RIGHTS AGREEMENT
dated as of October 15, 1997
by and between
Progressive Bank, Inc.
and
Registrar and Transfer Company
as Rights Agent
SHAREHOLDER RIGHTS AGREEMENT
Table of Contents
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions. . . . . . . . . . . . . . 1
ARTICLE II
THE RIGHTS
Section 2.1 Summary of Rights. . . . . . . . . . . . . . . 4
Section 2.2 Legend on Common Stock Certificates. . . . . . 4
Section 2.3 Exercise of Rights; Separation of Rights . . . 5
Section 2.4 Adjustments to Exercise Price; Number
of Rights. . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Date on Which Exercise is Effective. . . . . . 7
Section 2.6 Execution, Authentication, Delivery and
Dating of Rights Certificates. . . . . . . . . 7
Section 2.7 Registration, Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . 7
Section 2.8 Mutilated, Destroyed, Lost and Stolen Rights
Certificates . . . . . . . . . . . . . . . . . 8
Section 2.9 Persons Deemed Owners. . . . . . . . . . . . . 8
Section 2.10 Delivery and Cancellation of Certificates . . 9
Section 2.11 Agreement of Rights Holders. . . . . . . . . . 9
ARTICLE III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF
CERTAIN TRANSACTIONS
Section 3.1 Distribution Date. . . . . . . . . . . . . . . 9
Section 3.2 Flip-over. . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
THE RIGHTS AGENT
Section 4.1 General. . . . . . . . . . . . . . . . . . . . 11
Section 4.2 Merger or Consolidation or Change of Name
of Rights Agent. . . . . . . . . . . . . . . . 11
Section 4.3 Duties of Rights Agent . . . . . . . . . . . . 12
Section 4.4 Change of Rights Agent . . . . . . . . . . . . 13
ARTICLE V
MISCELLANEOUS
Page
Section 5.1 Redemption . . . . . . . . . . . . . . . . . . 14
Section 5.2 Expiration . . . . . . . . . . . . . . . . . . 14
Section 5.3 Issuance of New Rights Certificates. . . . . . 14
Section 5.4 Supplements and Amendments . . . . . . . . . . 14
Section 5.5 Fractional Shares. . . . . . . . . . . . . . . 14
Section 5.6 Rights of Action . . . . . . . . . . . . . . . 14
Section 5.7 Holder of Rights Not Deemed a Shareholder. . . 15
Section 5.8 Notice of Proposed Actions . . . . . . . . . . 15
Section 5.9 Notices. . . . . . . . . . . . . . . . . . . . 15
Section 5.10 Suspension of Exercisability. . . . . . . . . 16
Section 5.11 Costs of Enforcement. . . . . . . . . . . . . 16
Section 5.12 Successors. . . . . . . . . . . . . . . . . . 16
Section 5.13 Benefits of this Agreement. . . . . . . . . . 16
Section 5.14 Descriptive Headings. . . . . . . . . . . . . 16
Section 5.15 Governing Law . . . . . . . . . . . . . . . . 16
Section 5.16 Counterparts. . . . . . . . . . . . . . . . . 16
Section 5.17 Severability. . . . . . . . . . . . . . . . . 16
EXHIBITS
Exhibit A Form of Rights Certificate (Together with Form of
Election to Exercise)
Exhibit B Form of Certificate of Designations Establishing
Series of Shares of Participating Junior Preferred
Stock
RIGHTS AGREEMENT
This Rights Agreement ("Agreement") is made and entered
into as of the 15th day of October, 1997 by and between
Progressive Bank, Inc., a New York corporation (the "Company"),
and Registrar and Transfer Company, a New York corporation (the
"Rights Agent").
WHEREAS, the Board of Directors of the Company has
authorized and declared a dividend of one right (the "Right") in
respect of each share of Common Stock (as hereinafter defined)
of the Company outstanding as of the close of business on
October 15, 1997 (the "Record Time") and authorized the issuance
of one Right in respect of each share of Common Stock issued
after the Record Time and prior to the Separation Time (as
hereinafter defined);
WHEREAS, each Right entitles the holder thereof, after the
Separation Date, to purchase securities of the Company (or, in
certain cases, of certain other entities) pursuant to the terms
and subject to the conditions set forth herein; and
WHEREAS, in connection with the matters referred to
herein, the Company desires to appoint the Rights Agent to act
on behalf of the Company for the benefit of the holders of
Rights, and the Rights Agent is willing so to act;
NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual agreements set forth herein, and for the benefit
of the holders of the Rights, the parties hereto hereby agree as
follows:
ARTICLE I - CERTAIN DEFINITIONS
-------------------------------
1.1 Certain Definitions. For purposes of this Agreement,
the following terms have the meaning indicated:
"Acquiring Person" shall mean any Person who is a
Beneficial Owner of 20% or more of the outstanding shares of
Common Stock; provided, however, that the term "Acquiring
Person" shall not include (i) any Person who shall become the
Beneficial Owner of 20% or more of the outstanding shares of
Common Stock solely as a result of an acquisition by the Company
of shares of Common Stock, until such time thereafter as such
Person shall become the Beneficial Owner (other than by means of
a stock dividend or stock split) of any additional shares of
Common Stock; or (ii) any Person who shall become the Beneficial
Owner of 20% or more of the outstanding shares of the Common
Stock solely as a result of purchasing the Common Stock directly
from the Company pursuant to a written agreement with the
Company.
"Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under
the Securities Exchange Act of 1934 ("Exchange Act"), as in
effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "Beneficially Own":
(i) any securities which such Person or any of
such Person's Affiliates or Associates beneficially owns,
directly or indirectly, for purposes of Section 13(d) of
the Exchange Act or Rule 13d-3 promulgated thereunder (or
any comparable or successor law or regulation), in each
case as in effect on the date hereof;
(ii) any securities which such Person or any of
such Person's Affiliates or Associates has the right to
acquire (whether such right is exercisable immediately, or
only after the passage of time, compliance with regulatory
requirements, the fulfillment of a condition, or
otherwise) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants
or options, or otherwise, provided that a Person shall not
under this clause (ii) be deemed the Beneficial Owner of,
or to Beneficially Own, securities tendered pursuant to a
tender offer or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange;
(iii) any securities which such Person or any such
Person's Affiliates or Associates has the right to vote,
alone or in concert with others, pursuant to any
agreement, arrangement or understanding, provided that a
Person shall not under this clause (iii) be deemed the
Beneficial Owner of, or to Beneficially Own, any security
if the agreement, arrangement or understanding to vote
such security (A) arises solely from a revocable proxy
given to such Person or any of such Person's Affiliates or
Associates in response to a public proxy solicitation made
pursuant to and in accordance with the applicable rules
and regulations of the Exchange Act, and (B) is not also
then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report);
(iv) any securities which are owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (other than voting pursuant to
a revocable proxy as described in the proviso to clause
(iii) hereof) or disposing of any securities of the
Company; and
(v) on any day on or after a Distribution Date,
all Rights that prior to such date were represented by
certificates for Common Stock that such Person owns on
such day.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order
to close.
"Close of Business" on any given date shall mean 5:00
p.m., New York time, on such date; provided, however, that if
such date is not a Business Day, it shall mean 5:00 p.m., New
York time, on the next succeeding Business Day.
"Common Stock" shall mean one share of Common Stock, par
value $1.00 per share, of the Company.
"Distribution Date" shall mean the first date of public
announcement by the Company (by any means) or by an Acquiring
Person (by means of filing a Schedule 13D under the Exchange Act
or any comparable or successor report or schedule or an
amendment thereto) that an Acquiring Person has become such.
"Exercise Price" shall mean, as of any date, the price at
which a holder may purchase the securities issuable upon
exercise of one whole Right. Until adjustment thereof in
accordance with the terms hereof, the Exercise Price shall equal
$100.00.
"Expiration Date" shall mean the earlier of (i) the date
of the Redemption Time or (ii) the close of business on October
15, 2007.
"Flip-over Stock" of any Person shall mean the capital
stock (or similar equity interest) with the greatest voting
power in respect of the election of directors (or other Persons
similarly responsible for the direction of the business and
affairs) of such Person or, if such other Person is a Subsidiary
of another Person, the Person or Persons which ultimately
controls such first-mentioned Person.
"Flip-over Transaction or Event" shall mean a transaction
or series of transactions in which, directly or indirectly, (i)
the Company shall consolidate with or merge with or into an
Acquiring Person, or any other Person acting together in any
respect with such Person, or an Acquiring Person or any other
Person acting together in any respect with such Person shall
merge with or into the Company, (ii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer) assets (A) aggregating more than 50%
of the assets (measured by either book value or fair market
value) or (B) generating more than 50% of the operating income
or cash flow, of the Company and its Subsidiaries (taken as a
whole) to an Acquiring Person or any other Person acting
together in any respect with such Person (provided that for
purposes of clauses (i) and (ii), but without limitation, a
Person shall be deemed to be acting together in any respect with
an Acquiring Person if such Person enters into any transaction
of the type described in clause (i) or (ii) within one year
after the time the Acquiring Person has become such, unless (x)
such transaction was
2
initiated by the Company and (y) the Acquiring Person or any
Person acting together in any respect with such Person has not
acquired control of the Board of Directors of the Company), (iii)
any Acquiring Person shall (A) sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of,
to, from, or with, as the case may be, the Company or any of its
Subsidiaries, over any period of 12 consecutive calendar months,
assets or liabilities (x) having an aggregate fair market value
of more than $90,000,000 or (y) on terms and conditions less
favorable to the Company than the Company would be able to obtain
through arm's-length negotiations with an unaffiliated third
party, (B) receive any compensation for services from the Company
or any of its Subsidiaries, other than compensation for full-time
employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (C) receive
the benefit, directly or indirectly (except proportionately as a
shareholder), over any period of 12 consecutive calendar months,
of any loans, advances, guarantees, pledges, insurance,
reinsurance or other financial assistance or any tax credits or
other tax advantage provided by the Company or any of its
Subsidiaries involving an aggregate principal amount in excess of
$10,000,000 or an aggregate cost or transfer of benefits from the
Company or any of its Subsidiaries in excess of $10,000,000 or,
in any case, on terms and conditions less favorable to the
Company than the Company would be able to obtain through arm's
length negotiations with a third party, or (iv) as a result of
any reclassification of securities (including any reverse stock
split), or recapitalization, of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any
other transaction or series of transactions (whether or not with
or into or otherwise involving an Acquiring Person), the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Company or any of its
Subsidiaries which is directly or indirectly owned by any
Acquiring Person is increased by more than 1%. The terms
"Acquiring Person" shall include any Acquiring Person and its
Affiliates and Associates (other than the Company, a wholly
owned Subsidiary of the Company or any employee stock ownership
or other employee benefit plan of the Company or a wholly owned
Subsidiary of the Company), counted together as a single Person.
"Junior Preferred Stock" shall mean the series of Series A
Junior Participating Preferred Stock, par value $1.00 per share,
of the Company created by a Certificate of Designations,
Relative Rights, Preferences and Limitations in substantially
the form set forth in Exhibit B hereto appropriately completed.
"Market Price" per share of any security on any date (the
"Determination Date") shall mean the arithmetic average of the
daily closing prices per share of such security (determined as
described below) on each of the 20 consecutive Trading Days
through and including the Trading Day immediately preceding the
Determination Date; provided, however, that if an event of a
type analogous to any of the events described in Section 2.4
hereof shall have caused the closing price on one or more
Trading Days during such period of 20 Trading Days not to be
fully comparable with the closing price on the Determination
Date, each such closing price so used shall be appropriately
adjusted in order to make it fully comparable with the closing
price on the Determination Date. The closing price per share of
any security on any date shall be the last reported sale price,
regular way, or, in case no such sale takes place or is reported
on such date, the average of the closing bid and asked prices,
regular way, for such security, 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, Inc. or, if such security is not listed or
admitted to trading on the New York Stock Exchange, Inc., as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which such security is listed or
admitted to trading or, if such security is not listed or
admitted to trading on any national securities exchange, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other self-
regulatory organization or registered securities information
processor (as such terms are used under the Exchange Act) as
then reports trading information concerning such security, or,
if on any such date such security is not listed or admitted to
trading on any national securities exchange or quoted by any
such organization, the average of the closing bid and asked
prices as furnished by any registered securities dealer that is
a market maker (as such term is used under the Exchange Act) in
such security and which is selected by the Board of Directors of
the Company; provided, however, that if on any such date such
security is not listed or admitted to trading on a national
securities exchange or traded in the over-the-counter market,
the closing price of such security on such date shall mean the
fair value of such security on such date as determined in good
faith by the Board of Directors of the Company, after
consultation with a nationally recognized investment banking
firm, and set forth in a certificate delivered to the Rights
Agent.
3
"Person" shall mean any individual, firm, partnership,
association, group (as such term is used in Rule 13d-5 under the
Exchange Act, as such Rule is in effect on the date of this
Agreement), corporation or other entity.
"Redemption Price" shall mean an amount (calculated to the
nearest one one-hundredth of a cent) equal to the Exercise
Price, as in effect at the Redemption Time, divided by 10,000
(i.e., initially $0.01).
"Redemption Time" shall mean the time at which the right
to exercise the Rights shall terminate pursuant to Section 5.1
hereof.
"Separation Time" shall mean the close of business on the
earlier of (i) the later of (A) the tenth day, after the date on
which any Person (other than the Company, a majority-owned
Subsidiary of the Company or an employee stock ownership or
other employee benefit plan of the Company or a majority-owned
Subsidiary of the Company) commences a tender or exchange offer
which, if consummated, would result in such Person's becoming an
Acquiring Person and (B) such later date as the Board of
Directors of the Company may from time to time fix by resolution
adopted prior to the Separation Time and (ii) the Distribution
Date; provided that, if the foregoing results in the Separation
Time being prior to the Record Time, the Separation Time shall
be the Record Time and provided further that, if any tender or
exchange offer referred to in clause (i) of this definition is
canceled, terminated or otherwise withdrawn prior to the
Separation Time, such offer shall be deemed, for purposes of
this definition, never to have been made.
"Subsidiary" of any Person shall mean any corporation or
other entity of which equity securities or equity interests
representing a majority of the voting power are owned, directly
or indirectly, or which is effectively controlled, by such
Person.
"Trading Day" shall mean, as to any stock or other
security, a day on which the principal national securities
exchange or NASDAQ on which such stock or other security is
listed, quoted or admitted to trading is open for the
transaction of business or, if such stock or other security is
not listed, quoted or admitted to trading on any national
securities exchange or NASDAQ, a Business Day.
ARTICLE II - THE RIGHTS
-----------------------
2.1 Summary of Rights. As soon as practicable after the
Record Time, the Company will mail a copy of a letter to
shareholders summarizing the terms of the Rights to each holder
of record of Common Stock as of the Record Time, at such
holder's address as shown by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates
for the Common Stock issued after the Record Time but prior to
the Separation Time shall evidence one Right for each share of
Common Stock represented thereby and shall have impressed on,
printed on, written on or otherwise affixed to them the
following legend:
Until the Separation Time (as defined in the Rights
Agreement referred to below) or the earlier
Expiration Time, this certificate also evidences and
entitles the holder hereof to certain Rights as set
forth in a Rights Agreement, dated as of October 15,
1997 (as such may be amended from time to time, the
"Rights Agreement"), between Progressive Bank, Inc.
(the "Company") and Registrar and Transfer Company,
the Rights Agent, the terms of which are hereby
incorporated herein by reference and a copy of which
is on file at the principal executive offices of the
Company. Under certain circumstances, as set forth
in the Rights Agreement, such Rights may be
redeemed, may be exchanged for shares of Common
Stock or other securities or assets of the Company,
may expire, may become void (if they are
"Beneficially Owned" by an "Acquiring Person" or an
Affiliate or Associate thereof, as such terms are
defined in the Rights Agreement, or by any
transferee of any of the foregoing) or may be
evidenced by separate certificates and may no longer
be evidenced by this certificate. The Company will
mail or arrange for the mailing of a copy of the
Rights Agreement to the holder of this certificate
without charge within five days after the receipt of
a written request therefor.
4
Certificates representing shares of Common Stock that are issued
and outstanding at the Record Time shall evidence one Right for
each share of Common Stock evidenced thereby notwithstanding the
absence of the foregoing legend.
In the event that the Company purchases or acquires any
Common Stock after the Record Time but prior to the Separation
Time, any Rights associated with such Common Stock shall be
deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Common Stock
that is no longer outstanding. Upon reissuance of such Common
Stock by the Company prior to the Separation Time (or the
earlier Expiration Time), the Rights shall again attach to such
Common Stock as set forth in Section 2.2 hereof.
2.3 Exercise of Rights; Separation of Rights. (a)
Subject to adjustment as herein set forth, each Right will
entitle the holder thereof, after the Separation Time, to
purchase, for the Exercise Price, one one-hundredth of a share
of Junior Preferred Stock.
(b) Until the Separation Time, (i) no Right may be
exercised and (ii) each Right will be evidenced by the
certificate for the associated share of Common Stock and will be
transferable only together with, and will be transferred by a
transfer of, such associated share. Notwithstanding any other
provision of this Agreement, any Rights held by the Company or
any of its Subsidiaries other than in fiduciary capacity shall
not be exercisable. Nothing in the preceding sentence shall be
construed as limiting the right of the Company and its
Subsidiaries to acquire or transfer Rights.
(c) Subject to the terms and conditions herein set
forth, after the Separation Time and prior to the Expiration
Date, the Rights (i) may be exercised, and (ii) may be
transferred independently of the shares of Common Stock in
respect of which they were originally issued. Promptly
following the Separation Time, the Rights Agent will mail to
each holder of record of Common Stock as of the Separation Time,
at such holder's address as shown by the records of the Company
(the Company hereby agreeing to furnish copies of such records
to the Rights Agent for this purpose), (x) a certificate (a
"Rights Certificate") in substantially the form of Exhibit A
hereto appropriately completed, representing the number of
rights held by such holder at the Separation Time and having
such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any law
or with any rule or regulation made pursuant thereto or with any
rule or regulation of any national securities exchange or other
self-regulatory organization (as such terms are used under the
Exchange Act) on which the Rights may from time to time be
listed or through which the Rights may from time to time be
traded, or to conform to usage, and (y) a disclosure statement
describing the Rights.
(d) Subject to Sections 2.3(b) and 5.10, Rights
may be exercised on any Business Day after the Separation Time
and prior to the Expiration Time by submitting to the Rights
Agent the Rights Certificate evidencing such Rights with an
election to exercise (an "Election to Exercise") substantially
in the form attached to the Rights Certificate duly completed,
accompanied by payment in cash, or by certified or official bank
check or money order payable to the order of the Company, of a
sum equal to the Exercise Price multiplied by the number of
Rights being exercised together with a sum sufficient to cover
any transfer tax or charge which may be payable in respect of
any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for
shares or depositary receipts (or both) in a name other than
that of the holder of the Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an
Election to Exercise accompanied by payment as set forth in
Section 2.3(d) above, and subject to the conditions set forth in
this Agreement, the Rights Agent will thereupon promptly (i)(A)
requisition from a transfer agent stock certificates for the
stock or other securities purchasable upon exercise of the
Rights Certificates evidencing such number of shares or other
securities to be purchased (the Company hereby irrevocably
authorizing its transfer agents to comply with all such
requisitions) and (B) if the Company elects pursuant to Section
5.5 hereof not to issue certificates representing fractional
shares, requisition from the depositary selected by the Company
depositary receipts representing the fractional shares to be
purchased or requisition from the Company the amount of cash to
be paid in lieu of fractional shares in accordance with Section
5.5 hereof and
5
(ii) after receipt of such certificates, depositary receipts
and/or cash, deliver the same to or upon the order of the
registered holder of such Rights Certificate, registered (in the
case of certificates or depositary receipts) in such name or
names as may be designated by such holder.
(f) In case the holder of any Rights shall
exercise less than all the Rights evidenced by such holder's
Rights Certificate, a new Rights Certificate evidencing the
Rights which remain unexercised will be issued by the Rights
Agent to such holder or to such holder's duly authorized
assigns.
(g) The Company covenants and agrees that it will
(i) cause to be kept available until the Expiration Date out of
its authorized and unissued shares of capital stock a number of
shares of preferred stock that will be sufficient to permit the
creation and establishment of the Junior Preferred Stock and the
exercise in full of all outstanding Rights; (ii) immediately
upon the occurrence of the Separation Time, file with the
Department of State of New York a Certificate of Amendment in
substantially the form set forth in Exhibit B hereto and take
all such further action as may be necessary to create and
establish the Junior Preferred Stock; (iii) take all such action
as may be necessary to ensure that all shares delivered upon
exercise of Rights shall, at the time of delivery thereof
(subject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered and fully paid and
nonassessable; (iv) take all such action as may be necessary to
ensure that all securities other than shares delivered upon
exercise of Rights shall, at the time of delivery thereof
(subject to payment of the Exercise Price), be duly and validly
authorized, executed, issued and delivered and valid and binding
obligations of the issuer thereof; (v) take all such action as
may be necessary to comply with any applicable requirements of
the Securities Act of 1933 or the Exchange Act, and the rules
and regulations thereunder, and any other applicable law, rule
or regulation, in connection with the issuance of any shares
upon exercise of Rights; (vi) use its best efforts to cause all
shares and other securities issued upon exercise of Rights to be
listed on a national securities exchange or traded in the over-
the-counter market, as reported by NASDAQ or another self-
regulatory organization or registered securities information
processor (as such terms are used under the Exchange Act), upon
issuance; and (vii) pay when due and payable any and all federal
and state transfer taxes and charges which may be payable in
respect of the original issuance or delivery of the Rights
Certificates or of any shares issued upon the exercise of
Rights, provided that the Company shall not be required to pay
any transfer tax or charge which may be payable in respect of
any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for
shares in a name other than that of the holder of the Rights
being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights.
(a) In the event the Company shall at any time after the Record
Date and prior to the Separation Time (i) declare or pay a
dividend on Common Stock payable in Common Stock, (ii) subdivide
the outstanding Common Stock or (iii) combine the outstanding
Common Stock into a smaller number of shares of Common Stock,
then (x) the Exercise Price in effect after such adjustment will
be equal to the Exercise Price in effect immediately prior to
such adjustment divided by the number of shares of Common Stock
(the "Expansion Factor") that a holder of one share of Common
Stock immediately prior to such dividend, subdivision or
combination would hold thereafter as a result thereof and (y)
each Right held prior to such adjustment will become that number
of Rights equal to the Expansion Factor, and (z) the adjusted
number of Rights will be deemed to be distributed among the
shares of Common Stock with respect to which the original Rights
were associated (if they remain outstanding) and the shares
issued in respect of such dividend, subdivision or combination,
so that each such share of Common Stock will have exactly one
Right associated with it. Each adjustment made pursuant to this
paragraph shall be made as of the payment or effective date for
the applicable dividend, subdivision or combination.
In the event the Company shall at any time after the
Record Time and prior to the Separation Time issue any shares of
Common Stock otherwise than in a transaction referred to in the
preceding paragraph, each such share of Common Stock so issued
shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such
share.
(b) In the event the Company shall at any time
after the Record Time and prior to the Separation Time issue or
distribute any securities or assets in respect of, in lieu of or
in exchange for Common Stock (other than
6
pursuant to a regular periodic cash dividend or a dividend paid
solely in Common Stock) whether by dividend, in a
reclassification or recapitalization (including any such
transaction involving a merger, consolidation or binding share
exchange), or otherwise, the Company shall make such adjustments,
if any, in the Exercise Price, number of Rights and/or securities
or other property purchasable upon exercise of Rights as the
Board of Directors of the Company, in its sole discretion, may
deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights
generally, and the Company and the Rights Agent shall amend this
Agreement as necessary to provide for such adjustments.
(c) Each adjustment to the Exercise Price made
pursuant to this Section 2.4 shall be calculated to the nearest
cent. Whenever an adjustment to the Exercise Price is made
pursuant to this Section 2.4, the Company shall (i) promptly
prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (ii)
promptly file with the Rights Agent and with each transfer agent
for the Common Stock a copy of such certificate and (iii) mail a
brief summary thereof to each holder of Rights.
(d) Irrespective of any adjustment or change in
the securities purchasable upon exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may
continue to express the securities so purchasable which were
expressed in the initial Rights Certificates issued hereunder.
2.5 Date on Which Exercise is Effective. Each person in
whose name any certificate for shares issued upon the exercise
of Rights shall for all purposes be deemed to have become the
holder of record of the shares 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 Exercise Price for such Rights (and any
applicable taxes and other governmental charges payable by the
exercising holder hereunder) was made; provided, however, that
if the date of such surrender and payment is a date upon which
the stock transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares
on, and such certificate shall be dated, the next succeeding
Business Day on which the stock transfer books of the Company
are open.
2.6 Execution, Authentication, Delivery and Dating of
Rights Certificates. (a) The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the Board,
President or one of its Vice Presidents, under its corporate
seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers
on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding
that such individuals or any of them have ceased to hold such
offices prior to the countersignature and delivery of such
Rights Certificates.
Promptly after the Company learns of the Separation Time,
the Company will notify the Rights Agent of such Separation Time
and will deliver Rights Certificates executed by the Company to
the Rights Agent for countersignature, and the Rights Agent
shall manually countersign and deliver such Rights Certificates
to the holders of the Rights pursuant to Section 2.3(c) hereof.
No Rights Certificate shall be valid for any purpose until
manually countersigned by the Rights Agent.
(b) Each Rights Certificate shall be dated the
date of countersignature thereof by the Rights Agent.
2.7 Registration, Registration of Transfer and Exchange.
(a) After the Separation Time, the Company will cause to be
kept a register (the "Rights Register") in which, subject to
such reasonable regulations as it may prescribe, the Company
will provide for the registration and transfer of Rights. The
Rights Agent is hereby appointed "Rights Registrar" for the
purpose of maintaining the Rights Register for the Company and
registering Rights and transfers of Rights after the Separation
Time as herein provided. In the event that the Rights Agent
shall cease to be
7
the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times after the
Separation Time.
After the Separation Time and prior to the Expiration
Time, upon surrender for registration of transfer or exchange of
any Rights Certificate, and subject to the provisions of Section
2.7(c) below, the Company will execute, and the Rights Agent
will countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to
the holder's instructions, one or more new Rights Certificates
evidencing the same aggregate number of Rights as did the Rights
Certificate so surrendered.
(b) Except as otherwise provided in Section 3.1(b)
hereof, all Rights issued upon any registration of transfer or
exchange of Rights Certificates shall be the valid obligations
of the Company, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon
such registration of transfer or exchange.
(c) Every Rights Certificate surrendered for
registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form
satisfactory to the Company or the Rights Agent, as the case may
be, duly executed by the holder thereof or such holder's
attorney duly authorized in writing. As a condition to the
issuance of any new Rights Certificate under this Section 2.7,
the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in
relation thereto.
(d) The Company shall not be required to register
the transfer or exchange of any Rights after the Rights have
been redeemed pursuant to Section 5.1 hereof or become void
pursuant to Section 3.1(b) hereof.
2.8 Mutilated, Destroyed, Lost and Stolen Rights
Certificates. (a) If any mutilated Rights Certificate is
surrendered to the Rights Agent prior to the Expiration Time,
the Company shall execute and the Rights Agent shall countersign
and deliver in exchange therefor a new Rights Certificate
evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Company and
the Rights Agent prior to the Expiration Time (i) evidence to
their satisfaction of the destruction, loss or theft of any
Rights Certificate and (ii) such security or indemnity as may be
required by them to save each of them and any of their agents
harmless, then, in the absence of notice to the Company or the
Rights Agent that such Rights Certificate has been acquired by a
bona fide purchaser, the Company shall execute and upon its
request the Rights Agent shall countersign and deliver, in lieu
of any such destroyed, lost or stolen Rights Certificate, a new
Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new
Rights Certificate under this Section 2.8, the Company may
require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses
of the Rights Agent) connected therewith.
(d) Every new Rights Certificate issued pursuant
to this Section 2.8 in lieu of any mutilated, destroyed, lost or
stolen Rights Certificate shall evidence an original additional
contractual obligation of the Company, whether or not the
mutilated, destroyed, lost or stolen Rights Certificate shall be
at any time enforceable by anyone, and shall be entitled to all
the benefits of this Agreement equally and proportionately with
any and all other Rights duly issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of
a Rights Certificate (or, prior to the Separation Time, the
associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the
Company or the Rights Agent may deem and treat the person in
whose name such Rights Certificate (or, prior to the Separation
Time, such Common Stock certificate) is registered as the
absolute owner thereof and of the
8
Rights evidenced thereby for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice
to the contrary. As used in this Agreement, unless the context
otherwise requires, the term "holder" of any Rights shall mean
the registered holder of such Rights (or, prior to the Separation
Time, the associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All
Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to
any person other than the Rights Agent, be delivered to the
Rights Agent and, in any case, shall be promptly canceled by the
Rights Agent. The Company may at any time deliver to the Rights
Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Rights Certificates
so delivered shall be promptly canceled by the Rights Agent. No
Rights Certificates shall be countersigned in lieu of or in
exchange for any Rights Certificates canceled as provided in
this Section 2.10, except as expressly permitted by this
Agreement. The Rights Agent shall return all canceled Rights
Certificates to the Company.
2.11 Agreement of Rights Holders. Every holder of Rights
by accepting the same consents and agrees with the Company and
the Rights Agent and with every other holder of Rights that:
(a) prior to the Separation Time, each Right will
be transferable only together with, and will be transferred by a
transfer of, the associated share of Common Stock;
(b) after the Separation Time, the Rights
Certificates will be transferable only on the Rights Register as
provided herein;
(c) prior to due presentment of a Rights
Certificate (or, prior to the Separation Time, the associated
Common Stock certificate) for registration of transfer, the
Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the
Rights Certificate (or, prior to the Separation time, the
associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons
will under the circumstances set forth in Section 3.1(b) become
void; and
(e) This Agreement may be supplemented or amended
from time to time pursuant to Section 2.4(b) or 5.4 hereof.
ARTICLE III - ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF
-------------------------------------------------------
CERTAIN TRANSACTIONS
--------------------
3.1 Distribution Date. (a) In the event that prior to
the Expiration Time a Distribution Date shall occur, then, if
applicable law does not preclude Rights owned by certain Persons
referred to in Section 3.1(b) hereof to become void pursuant to
the provisions thereof, the Company shall take such action as
shall be necessary to ensure and provide that, except as
provided below, each Right shall constitute the right to
purchase from the Company, upon exercise thereof in accordance
with the terms hereof (but subject to Sections 5.1 and 5.10
hereof), that number of shares of Common Stock having an
aggregate Market Price on the Distribution Date equal to twice
the Exercise Price for an amount in cash equal to the Exercise
Price (such right to be appropriately adjusted in order to
protect the interests of the holders of Rights generally in the
event that on or after such Distribution Date an event of a type
analogous to any of the events described in Section 2.4(a) or
(b) shall have occurred with respect to the Common Stock).
(b) Notwithstanding the foregoing, to the extent
permitted by applicable law, any Rights that are or were
Beneficially Owned on or after the Distribution Date by an
Acquiring Person, or an Affiliate or Associate thereof or by a
transferee, direct or indirect, of any of the foregoing shall
become void and any holder of such Rights
9
(including transferees) shall thereafter have no rights to
exercise or transfer such Rights. For purposes of the preceding
sentence, a transferee of an Acquiring Person or Affiliate or
Associate thereof shall include only a Person who (i) becomes a
transferee after the Acquiring Person becomes such or (ii)
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 3.1(b). If any Rights Certificate is
presented for assignment or exercise and the Person presenting
the same does not complete the certification set forth at the end
of the form of assignment or notice of election to exercise and
provide such additional evidence of the identity of the
Beneficial Owner and its Affiliates and Associates (or former
Beneficial Owners and their Affiliates and Associates) as the
Company shall reasonably request, then the Company shall be
entitled to conclusively deem the Beneficial Owner thereof to be
an Acquiring Person, or an Affiliate or Associate thereof or a
transferee of any of the foregoing and accordingly will, to the
extent permitted by applicable law, deem the Rights evidenced
thereby to be void and not transferable or exercisable.
(c) The Board of Directors of the Company may, at
its option, at any time after a Distribution Date and prior to
the time that an Acquiring Person becomes the Beneficial Owner
of more than 50% of the outstanding shares of Common Stock, but
only if applicable law does not preclude Rights owned by certain
Persons referred to in Section 3.1(b) hereof to become void
pursuant to the provisions thereof, elect to exchange all (but
not less than all) of the then outstanding Rights (which shall
not include Rights that have become void pursuant to the
provisions of Section 3.1(b)) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right,
appropriately adjusted in order to protect the interests of
holders of Rights generally in the event that after the
Separation Time an event of a type analogous to any of the
events described in Section 2.4(a) or (b) shall have occurred
with respect to the Common Stock (such exchange ratio, as
adjusted from time to time, being hereinafter referred to as the
"Exchange Ratio").
Immediately upon the action of the Board of
Directors of the Company electing to exchange the Rights,
without any further action and without any notice, the right to
exercise the Rights will terminate and each Right will
thereafter represent only the right to receive a number of
shares of Common Stock equal to the Exchange Ratio. Promptly
after the action of the Board of Directors electing to exchange
the Rights, the Company shall give notice thereof (specifying
the steps to be taken to receive shares of Common Stock in
exchange for Rights) to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice in accordance
with Section 5.9.
(d) Whenever the Company shall become obligated
under Section 3.1(a) or (c) to issue shares of Common Stock upon
exercise of or in exchange for Rights, the Company, at its
option, may substitute therefor shares of Junior Preferred
Stock, at a ratio of one one-hundredth of a share of Junior
Preferred Stock for each share of Common Stock so issuable.
(e) In the event that there shall not be
sufficient treasury shares or authorized but unissued shares of
Common Stock or Junior Preferred Stock of the Company to permit
the exercise or exchange in full of the Rights in accordance
with Section 3.1(a) or (c), the Company shall either (i) cause
sufficient additional shares to be authorized (provided that if
such authorization is not obtained, the Company will take the
action specified in clause (ii) of this sentence) or (ii) take
such action as shall be necessary to ensure and provide, to the
extent permitted by applicable law and any agreements or
instruments in effect on the Distribution Date to which it is a
party, that each Right shall thereafter constitute the right to
receive, (x) at the Company's option, either (A) in return for
the Exercise Price, debt or equity securities or other assets
(or a combination thereof) having a fair value equal to twice
the Exercise Price, or (B) without payment of consideration
(except as otherwise required by applicable law), debt or equity
securities or other assets (or a combination thereof) having a
fair value equal to the Exercise Price, or (y) if the Board of
Directors of the Company elects to exchange the Rights in
accordance with Section 3.1(c), debt or equity securities or
other assets (or a combination thereof) having a fair value
equal to the product of the Market Price of a share of Common
Stock on the
10
Distribution Date times the Exchange Ratio in effect on the
Distribution Date, where in any case set forth in (x) or (y)
above the fair value of such debt or equity securities or other
assets shall be as determined in good faith by the Board of
Directors of the Company, after consultation with a nationally
recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the
Company shall not enter into any agreement with any Acquiring
Person or any Affiliate or Associate of an Acquiring Person with
respect to, or consummate or permit to occur, any Flip-over
Transaction or Event, unless and until it shall have entered
into a supplemental agreement with the Person engaging in such
Flip-over Transaction or Event (the "Flip-over Entity"), for the
benefit of the holders of the Rights, providing that, upon
consummation or occurrence of the Flip-over Transaction or Event
(i) each Right shall thereafter constitute the right to purchase
from the Flip-over Entity, upon exercise thereof in accordance
with the terms hereof, that number of shares of Flip-over Stock
of the Flip-over Entity having an aggregate Market Price on the
date of consummation or occurrence of such Flip-over Transaction
or Event equal to twice the Exercise Price for an amount in cash
equal to the Exercise Price (such right to be appropriately
adjusted in order to protect the interests of the holders of
Rights generally in the event that after such date of
consummation or occurrence an event of a type analogous to any
of the events described in Section 2.4(a) or (b) shall have
occurred with respect to the Flip-over Stock), and (ii) the
Flip-over Entity shall thereafter be liable for, and shall
assume, by virtue of such Flip-over Transaction or Event and
such supplemental agreement, all the obligations and duties of
the Company pursuant to this Agreement. The provisions of this
Section 3.2 shall apply to successive Flip-over Transactions or
Events.
(b) Prior to the Expiration Time, unless the
Rights will be redeemed pursuant to Section 5.1 hereof in
connection therewith, the Company shall not enter into any
agreement with respect to, or consummate or permit to occur, any
Flip-over Transaction or Event if at the time thereof there are
any rights, warrants or securities outstanding or any other
arrangements, agreements or instruments which would eliminate or
otherwise diminish in any respect the benefits intended to be
afforded by this Agreement to the holders of Rights upon
consummation or occurrence of such transaction or event.
ARTICLE IV - THE RIGHTS AGENT
-----------------------------
4.1 General. (a) The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company agrees to pay to the
Rights Agent reasonable compensation as shall be agreed to in
writing from time to time for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses (including expenses incurred by the
Rights Agent under Section 4.4) and counsel fees and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration
of this Agreement in reliance upon any certificate for
securities purchasable upon exercise of Rights, Rights
Certificate, certificate for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or
persons.
4.2 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 is a party, or any corporation succeeding to the
shareholder services business of the Rights Agent or any
successor Rights Agent, will be the successor to the Rights
Agent under this Agreement without the execution or filing of
any paper or any further act
11
on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. In
case, at the time such successor Rights Agent succeeds to the
agency created by this Agreement, any of the Rights Certificates
have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights
Agent may countersign such Rights Certificates either in the name
of the predecessor Rights Agent or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates will
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 is changed and at such time any of the Rights Certificates
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 is changed name; and
in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
4.3 Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the
opinion of such counsel will be full and complete authorization
and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent deems it necessary or
desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a person
believed by the Rights Agent to be the Chairman of the Board,
the President or any Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such
certificate will 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 will be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the certificates for securities purchasable
upon exercise of Rights or the Rights Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and will be deemed to have
been made by the Company only.
(e) The Rights Agent will not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due authorization,
execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any certificate for securities
purchasable upon exercise of Rights or Rights Certificate
(except its countersignature thereof); nor will it be
responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Section 3.1(b) hereof) or any adjustment required
under the provisions of Section 2.4, 3.1 or 3.2 hereof 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 after receipt of the certificate contemplated
by Section 2.4 describing any such adjustment); nor will it by
any act hereunder be deemed to make any representation or
warranty
12
as to the authorization or reservation of any securities
purchasable upon exercise of Rights or any Rights or
as to whether any securities purchasable upon exercise of Rights
will, when issued, be duly and validly authorized, executed,
issued and delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
of its duties hereunder from any person believed by the Rights
Agent to be the Chairman of the Board, the President or any Vice
President or the Secretary or any Assistance Secretary or the
Treasurer or any Assistant Treasurer of the Company, and to
apply to such persons for advice or instructions in connection
with its duties, and it shall not be liable for any action taken
or suffered by it in good faith in accordance with instructions
of any such person. Any application by the Rights Agent for
written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Rights Agreement
and the date on and/or after which such action shall be taken or
such omission shall be effective. Until 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 liable for any inaction or omission related to the
subject of the proposal included in any such application.
(h) The Rights Agent and any shareholder,
director, officer or employee of the Rights Agent may buy, sell
or deal in Common Stock, 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 the Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or
agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof.
4.4 Change of Rights Agent. The Rights Agent may resign
and be discharged from its duties under this Agreement upon 60
days' notice (or such lesser notice as is acceptable to the
Company) in writing mailed to the Company and to each transfer
agent of Common Stock by registered or certified mail, and to
the holders of the Rights in accordance with Section 5.9. The
Company may remove the Rights Agent upon 60 days' notice in
writing, mailed to the Rights Agent and to each transfer agent
of the Common Stock by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.9. If the
Rights Agent should resign or be removed or otherwise become
incapable of acting, the Company will appoint a successor to the
Rights Agent. If the Company fails to make such appointment
within a period of 30 days after 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
any Rights (which holder shall, with such notice, submit such
holder's Rights Certificate for inspection by the Company), then
the holder of any Rights or the Rights Agent 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 any
other state of the United States which is authorized under such
laws to exercise the powers of the Rights Agent contemplated by
this Agreement and is subject to supervision or examination by
federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights
Agent will 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
13
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 will
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 holders of the Rights. Failure to give
any notice provided for in this Section 4.4, 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.
ARTICLE V - MISCELLANEOUS
-------------------------
5.1 Redemption. (a) The Board of Directors of the
Company may, at its option, at any time prior to the
Distribution Date, or ten days thereafter, subject to extension
by a vote of two-thirds of the Board of Directors, elect to
redeem all (but not less than all) the then outstanding Rights
at the Redemption Price, and the Company, at its option, may pay
the Redemption Price either in cash or shares of Common Stock or
other securities of the Company deemed by the Board of
Directors, in the exercise of its sole discretion, to be at
least equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Board of
Directors of the Company electing to redeem the Rights, without
any further action and without any notice, the right to exercise
the Rights will terminate and each Right will thereafter
represent only the right to receive the Redemption Price in cash
or securities, as determined by the Board of Directors..
Promptly after the action of the Board of Directors electing to
redeem, and thereby redeeming, the Rights, the Company shall
give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice in
accordance with Section 5.9, provided, however, that the failure
to give, or any defect in, any such notice shall not affect the
validity of such redemption.
5.2 Expiration. No Person shall have any rights
pursuant to this Agreement or any Right after the Expiration
Time, except, if the Rights are redeemed, as provided in Section
5.1 hereof.
5.3 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 number or kind or class of shares of
stock purchasable upon exercise of Rights made in accordance
with the provisions of this Agreement.
5.4 Supplements and Amendments. The Company and the
Rights Agent may from time to time supplement or amend this
Agreement without the approval of any holder of Rights (i) in
any respect prior to the Distribution Date (other than to change
the Redemption Price or the Expiration Time, except as
contemplated elsewhere herein), (ii) to make any changes
following the close of business on the Distribution Date which
the Company may deem necessary or desirable and which shall not
materially adversely affect the interests of the holders of
Rights generally or (iii) in order to cure any ambiguity or to
correct or supplement any provision contained herein which may
be inconsistent with any other provisions herein or otherwise
defective. The Rights Agent will duly execute and deliver any
supplement or amendment hereto requested by the Company which
satisfies the terms of the preceding sentence.
5.5 Fractional Shares. If the Company elects not to
issue certificates representing fractional shares upon exercise
of Rights, the Company shall, in lieu thereof, (a) evidence such
fractional shares by depositary receipts issued pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that
each holder of a depositary receipt shall have all of the
rights, privileges and preferences to which such holder would be
entitled as a beneficial owner of such fractional share, or (b)
pay to the registered holder of such Rights the same fraction of
the Market Price (determined as of the date of exercise) of one
share of the stock issuable upon such exercise.
5.6 Rights of Action. Subject to the terms of this
Agreement, rights of action in respect of this Agreement, other
than rights of action vested solely in the Rights Agent, are
vested in the respective holders of the Rights; and any holder
of any Rights, without the consent of the Rights Agent or of the
holder of any other Rights, may on such holder's
14
own behalf and for such holder's own benefit and the benefit of
other holders of Rights, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise
such holder's Rights in the manner provided in such holder's
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 will be entitled to specific performance of the
obligations of, and injunctive relief against actual or
threatened violations of the obligations of, any Person subject
to this Agreement.
5.7 Holder of Rights Not Deemed a Shareholder. No
holder, as such, of any Rights shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of
shares or any other securities which may at any time be issuable
on the exercise of such Rights, nor shall anything contained
herein or in any Rights Certificate be construed to confer upon
the holder of any Rights, 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 5.8
hereof), or to receive dividends or subscription rights, or
otherwise, until such Rights shall have been exercised in
accordance with the provisions hereof.
5.8 Notice of Proposed Actions. In case the Company
shall propose after the Separation Time and prior to the
Expiration Time (i) to effect or permit (in cases where the
Company's permission is required) occurrence of any Distribution
Date or Flip-over Transaction or Event or (ii) to effect the
liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a
Right, in accordance with Section 5.9 hereof, a notice of such
proposed action, which shall specify the Distribution Date or
the date on which such Flip-over Transaction or Event,
liquidation, dissolution, or winding up is to take place, and
such notice shall be so given at least 20 Business Days prior to
the date of the taking of such proposed action.
5.9 Notices. Notices or demands authorized or required
by this Agreement to be given or made by the Rights Agent or by
the holder of any Rights to or on the Company shall be
sufficiently given or made if delivered or sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Rights Agent) as follows:
Progressive Bank, Inc.
ββββ βββββ ββ
β.β. βββ ββββ
ββββββββ, βββ ββββ βββββ-ββββ
Attention: Corporate Secretary
Any notice or demand authorized or required by this Agreement to
be given or made by the Company or by the holder of any Rights
to or on the Rights Agent shall be sufficiently given or made if
delivered or sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the
Company) as follows:
Registrar and Transfer Company
ββ ββββββββ βββββ
ββββββββ, ββ βββββ
Attention: ββββββββ βββββββ, Vice
President
Notices or demands authorized or required by this Agreement to
be given or made by the Company or the Rights Agent to or on the
holder of any Rights shall be sufficiently given or made if
delivered or sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as it
appears upon the registry books of the Rights Agent or, prior to
the Separation Time, on the registry books of the transfer agent
for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice.
15
5.10 Suspension of Exercisability. To the extent that
the Company determines in good faith that some action need be
taken pursuant to Section 3.1(e) or to comply with federal or
state securities laws, the Company may suspend the
exercisability of the Rights following the date of the
occurrence of the Separation Time or the Distribution Date in
order to take such action or comply with such laws. In the
event of any such suspension, the Company shall issue as
promptly as practicable a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
Notice thereof pursuant to Section 5.9 shall not be required.
5.11 Costs of Enforcement. The Company agrees that if
the Company or any other Person the securities of which are
purchasable upon exercise of Rights fails to fulfill any of its
obligations pursuant to this Agreement, then the Company or such
Person will reimburse the holder of any Rights for the costs and
expenses (including legal fees) incurred by such holder in
actions to enforce such holder's rights pursuant to any Rights
or this Agreement.
5.12 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.
5.13 Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than
the Company, the Rights Agent and the holders of the Rights any
legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the holders of the Rights.
5.14 Descriptive Headings. Descriptive headings appear
herein for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
5.15 Governing Law. This Agreement and each Right issued
hereunder shall be deemed to be a contract made under the State
of New York and for all purposes shall be governed by and
construed in accordance with the laws of such state applicable
to contracts to be made and performed entirely within such
state.
5.16 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.
5.17 Severability. If any term or provision hereof or
the application thereof to any circumstance shall, in any
jurisdiction and to any extent, be invalid or unenforceable,
such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable
the remaining terms and provisions hereof or the application of
such term or provision to circumstances other than those as to
which it is held invalid or unenforceable.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above
written.
PROGRESSIVE BANK, INC.
By /s/ βββββ βββ ββββββ
_____________________
βββββ βββ ββββββ
Title: President
REGISTRAR AND TRANSFER COMPANY
By /s/ ββββββββ βββββββ
_____________________
ββββββββ βββββββ
Title: Vice President
Exhibit A
---------
FORM OF
RIGHTS CERTIFICATE
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER OCTOBER 15, 2007 OR EARLIER
IF REDEEMED. THE RIGHTS ARE SUBJECT TO REDEMPTION
AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY ACQUIRING PERSONS OR AFFILIATES
OR ASSOCIATES THEREOF (AS THOSE TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE
FOREGOING MAY BECOME NULL AND VOID.
Rights Certificate
PROGRESSIVE BANK, INC.
This certifies that __________________________________, or
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights
Agreement dated as of October 15, 1997 (the "Rights Agreement")
by and between Progressive Bank, Inc., a New York corporation
(the "Company"), and Registrar and Transfer Company (the "Rights
Agent"), to purchase from the Company at any time after the
Separation Time and prior to the earlier of the Redemption Date
(as such terms are defined or referred to in the Rights
Agreement) or 5:00 p.m., New York time, on, October 15, 2007, at
the office of the Rights Agent designated for such purpose or at
the office of its successors as Rights Agent, one one-hundredth
of a fully paid and nonassessable share of Series A Junior
Participating Preferred Stock, $1.00 par value per share, of the
Company (the "Preferred Shares"), at a purchase price of $100.00
per one one-hundredth of a Preferred Share (the "Exercise
Price"), subject to adjustment as provided in the Rights
Agreement upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The number of Rights represented by this Rights Certificate (and
the number of Preferred Shares which may be purchased upon
exercise thereof) set forth above, and the Exercise Price per
share set forth above, are the number of Rights and the Exercise
Price as of October 15, 1997, based upon the Preferred Shares as
constituted at such date.
As provided in the Rights Agreement, the Exercise Price and
the number of Preferred Shares, or under certain circumstances as
set forth in the Rights Agreement, shares of Common Stock, which
may be purchased upon the exercise of the Rights represented by
this Rights Certificate are subject to modification and
adjustment upon the occurrence of certain 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. Copies
of the Rights Agreement are on file at the principal executive
offices of the Company and the above-mentioned offices of the
Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent
designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date
representing Rights entitling the holder thereof to purchase a
like aggregate number of Preferred Shares, or under certain
circumstances as set forth in the Rights Agreement, shares of
Common Stock, as the Rights represented by the Rights Certificate
or the Rights Certificates surrendered shall have entitled 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 Rights
represented by this Rights Certificate may be redeemed by the
Company, at its option, at a redemption price of $.01 per Right.
No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights represented hereby (other than
fractions which are integral multiples of one-hundredth of a
Preferred Share, which may, at the option of the Company, be
represented by depositary receipts), but in lieu thereof, a cash
payment shall be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of the Preferred Shares or of any other
securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights represented by the 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 signature of the proper officers of
the Company and its corporate seal. Dated as of
____________________.
Attest: PROGRESSIVE BANK, INC.
By ____________________ By____________________
Title: Title:
Countersigned:
________________________
By _____________________
Authorized Signatory
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 transfer 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 this Rights Certificate on the books of
Progressive Bank, Inc. with full power of substitution.
Dated:______________ _______________________
Signature
Signature Guaranteed:
Certificate
-----------
(to be completed, if true)
Signatures must be guaranteed by an eligible guarantor
institution (a bank, stockbroker, savings and loan association or
credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended.
The undersigned hereby certifies that the Rights represented
by this Rights Certificate are not Beneficially Owned by an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such capitalized terms are defined in the Rights
Agreement).
Dated:______________ _______________________
Signature
Signature Guaranteed:
Form of Reverse Side of Rights Certificate --
continued
NOTICE
The signature to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as
written upon the face of the Rights Certificate in every
particular, without alteration or enlargement or any change
whatsoever, and must be guaranteed by an eligible guarantor
institution (a bank, stockbroker, savings and loan association or
credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended.
In the event that the foregoing Certificate is not duly
executed, with signature guaranteed, the Company shall deem the
Rights represented by this Rights Certificate to be Beneficially
Owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such capitalized terms are defined in the
Rights Agreement), and shall affix a legend to that effect on any
Rights Certificate issued in exchange for this Rights
Certificate.
Form of Reverse Side of Rights Certificate --
continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if such holder desires
to exercise the Rights Certificate.)
TO PROGRESSIVE BANK, INC.
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to
purchase the Preferred Shares or, under certain circumstances as
set forth in the Rights Agreement, Common Shares, issuable upon
the exercise of such Rights and requests a certificate for such
Preferred Shares (or Common Shares) be issued in the name of:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Rights shall not be all the Rights
represented by this Rights Certificate, a new Rights Certificate
for the balance remaining of such Rights shall be registered in
the name of and delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
Dated:______________ _______________________
Signature
Signature Guaranteed:
Form of Reverse Side of Rights Certificate--
continued
Certificate
-----------
(to be completed, if true)
The undersigned hereby certifies that the Rights represented
by this Rights Certificate are not Beneficially Owned by an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such capitalized terms are defined in the Rights
Agreement).
Dated:______________ _______________________
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, 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, and must be guaranteed by an eligible guarantor
institution (a bank, stockbroker, savings and loan association or
credit union with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended.
In the event that the foregoing Certificate is not duly
executed, with signature guaranteed, the Company shall deem the
Rights represented by this Rights Certificate to be Beneficially
Owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such capitalized terms are defined in the
Rights Agreement).
Exhibit B
---------
FORM OF
CERTIFICATE OF DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES
AND LIMITATIONS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
$1.00 Par Value
of
PROGRESSIVE BANK, INC.
Pursuant to Section 502 of the New York Business Corporation Law
Section 1. Designation and Number. The shares of such
series shall be designated as Series A Junior Participating
Preferred Stock, $1.00 par value (the "Series A Preferred Stock")
and the number of shares constituting such series shall be
____________________ (_______).
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Preferred Stock, in
preference to the holders of shares of Common Stock, $1.00 par
value per share, of the Corporation (the "Common Stock") and of
any other junior stock of the Corporation which may be
outstanding, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the tenth
day of January, April, July and October in each year (each such
date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $____ per share ($____
per annum), or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common
Stock, or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event that the Corporation
shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then and in each such event,
the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event,
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section 2 immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided, however,
that in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $__ per share ($___ per
annum) on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares of Series A Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which cases such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall cumulate but shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date
shall be not more than 50 nor less than ten days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series
A Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle
the holder thereof to 100 votes (and each one one-hundredth of a
share of Series A Preferred Stock shall entitle the holder
thereof to one vote) on all matters submitted to a vote of the
stockholders of the Corporation. In the event that the
Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then and in each such
event, the number of votes per share to which holders of shares
of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event, and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided by law, the Certificate of
Incorporation of the Corporation, or herein, the holders of
shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) In addition, the holders of shares of Series A
Preferred Stock shall have the following special voting rights:
In the event that dividends on Series A Preferred Stock,
whenever accrued, shall not have been paid or declared and a
sum sufficient for the payment thereof set aside, in amount
equivalent to six (6) quarterly dividends on all shares of
Series A Preferred Stock at the time outstanding, then and
in each such event, the holders of shares of Series A
Preferred Stock and each other series of preferred stock now
or hereafter issued which shall be accorded such class
voting rights by the Board of Directors and which shall have
the right to elect two (2) directors as the result of a
prior or subsequent default in payment of dividends on such
series (each such other series being hereinafter called
"Other Series of Preferred Stock"), voting separately as a
class without regard to series, shall be entitled to elect
two (2) directors, in addition to the directors to be
elected by the holders of all shares of the Corporation
entitled to vote for the election of directors, and the
holders of all shares (including the Series A Preferred
Stock) otherwise entitled to vote for directors, voting
separately as a class, shall be entitled to elect the
remaining members of the Board of Directors. Such special
voting right of the holders of shares of Series A Preferred
Stock may be exercised until all dividends in default on the
Series A Preferred Stock shall have been paid in full or
declared and funds sufficient therefor set aside, and when
so paid or provided for, such special voting right of the
holders of shares of Series A Preferred Stock shall cease,
but subject always to the same provisions for the vesting of
such special voting rights in the event of any such future
dividend default or defaults. At anytime after such special
voting rights shall have so vested in the holders of shares
of Series A Preferred Stock, the Secretary of the
Corporation may, and upon the written request of the holders
of record of ten percent (10%) or more in number of the
shares of Series A Preferred Stock and each Other Series of
Preferred Stock then outstanding addressed to the Secretary
at the principal executive office of the Corporation shall,
call a special meeting of the holders of shares of Preferred
Stock so
2
entitled to vote, for the election of the directors
to be elected by them as herein provided, to be held within
fifty (50) days after such call and at the place and upon
the notice provided by law and in the Bylaws for the holding
of meetings of stockholders; provided, however, that the
Secretary shall not be required to call such special meeting
in the case of any such request received less than ninety
(90) days before the date fixed for any annual meeting of
stockholders, and if in such case such special meeting is
not called, the holders of shares of Preferred Stock so
entitled to vote shall be entitled to exercise the special
voting rights provided in this paragraph at such annual
meeting. If any such special meeting required to be called
as above provided shall not be called by the Secretary
within thirty (30) days after receipt of any such request,
then the holders of record of ten percent (10%) or more in
number of the shares of Series A Preferred Stock and each
Other Series of Preferred Stock then outstanding may
designate in writing one of their number to call such
meeting, and the person so designated may, at the expense of
the Corporation, call such meeting to be held at the place
and upon the notice above provided, and for that purpose
shall have access to the stock books of the Corporation. No
such special meeting and no adjournment thereof shall be
held on a date later than sixty (60) days before the annual
meeting of stockholders or a special meeting held in place
thereof next succeeding the time when the holders of shares
of Series A Preferred Stock become entitled to elect
directors as above provided. If, at any meeting so called
or at any annual meeting held while the holders of shares of
Series A Preferred Stock have the special voting rights
provided for in this paragraph, the holders of not less than
forty percent (40%) of the shares of Series A Preferred
Stock and each Other Series of Preferred Stock then
outstanding are present in person or by proxy which
percentage shall be sufficient to constitute a quorum for
the election of additional directors as herein provided, the
then authorized number of directors of the Corporation shall
be increased by two (2), as of the time of such special
meeting or the time of the first such annual meeting held
while such holders have said special voting rights and such
quorum is present, and the holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock,
voting as a class, shall be entitled to elect the additional
directors so provided for. If the directors of the
Corporation are then divided into classes under provisions
of the Certificate of Incorporation of the Corporation, as
amended, or the Bylaws, the two (2) additional directors
shall be members of those respective classes of directors in
which a vacancy is created as a result of such increase in
the authorized number of directors. Upon the election at
such meeting by the holders of shares of Series A Preferred
Stock and each Other Series of Preferred Stock, voting as a
class, of the two (2) directors they are entitled so to
elect, the persons so elected, together with such persons as
may be directors or as may have been elected as directors by
the holders of all shares (including Series A Preferred
Stock) otherwise entitled to vote for directors, shall
constitute the duly elected directors of the Corporation.
The additional directors so elected by holders of shares of
Series A Preferred Stock and each Other Series of Preferred
Stock shall serve until the next annual meeting or until
their respective successors shall be elected and qualified
or if any such director is a member of a class of directors
under provisions dividing the directors into classes as
aforesaid, each such director shall serve until the annual
meeting at which the term of office of such director's class
shall expire or until such director's successor shall be
elected and shall qualify, and at each subsequent meeting of
stockholders at which the directorship of any director
elected by the vote of holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock
under the special voting rights set forth in this paragraph
is up for election, said special voting rights shall apply
in the re-election of such director or in the election of
such director's successor; provided, however, that whenever
the holders of shares of Series A Preferred Stock and each
Other Series of Preferred Stock shall be divested of the
special rights to elect two (2) directors as above provided,
the terms of office of all persons elected as directors by
the holders of shares of Series A Preferred Stock and each
Other Series of Preferred Stock, voting as a class, or
elected to fill any vacancies resulting from the death,
resignation, or removal of directors so elected by the
holders of shares of Series A Preferred Stock and each Other
Series of Preferred Stock, shall forthwith terminate and the
authorized number of directors shall be reduced accordingly.
If, at any time after a special meeting of stockholders or
an annual meeting of stockholders at which the holders of
shares of Series A Preferred Stock and each Other Series of
Preferred Stock have elected additional directors as
provided above, and while the holders of shares of Series A
Preferred Stock and each Other Series of Preferred Stock
shall be entitled to elect two (2) directors, the number of
directors who have been elected by the holders of shares of
Series A Preferred Stock and each Other Series of Preferred
Stock (or who by reason of one or more resignations, deaths
or removals have
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succeeded any directors so elected) shall by reason of
resignation, death or removal be less than two (2) but
at least one (1), the vacancy in the directors elected
by the holders of shares of the Series A Preferred
Stock and each Other Series of Preferred Stock may be filled
by the remaining director elected by such holders, and in
the event that such election shall not occur within thirty
(30) days after such vacancy arises, or in the event that
there shall not be incumbent at least one (1) director
elected by such holders, the Secretary of the Corporation
may, and upon the written request of the holders of record
of ten percent (10%) or more in number of the shares of
Series A Preferred Stock and each Other Series of Preferred
Stock then outstanding addressed to the Secretary at the
principal office of the Corporation shall, call a special
meeting of the holders of shares of Preferred Stock so
entitled to vote, for an election to fill such vacancy or
vacancies, to be held within fifty (50) days after such call
and at the place and upon the notice provided by law and in
the Bylaws for the holding of meetings of stockholders;
provided, however, that the Secretary shall not be required
to call such special meeting in the case of any such request
received less than ninety (90) days before the date fixed
for any annual meeting of stockholders, and if in such case
such special meeting is not called, the holders of shares of
Preferred Stock so entitled to vote shall be entitled to
fill such vacancy or vacancies at such annual meeting. If
any such special meeting required to be called as above
provided shall not be called by the Secretary within thirty
(30) days after receipt of any such request, then the
holders of record of ten percent (10%) or more in number of
the shares of Series A Preferred Stock and each Other Series
of Preferred Stock then outstanding may designate in writing
one of their number to call such meeting, and the person so
designated may, at the expense of the Corporation, call such
meeting to be held at the place and upon the notice above
provided, and for that purpose shall have access to the
stock books of the Corporation; no such special meeting and
no adjournment thereof shall be held on a date later than
sixty (60) days before the annual meeting of stockholders or
a special meeting held in place thereof next succeeding the
time when the holders of shares of Series A Preferred Stock
and each Other Series of Preferred Stock become entitled to
elect directors as above provided.
(D) Nothing herein shall prevent the directors or
stockholders from taking any action to increase the number of
authorized shares of Series A Preferred Stock, or increasing the
number of authorized shares of Preferred Stock of the same class
as the Series A Preferred Stock or the number of authorized
shares of Common Stock, or changing the par value of the Common
Stock, or issuing options, warrants, or rights to any class of
stock of the Corporation as authorized by the Certificate of
Incorporation of the Corporation, as it may hereafter be amended.
(E) Except as set forth herein, holders of shares of Series
A Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are
entitled to vote as set forth in the Certificate of Incorporation
of the Corporation or herein or by law) for taking any corporate
action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in Section 2 hereof are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions with respect to, shares of stock ranking
junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on, or make any other
distributions with respect to, any shares of stock
ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on shares
of the Series A Preferred Stock and all such parity stock
on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of
all such shares are then entitled;
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(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either
as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock, provided
that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of
stock ranking on a parity with the Series A Preferred
Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms
as the Board of Directors, after consideration of the
respective annual dividend rates and other relative
rights and preferences of the respective series and
classes, shall determine in good faith will result in
fair and equitable treatment among the respective series
or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued
shares of preferred stock, without designation as to series, and
may be reissued as part of a new series of preferred stock to be
created by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon
any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of the shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received the greater of (i) $100 per
share ($1 per one one-hundredth of a share), plus an amount equal
to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, or (ii) an
aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares
of Common Stock, nor shall any distribution be made (B) to the
holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably
on the Series A Preferred Stock and all other such parity stock
in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or
winding up. In the event that the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of
shares of Common Stock, then and in each such event, the
aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the
proviso in clause (A) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately
after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In the event that
the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, or otherwise changed,
then and in each such event, the shares of Series A Preferred
Stock shall at the same time be similarly exchanged or changed in
an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event that the
Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock,
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then and in each such event, the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event, and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable. Notwithstanding the foregoing,
the Corporation may acquire shares of Series A Preferred Stock in
any other manner permitted by law, the Certificate of
Incorporation of the Corporation, or herein.
Section 9. Rank. Unless otherwise provided in the
Certificate of Incorporation of the Corporation, the Series A
Preferred Stock shall rank junior to all other series of the
Corporation's preferred stock as to the payment of dividends and
the distribution of assets on liquidation, dissolution or winding
up, and senior to the Common Stock of the Corporation.
Section 10. Amendment. The Certificate of Incorporation of
the Corporation shall not be amended in any manner that would
materially and adversely alter or change the powers, preferences
or special rights of the Series A Preferred Stock without the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting together
as a single series.
Section 11. Fractional Shares. Series A Preferred Stock
may be issued in fractions of a share (in one one-hundredths
(1/100) of a share and integral multiples thereof) which shall
entitle the holder thereof, in proportion to such holder's
fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other
rights of holders of shares of Series A Preferred Stock.
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IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the
penalties of perjury this _____ day of ____________ 1997.
_____________________________
βββββ βββ ββββββ
President and Chief Executive
Officer
Attest:
______________________________
ββββββββ β. Parent
Corporate Secretary
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