Stock
or an Equivalent Share on the record date and the denominator of
which shall be the current market price of a share of Common Stock or
an Equivalent Share on such record date less the fair market value
(as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the cash,
evidences of indebtedness, assets or securities so to be
distributed or of such subscription rights, options or warrants
applicable to a share of Common Stock or an Equivalent Share, as
the case may be. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, each Right shall be adjusted to evidence
the right to receive that number of Units of Preferred Stock that
such Right would have entitled the holder to receive, for the
Purchase Price, if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than 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 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii)
hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices
per share of such Common Stock for the ten consecutive Trading
Days immediately following such date; provided, however, that in
the event that the current market price per share of the Common
Stock is determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or distribution
on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration
of the requisite 30 Trading Day or ten Trading Day period, as set
forth above, 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 properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are listed
or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange,
the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if
on any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Common Stock selected by the Board of Directors of the Company. If on
any such date no market maker is making a market in the Common Stock,
the fair value of such shares on such date as determined in good
faith by the Board of Directors of the Company shall be used. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed
or admitted to trading is open for the transaction of business
or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Business Day. If
the Common Stock is not publicly held or not so listed or traded,
"current market price" per share shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "current market price" per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock
in Section 11(d)(i) hereof (other than the last sentence thereof).
If the current market price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock
is not publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the "current market price" per
share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1,000 (as such number may be appropriately adjusted
for such events as stock splits, stock dividends and recapitalizations
with respect to the Common Stock and Preferred Stock occurring after
the date of this Agreement) multiplied by the current market price
per share of the Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded, "current
market price" per share of the Preferred Stock shall mean the fair
value per share as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the "current market
price" of one one-thousandth of a share of Preferred Stock shall be
equal to the "current market price" of one share of Preferred Stock
divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the number of Units of Preferred Stock for which a
Right is exercisable or in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at
least one percent in such number of shares or in the Purchase Price;
provided, however, that any adjustments that 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
ten-thousandth of a Unit of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction that
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and if required, the Purchase
Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section
11(a), (b), (c), (e), (g), (h), (i), (k) and (l) hereof, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred 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 number or kind of shares purchasable
upon exercise of the Rights or to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the adjusted number of Units of Preferred Stock or other
securities 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 below in this Section 11(h), upon each adjustment of
the Purchase Price as a result of the calculations made in Section
11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the
adjusted Purchase Price, that number of Units of Preferred Stock
obtained by (i) multiplying (x) the number of Units of Preferred
Stock covered by a Right immediately prior to this adjustment by (y)
the Purchase Price in effect immediately prior to such adjustment
and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price. On
or after the date of any adjustment of the Purchase Price, in lieu
of any adjustment in the number of Units of Preferred Stock or any
other capital stock purchasable upon the exercise of a Right, the
Company may elect to adjust the number of Rights. Each of the
Rights outstanding after the adjustment in the number of Rights shall
be exercisable for the number of Units of Preferred 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 day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than
the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to
this Section 11(h), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates
on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified
in the public announcement.
(i) Irrespective of any adjustment or change in the
Purchase Price or the number of Units of Preferred Stock or the number
and kind of other securities issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Unit, the number of Units
and the other terms that were expressed in the initial Rights
Certificates issued hereunder.
(j) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after
such record date of the number of Units of Preferred Stock and other
capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of Units of Preferred
Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise before giving effect 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 (fractional or
otherwise) or securities upon the occurrence of the event requiring
such adjustment.
(k) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that in
its good faith judgment the Board of Directors of the Company shall
determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of
any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or
securities that by their terms are convertible into or exchangeable
for shares of Preferred Stock, (iv) stock dividend or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Preferred Stock shall not be
taxable to such shareholders.
(l) The Company covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) hereof), (ii) merge
with or into any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(m)
hereof), (iii) effect a statutory share exchange with any Person
(other than a Subsidiary of the Company in a transaction that complies
with Section 11(m) hereof), or (iv) sell or transfer (or permit
any Subsidiary to sell or transfer), in one transaction, or a
series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(m) hereof),
if at the time of or immediately after such consolidation, merger,
statutory share exchange or sale there are any rights, warrants or
other instruments or securities outstanding or agreements in
effect that would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(m) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably foreseeable
that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Record Date and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding 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. Certificates of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock or the Common Stock, a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section
25 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained, and shall not be
obligated or responsible for calculating any adjustment, nor shall it be deemed
to have knowledge of any such adjustment unless and until it shall have received
such a certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event that, following the Stock Acquisition
Date, directly or indirectly, (w) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary
of the Company in a transaction that complies with Section 11(m)
hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (x) any Person (other
than a Subsidiary of the Company in a transaction that complies with
Section 11(m) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the
outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash
or any other property, (y) the Company shall be a party to a
statutory share exchange with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section
11(m) hereof) after which the Company is a Subsidiary of any other
Person, or (z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person
or Persons (other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with Section
11(m) hereof), then, and in each such case, proper provision shall
be made so that: (i) each record 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, nonassessable and freely
tradeable shares of Common Stock of the Principal Party (as hereinafter
defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the
number of shares of Common Stock for which a Right (or Unit(s) of
Preferred Stock for which a Right is exercisable) 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 for which a Right (or Unit(s) of Preferred Stock for
which a Right is exercisable) 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 (2)
dividing that product (which, following the first occurrence of a
Section 13 Event, shall be referred to as the "Purchase Price" for
each Right for all purposes of this Agreement) by 50% of the current
market price (determined pursuant to Section 11(d)(i) hereof) per
share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; and (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of
a Section 13 Event; (iv) 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 ensure
that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (w), (x) or (y) of the first sentence of Section 13(a) hereof,
the Person that is the issuer of any securities into which shares of
Common Stock of the Company are converted in such merger,
consolidation or statutory share exchange, and if no securities are
so issued, the Person that is the other party to such merger,
consolidation or statutory share exchange; and (ii) in the case of
any transaction described in clause (z) of the first sentence of
Section 13(a) hereof, 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 of such Person is not at such
time and has not been continuously over the preceding twelve-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.
(c) The Company shall not consummate any such consolidation,
merger, statutory share exchange, sale or transfer unless the
Principal Party shall have a sufficient number of authorized shares
of its Common Stock that 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
paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of any consolidation,
merger, statutory share exchange 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 on an appropriate form 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 Expiration Date
and similarly comply with applicable state securities laws; and
(ii) deliver to record holders of the Rights
historical financial statements for the Principal Party and each of
its Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or statutory share exchanges
or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights that have not theretofore been
exercised shall thereafter become exercisable in the manner described
in Section 13(a) hereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions
of Rights, except prior to the Distribution Date as provided in
Section 11(n) hereof, or to distribute Rights Certificates that
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Right. For purposes of this
Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price,
or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company.
If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral
multiples of one one-thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates that evidence
fractional shares of Preferred Stock (other than in such integral
multiples). In lieu of fractional shares of Preferred Stock that are
not in such integral multiples, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of
the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the current
market value of one one-thousandth of a share of Preferred Stock
shall be one one-thousandth of the current market price of a share
of Preferred 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 Right or any
fractional shares upon exercise of a Right, except as permitted by
this Section 14.
Section 15. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock in respect of which Rights have been issued); and any
registered holder of any Rights Certificate (or, prior to the Distribution
Date, of such Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
such 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
Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against
actual or threatened violations of the obligations hereunder of any Person
subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied by
a proper instrument of transfer and with the appropriate forms and
certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name a Rights 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 Rights
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, subject to the last sentence of
Section 7(e) hereof, nor the Rights Agent shall be required to 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 any
such order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of Units of
Preferred Stock or any other securities of the Company that may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in
Section 25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. 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 disbursements and other disbursements
incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent, its directors, officers,
employees and agents, for, and to hold each of them harmless against,
any loss, liability, or expense incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent or other
such indemnified party, for anything done or omitted by the Rights
Agent or such other indemnified party in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in the
premises.
(b) The Rights Agent may conclusively rely upon, and shall
be fully 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 or the exercise or performance of its
duties hereunder in reliance upon any Rights 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, instruction,
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.
The indemnity provided in this Section 18 shall survive the expiration
of the Rights, the termination of the Agreement and the resignation or removal
of the Rights Plan.
Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate
trust 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, however, 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 Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have
been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in the
name of the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificates shall
have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its
prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting,
the Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the written advice or opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such written advice or opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of
any Acquiring Person and the determination of "current market
price") be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, any Vice Chairman,
the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder 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 Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates),
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 any provision of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant
or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment provided for in this
Agreement or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after actual
notice of any such adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization
or reservation of any shares of Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Preferred Stock will, when so issued, be duly
authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, any Vice Chairman,
the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer, or for any delay in
acting while awaiting instructions. At any time the Rights Agent
may apply to the Company for written instructions with respect to
any matter arising in connection with the Rights Agent's duties and
obligations arising under this Agreement. Such application by the
Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent with respect to its
duties or obligations under this Agreement and the date on and/or
after which such action shall be taken and the Rights Agent shall
not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the date
specified therein (which date shall be not less than one Business Day
after the Company receives such application, without the Company's
consent) unless, prior to taking or initiating any such action, the
Rights Agent has received written instructions in response to such
application specifying the action to be taken or omitted. The Rights
Agent shall not be required to take notice or be deemed to have notice
of any fact, event or determination (including, without limitation,
any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate or Associate) under
this Agreement unless and until the Rights Agent shall be specifically
notified in writing by the Company of such fact, event or
determination.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company.
(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, as long as the Rights Agent was not negligent
in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds
for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase,
as the case may be, has either not been completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested
exercise of transfer without first consulting with the Company.
(l) The Rights Agent undertakes only the express duties and
obligations imposed on it by this Agreement and no implied duties or
obligations shall be read into this Agreement against the Rights
Agent.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock or Common Stock, by registered or
certified mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Stock or Common Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company
shall fail to make such appointment within a period of 30 days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the
United States or of the Commonwealth of Virginia (or of any other state of the
United States so long as such corporation is authorized to do business in the
Commonwealth of Virginia), in good standing, and authorized under all
applicable laws to fulfill the duties of a rights agent. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent
of the Common Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, the Company may, if deemed necessary or appropriate
by the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with the
issuance or sale of shares of Common Stock following the Distribution Date.
Section 23. Redemption and Termination.
(a) (i) The Company may, at its option, at any time prior
to the earlier of (A) the Close of Business on the tenth day following
the Stock Acquisition Date, or (B) the Final Expiration Date, redeem
all but not less than all the then outstanding Rights (which shall
not include any rights that have become void pursuant to Section
7(e) hereof) at a redemption price of $.01 per Right, as it may be
appropriately adjusted by the Board of Directors of the Company
to reflect any stock split or combination, stock dividend or
similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price") and the Company may, at its option, pay the Redemption Price
either in shares of Common Stock (based on the current market price
(as determined pursuant to Section 11(d) hereof) per share of the
Common Stock at the time of redemption) or cash; provided, however,
that if the Board of Directors of the Company authorizes redemption of
the Rights in either of the circumstances set forth in clauses (x)
and (y) below, then there must be Continuing Directors in office
and such authorization shall require the concurrence of a
majority of such Continuing Directors: (x) such authorization
occurs on or after the date a Person becomes an Acquiring Person, or
(y) such authorization occurs on or after the date of a change
(resulting from a proxy solicitation) in a majority of the directors
in office at the commencement of such solicitation if any Person who
is a participant in such solicitation has stated (or, if upon the
commencement of such solicitation, a majority of the Board of
Directors of the Company has determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take, or
may consider taking, any action that would result in such Person
becoming an Acquiring Person or that would cause the occurrence of
a Triggering Event.
(ii) In addition, if there are Continuing
Directors then in office, the Board of Directors may redeem all but
not less than all of the then outstanding Rights at the Redemption
Price with the concurrence of a majority of such Continuing
Directors, following the occurrence of a Stock Acquisition Date and
following the expiration of the right of redemption under clause
(i) above, if either (A) (1) 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 a 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 less than 10% of the outstanding shares of Common Stock and
(2) there are no other Persons, immediately following the occurrence
of the event described in clause (1), who are Acquiring Persons, or
(B) in connection with the type of transaction specified in Section
13(a) hereof in which all holders of Common Stock are treated alike
and not involving an Acquiring Person or an Affiliate or Associate
of an Acquiring Person or any other Person in which such Acquiring
Person, Affiliate or Associate has any interest, or any other
Person acting directly or indirectly on behalf of or in
association with any such Acquiring Person, Affiliate or Associate.
Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Triggering Event until such time as the Company's
right of redemption under clause (i) above is not exercisable.
(b) Immediately upon the action of the Board of Directors
of the Company authorizing the redemption of the Rights pursuant
to subsection (a) of this Section 23 and without any further action
and without any notice, the right to exercise the Rights shall
terminate and the only right thereafter of a holder of such Rights
shall be to receive the Redemption Price for each Right so held.
Promptly after the action of the Board of Directors authorizing the
redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and to the holders of such 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 that is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption shall
state the method by which the payment of the Redemption Price will be
effected.
Section 24. Exchange.
(a) The Company may, at its option, by resolution of
its Board of Directors, at any time (including a time after any
Person becomes an Acquiring Person), exchange all or part of the
then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to Section 7(e) hereof) for
shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring with
respect to the Common Stock after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio");
provided, however, under the circumstances described in the
proviso to Section 23(a)(i) hereof, an Exchange shall be
effective only if there are Continuing Directors and shall require
the concurrence of a majority of such Continuing Directors.
(b) Immediately upon the action of the Board of Directors
of the Company authorizing the exchange of the Rights pursuant to
subsection (a) of this Section 24 and without any further action and
without any notice, the right to exercise the Rights will terminate
and the only right thereafter of a holder of such Rights shall be to
receive that number of shares of Common Stock equal to the number of
Rights held by such holder multiplied by the Exchange Ratio.
Promptly after the action of the Board of Directors authorizing the
exchange of the Rights, the Company shall give notice of such exchange
to the Rights Agent and to the holders of such 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 that is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by
which the exchange of the shares of Common Stock for Rights will be
effected.
(c) In the event that there shall not be sufficient
shares of Common Stock authorized but unissued to permit the
exchange in full of such Rights in accordance with this Section 24,
the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock for issuance upon
exchange of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary to
authorize such additional shares of Common Stock, the Company
shall substitute, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of shares of
other equity securities of the Company or fraction thereof such that
the current per share market price of one share of such other
equity securities multiplied by such number or fraction is equal to
the current per share market price of one share of Common Stock as of
the date of issuance of such shares of such other equity securities or
fraction thereof.
(d) The Company shall not be required to issue fractions
of shares of Common Stock or to distribute certificates that
evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, there shall be paid to the
registered holders of the Right Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable,
an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this
subsection (d), the current market value of a whole share of Common
Stock shall be the closing price of a share of Common Stock (as
determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the Exchange Date.
Section 25. 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 Preferred Stock or to make any other
distribution to the holders of Preferred Stock (other than a
regular quarterly cash dividend of the Company in compliance with
Section 13.1-653 of the Virginia Stock Corporation Act), or (ii) to
offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock
or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction that complies with
Section 11(m) hereof), or to effect a statutory share exchange
with any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) hereof), or to effect
any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than a
Subsidiary of the Company in one or more transactions each of which
complies with Section 11(m) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the
Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger,
statutory share exchange, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above
at least 20 days prior to the record date for determining holders of
the shares of Preferred Stock for purposes of such action, and in the
case of any such other action, at least 20 days prior to the date of
the taking of such proposed action or the date of participation
therein by the holders of the shares of Preferred Stock whichever shall
be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then,
in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of
the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer, if appropriate,
not only to Preferred Stock but also to Common Stock or other
securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sent by registered or
certified mail and shall be deemed given upon receipt if addressed (until
another address is filed in writing with the Rights Agent) as follows:
Second National Financial Corporation
000 X. Xxxx Xxxxxx
P. O. Xxx 00
Xxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sent
by registered or certified mail and shall be deemed given upon receipt if
addressed (until another address is filed in writing with the Company) as
follows:
Registrar and Transfer Company
00 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President - Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this Section
27, the Company may, and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval
of any holders of certificates representing shares of Common Stock. From and
after the Distribution Date and subject to the penultimate sentence of this
Section 27, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein that may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder (which lengthening or shortening, under the
circumstances described in the proviso to Section 23(a)(i) hereof, shall be
effective only if there are Continuing Directors and shall require the
concurrence of a majority of such Continuing Directors), or (iv) to change or
supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable and that shall not adversely affect the interests of
the holders of Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, that this
Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights
may be redeemed at such time as the Rights are not then redeemable, or (B)
any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company that states that the proposed supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock. No supplement or amendment shall be
made that changes the Redemption Price, the Final Expiration Date, the
Purchase Price or the number of shares of Common Stock for which a Right is
exercisable; provided, however, that at any time prior to the Distribution
Date, the Board of Directors of the Company may amend this Agreement to
increase the Purchase Price or extend the Final Expiration Date. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or
amendment that changes the rights or duties of the Rights Agent under this
Agreement shall be effective against the Rights Agent without the execution of
such supplement or amendment by the Rights Agent.
Section 28. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. 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 (and, where specifically provided for herein, the Continuing
Directors) shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board, or the Company (or, where specifically provided for herein, the
Continuing Directors), or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration
of this Agreement (including, without limitation, a determination to
redeem or not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are
done or made by the Board (or, where specifically provided for herein, by
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 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company,
the Rights Agent, the registered holders from time to time of the Rights
Certificates (and, prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of
the Company and the Persons specified above.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement
would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth day following the date of such
determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the Commonwealth of Virginia and for all purposes shall be
governed by and construed in accordance with the laws of such Commonwealth
applicable to contracts made and to be performed entirely within such
Commonwealth, except the rights and obligations of the Rights Agent, which
shall be governed by and construed in accordance with the laws of the State of
New Jersey.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
SECOND NATIONAL FINANCIAL CORPORATION
By:_________________________________________
O. R. Xxxxxx, Jr.
President & Chief Executive Officer
REGISTRAR AND TRANSFER COMPANY,
as Rights Agent
By:_________________________________________
Xxxxxxx Tatler
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER SEPTEMBER 9, 2008, OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE COMPANY, AT ITS OPTION, MAY REDEEM THE RIGHTS EVIDENCED BY THIS
CERTIFICATE AT A REDEMPTION PRICE OF $.01 PER RIGHT OR EXCHANGE THE RIGHTS FOR
SHARES OF COMMON STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH
TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS ARE OR MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON.
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE OR
MAY BECOME VOID AS SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
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 10, 1998 (the
"Rights Agreement"), between Second National Financial Corporation, a
Virginia corporation (the "Company"), and Registrar and Transfer Company, a New
Jersey corporation (the "Rights Agent"), to purchase from the Company at any
time prior to 5:00 P.M. (Richmond, Virginia time) on September 9, 2008 at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-thousandth of a fully paid,
non-assessable share (a "Unit") of Series A Junior Participating Preferred
Stock (the "Preferred Stock") or other securities of the Company, at a
purchase price of $_______ per Unit (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate duly executed. (All capitalized terms not defined
herein shall have the meaning set forth in the Rights Agreement.) The
Purchase Price may be paid in cash or by certified bank check or bank draft
payable to the order of the Company. The number of Rights evidenced by this
Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set
forth above, are the number and Purchase Price as of __________ __, [199_],
based on the Preferred Stock as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities that may be
purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Under certain circumstances
specified in Section 7(e) of the Rights Agreement, Rights that are or were
owned by an Acquiring Person or an Affiliate or Associate of an Acquiring
Person may become null and void and no longer exercisable by any Person
(including any subsequent transferee). Copies of the Rights Agreement are on
file at the above-mentioned office of the Rights Agent and are also available
upon written request to the Rights Agent or the Secretary of the Corporation.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of Units of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered then entitle such holder to purchase. If this Rights
Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Company, at
its option, may redeem the Rights evidenced by this Certificate at a
redemption price of $.01 per Right or exchange the Rights for shares of Common
Stock.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions that
are integral multiples of one one-thousandth of a share of Preferred Stock),
but in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting shareholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
this Rights Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the Company
and its corporate seal.
Dated as of ___________ __, ______
[SEAL]
ATTEST:
SECOND NATIONAL FINANCIAL CORPORATION
By:____________________________
Secretary
Countersigned:
REGISTRAR AND TRANSFER COMPANY
By:____________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_________________________ Attorney, to transfer the within Rights Certificate
on the books of the within-named Company, with full power of substitution.
Dated: ___________,_____
________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights 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 Rights
evidenced by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _______________ , ____ ____________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: SECOND NATIONAL FINANCIAL CORPORATION:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person that may be issuable upon
the exercise of the Rights) and requests that certificates for such shares
(or other securities) be issued in the name of and delivered to:
Please insert social security or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
(Please print name and address)
Date: _______________, ____
____________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of 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 Rights evidenced by this Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_______________, _____ _______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
EXHIBIT B
On September 10, 1998, the Board of Directors of Second
National Financial Corporation, a corporation organized under the laws of
Virginia (the "Company"), approved a Rights Agreement, dated as of and to be
effective on September 10, 1998 (the "Rights Agreement") between the
Company and Registrar and Transfer Company, as Rights Agent, having the
principal terms summarized below. In accordance with the Rights Agreement, the
Board also declared a dividend distribution of one Right for each
outstanding share of common stock (the "Common Stock") of the Company to
shareholders of record at the Close of Business on September 28, 1998 (the
"Record Date").
Each Right entitles the registered holder to purchase from
the Company one one-thousandth of a share of the Company's Series A
Junior Participating Preferred Stock ("Preferred Stock"). Each one
one-thousandth of a share (a "Unit") of Preferred Stock is structured to be
the equivalent of one share of Common Stock of the Company ("Common Stock").
Shareholders will receive one Right per share of Common Stock held of record
at the Close of Business on the Record Date. The exercise price of each Right
will be $120.00 subject to adjustment (the "Purchase Price"). Rights owned
by any Acquiring Person, as defined below, or by persons who have acquired
Rights from an Acquiring Person, are not exercisable, with certain exceptions.
Rights will also attach to shares of Common Stock issued
after the Record Date but prior to the Distribution Date unless the Board of
Directors determines otherwise at the time of issuance. The description and
terms of the Rights are set forth in the Rights Agreement.
The Rights will be evidenced by Common Stock
certificates, and no separate certificates evidencing the Rights (the
"Rights Certificates") will be distributed unless there is a Distribution
Date, described below. The Rights will separate from the Common Stock and a
distribution of the Rights Certificates will occur on a date (the
"Distribution Date") that is the earlier of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of Common
Stock (the "Stock Acquisition Date"), or (ii) 10 business days following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially becoming an Acquiring Person. Until the Distribution
Date, (i) the Rights will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock certificates, (ii)
any Common Stock certificates issued 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
certificates.
The Rights are not exercisable until the Distribution
Date and will expire at the Close of Business on September 9, 2008, unless
earlier redeemed or exchanged by the Company as described below. 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 such separate Rights Certificates alone
will represent the Rights.
While each Right will initially provide for the acquisition
of one Unit of Preferred Stock at the Purchase Price, the Rights Agreement
provides that if any person becomes an Acquiring Person, proper provision
shall be made so that each holder of a Right (except as described below) will
thereafter have the right to receive, upon exercise and payment of the
Purchase Price, Preferred Stock or, at the option of the Company, Common
Stock (or, in certain circumstances, cash, property or other securities of
the Company) having a value equal to twice the amount of the Purchase Price.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger, statutory share
exchange, or other business combination in which the Company is not the
surviving corporation, or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except as described
below) shall thereafter have the right to receive, upon exercise and
payment of the Purchase Price, common stock of the acquiring company having
a value equal to twice the Purchase Price. The events set forth in this
paragraph and in the immediately preceding paragraph are referred to as the
"Triggering Events." If there is a Triggering Event, Rights that are or were
owned by the Acquiring Person, or any affiliate or associates of such
Acquiring Person, on or after such Acquiring Person's Stock Acquisition Date
shall be null and void and shall not thereafter be exercised by any person
(including subsequent transferees).
The Purchase Price payable, and the number of shares of
Preferred Stock, Common Stock or other securities or property issuable upon
exercise of the Rights are subject to adjustment from time to time to
prevent dilution.
At any time (including a time after any person becomes an
Acquiring Person), the Company may exchange all or part of the Rights (except
as set forth below) for shares of Common Stock (an "Exchange") at an exchange
ratio of one share per Right, as appropriately adjusted to reflect any
stock split or similar transaction.
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). Under certain
circumstances set forth in the Rights Agreement, the decision to make an
Exchange or to redeem the Rights shall require the concurrence of a majority of
the Continuing Directors (as defined below). Additionally, the Company may
thereafter but prior to the occurrence of a Triggering Event redeem the Rights
in whole, but not in part, at the Redemption Price provided that such
redemption is incidental to a merger or other business combination
transaction involving the Company that is approved by a majority of the
Continuing Directors, does not involve an Acquiring Person, and in which all
holders of Common Stock are treated alike. 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 10% of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company. Immediately upon the action of the Board ordering
redemption of the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
The term "Continuing Directors" means any members of the
Board who was a member of the Board immediately before the adoption 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 does not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution
of the rights will not be taxable to shareholders or to the Company,
shareholders may, depending on the circumstances, recognize taxable income
in the event that the Rights become exercisable for Preferred Stock (or other
consideration) of the Company or for common stock of the acquiring company as
set forth above.
Other than certain provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights Agreement
may be amended by the Board prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by
the Board (in certain circumstances, only with the concurrence of the
Continuing Directors) in order to cure any ambiguity, to make certain other
changes that do not adversely affect the interests of holders of Rights
(excluding the interest of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, no amendment to
adjust the time period governing redemption may be made during the time that the
Rights are not redeemable.
