SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934
Arrow Financial Corporation
(Exact Name of Registrant as Specified in Its Charter)
New York 22-2448962
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
250 Glen Street, Glens Falls, New York 12801
(Address of Principal Executive Offices) (Zip Code)
If this Form relates to the registration If this Form relates to the
of a class of debt securities and is registration of a class of debt
effective upon filing pursuant to General securities and is to become
Instruction A(c)(1) please check the effective simultaneously with
following box. [ ] the effectiveness of a concurrent
registration statement under the
Securities Act of 1933 pursuant
to General Instruction A(c)(2)
please check the following box.
[ ]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
None ------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
Series I Junior Participating Preferred Stock
(Title of Class)
---------------------------------------------
(Title of Class)
Item 1. Description of Registrant's Securities to be Registered
On April 30, 1997, the Board of Directors of Arrow Financial
Corporation, a New York corporation (the "Company"), declared a dividend payable
May 12, 1997 of one right (a "Right") for each outstanding share of common
stock, par value $1.00 per share ("Common Stock"), of the Company held of record
at the close of business on May 12, 1997 (the "Record Time"), or issued
thereafter and prior to the Separation Time (as hereinafter defined). The Rights
will be issued pursuant to a Shareholder Protection Rights Agreement, dated as
of May 1, 1997 (the "Rights Agreement"), between the Company and Glens Falls
National Bank and Trust Company, a national banking organization, as Rights
Agent (the "Rights Agent"). Each Right, when exercisable, entitles its
registered holder to purchase from the Company one one-hundredth of a share of a
new series of non voting preferred stock, designated as Series I Junior
Participating Preferred Stock (the "Preferred Stock"), at a purchase price of
$75.00 (the "Exercise Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Glens Falls National Bank and Trust Company, as Rights
Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock upon the earlier
to occur of the following ("Separation Time"): (I) the day that a public
announcement is made that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock,
or (ii) the tenth day following the commencement of a tender offer or exchange
offer that would result in a person or a group becoming the beneficial owners of
20% or more of such outstanding shares of Common Stock. Until the Separation
Time, (I) the Rights will be evidenced, with respect to any of the Company's
Common Stock certificates outstanding as of and after the Record Time (other
than shares held in the Company's treasury), by such Common Stock certificates
and will be transferred with and only with such Common Stock certificates, (ii)
new Common Stock certificates issued after the Record Time will contain a
notation incorporating the Rights Agreement by reference, and (iii) the
surrender for transfer of any certificates for Common Stock outstanding as of
and after the Record Time will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
The Rights are not exercisable until the Separation Time. The Rights
will expire at the close of business on April 30, 2007, unless earlier redeemed
or exchanged by the Company, as described below.
As soon as practicable following the Separation Time, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business at the
Separation Time (except for any persons whose Rights have become void pursuant
to the Rights Agreement) and then and thereafter such separate Rights
Certificates alone will evidence the Rights. Except as otherwise determined by
the Board of
Directors, only shares of Common Stock issued prior to the Separation
Time will be issued with Rights.
The Exercise Price payable, and the number of one one-hundredths of a
share of Preferred Stock or other securities or property issuable, upon exercise
of the Rights are subject to adjustment from time to time to prevent dilution
(I) in the event of a stock dividend on, or a subdivision or combination of, the
Common Stock, or (ii) upon the issuance or distribution to holders of Common
Stock of any other securities or assets under circumstances where such an
adjustment is appropriate in order to protect the interests of holders of Rights
generally. Upon exercise of Rights, no fractional shares of Preferred Stock,
other than one one-hundredths of such shares, will be issued and, in lieu
thereof, an adjustment in cash will be made based on a formula set forth in the
Rights Agreement.
In the event that any person shall become an Acquiring Person as
defined in the second paragraph of this letter (such event being referred to
herein as a "Flip-in Event"), each holder of a Right will thereafter have the
right to receive, upon exercise, in lieu of one one-hundredth of a share of
Preferred Stock, that number of shares of Common Stock (or, in certain
circumstances, property or other securities of the Company) having a market
value equal to two times the Exercise Price of the Right.
For example, at an exercise price of $75.00 per Right, each Right
following a Flip-in Event would entitle its holder to purchase $150.00 worth of
Common Stock of the Company (or, under certain circumstances, property or other
securities of the Company) for $75.00. Assuming that the Common Stock had a per
share value of $25.00 at the time of a Flip-in Event, the holder of each valid
Right would be entitled to purchase six shares of Common Stock for $75.00.
Notwithstanding the discussion in the two preceding paragraphs,
following the occurrence of any Flip-in Event, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by an Acquiring Person will be null and void, including for purposes of
any subsequent Exchange (as defined below).
If, following a Stock Acquisition Date, (I) the Company is acquired in
a merger or other business combination transaction in which the Company is not
the surviving corporation, or (ii) 50% or more of the Company's assets or
earning power is sold or transferred (in one transaction or a series of
transactions), or (iii) the Acquiring Person increases by more than 1% its
percentage beneficial ownership of the Common Stock or any other class of stock
of the Company or engages in certain self-dealing transactions with the Company
(each such event a "Flip-over Event"), each holder of a Right (except Rights
owned by an Acquiring Person or certain related parties) shall thereafter have
the right to receive, upon the exercise of the Right and payment of the Exercise
Price, common stock of the surviving or purchasing company or of the Acquiring
Person (or, in certain cases, one of its affiliates) which at the time of such
transaction has a market value equal to two times the Exercise Price.
At any time after the occurrence of a Flip-In Event, the Company may
elect to effect a full or partial exchange (an "Exchange") of shares of its
Common Stock for Rights (other than Rights owned by an Acquiring Person which
have become void), at an initial exchange ratio of one share of Common Stock for
each Right owned, subject to adjustment. Alternatively, the Company may elect to
effect such an Exchange using shares of its Preferred Stock instead of Common
Stock, at an initial exchange ratio of one one-hundredth of a share of Preferred
Stock for each Right owned, subject to adjustment, or other securities of the
Company or assets having an equivalent value.
At any time prior to a Stock Acquisition Date, the Company may elect to
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(payable in cash, Common Stock or other consideration deemed appropriate by the
Board of Directors). Immediately upon the action of the Board of Directors
electing to redeem the Rights, the Rights will terminate and the only right of
the holders of Rights will be to receive the $.01 redemption price.
The Preferred Stock purchasable upon exercise of the Rights or issuable
upon an Exchange will be nonredeemable and junior to any other series of
preferred stock the Company may issue (unless otherwise provided by law or in
the terms of such stock). Each one one-hundredth of a share of Preferred Stock
will have a preferential quarterly dividend in an amount equal to the greater of
$.01 or any quarterly dividend for such quarter declared on each share of Common
Stock. In the event of liquidation, each one one-hundredth of a share of
Preferred Stock will receive a preferred liquidation payment equal to the
greater of $1.00 or the payment made per each share of Common Stock. Shares of
Preferred Stock will have no voting rights (other than such as are required by
law), except that, in the event the Company is in arrears on the payment of at
least three quarterly dividend payments, the holders of Preferred Stock will
have the right to elect a majority of the Board of Directors until all accrued
but unpaid dividends are paid. The rights of the Preferred Stock are protected
by customary anti-dilution provisions. Fractions of shares of Preferred Stock in
integral multiples of one one-hundredth of a share will be issuable; however,
the Company may elect to distribute depository receipts in lieu of such
fractions of shares. In lieu of fractional shares of Preferred Stock other than
integral multiples of one one-hundredth of a share, an adjustment in cash will
be made based on one hundred times the market price of the Common Stock on the
last trading date prior to the date of exercise.
Until a Right is exercised or exchanged, the holder thereof, as such,
will have no rights as a shareholder of the Company, including, without
limitation, the right to receive dividends.
While the distribution of the Rights will not be taxable to
shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of an acquiring company as set forth above, or are exchanged as
provided above.
Other than those provisions relating to the principal economic terms of
the Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Separation Time. After the
Separation Time, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity or to make changes which do not adversely
affect the interests of holders of Rights generally.
The Rights will not prevent a takeover of the Company. The Rights,
however, may have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that acquires 20% or more of the
Common Stock unless the Rights are first redeemed by the Board of Directors of
the Company. Nevertheless, the Rights should not interfere with a transaction
that is in the best interests of the Company and its shareholders prior to the
Flip- in date, because the Rights can be redeemed before the consummation of
such transaction.
As of May 15, 1997 there were 5,590,875 shares of Common Stock issued and
outstanding. As long as the Rights are attached to the Common Stock, the Company
will issue one Right with each new share of Common Stock so that all such shares
will have Rights attached.
The Rights Agreement (which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise) is attached hereto as an exhibit and is
incorporated herein by reference. The foregoing description of the Rights is
qualified in its entirety by reference to the Rights Agreement and such exhibits
thereto.
Item 2. Exhibits
Exhibit No. Description
EX-4 Form of Shareholder Protection Rights _____
Agreement, dated as of May 1, 1997,
between Arrow Financial Corporation
and Glen Falls National Bank and Trust
Company, Rights Agent, which includes as
Exhibit A thereto the Form of Preferred
Stock Rights Certificate.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
ARROW FINANCIAL CORPORATION
By: /s/ Thomas L. Hoy,
Thomas L. Hoy, President and
Chief Executive Officer
Date: 5/16/97
EXHIBIT INDEX
Exhibit No. Description
EX-4 Form of Shareholder Protection Rights _____
Agreement, dated as of May 1, 1997,
between Arrow Financial Corporation
and Glen Falls National Bank and Trust
Company, Rights Agent, which includes as
Exhibit A thereto the Form of Preferred
Stock Rights Certificate.
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
Dated as of
May 1, 1997
between
ARROW FINANCIAL CORPORATION
and
GLENS FALLS NATIONAL BANK AND TRUST COMPANY
as Rights Agent
TABLE OF CONTENTS
Page
Article I Certain Definitions............................................. 1
1.1 Certain Definitions............................................. 1
Article II The Rights...................................................... 6
2.1 Summary of Rights............................................... 6
2.2 Legend on Common Stock Certificates............................. 6
2.3 Exercise of Rights; Separation of Rights........................ 7
2.4 Adjustments to Exercise Price; Number of Rights................. 9
2.5 Date on Which Exercise is Effective............................. 10
2.6 Execution, Authentication, Delivery and Dating of
Rights Certificates........................................... 10
2.7 Registration, Registration of Transfer and Exchange............. 11
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates....... 11
2.9 Persons Deemed Owners........................................... 12
2.10 Delivery and Cancellation of Certificates....................... 12
2.11 Agreement of Rights Holders..................................... 13
Article III Adjustments to the Rights in the Event of Certain Transactions.. 13
3.1 Flip-in......................................................... 13
3.2 Flip-over....................................................... 15
Article IV The Rights Agent.................................................16
4.1 General..........................................................16
4.2 Merger or Consolidation or Change of Name of Rights Agent........16
4.3 Duties of Rights Agent...........................................17
4.4 Change of Rights Agent...........................................19
Article V Miscellaneous....................................................19
5.1 Redemption.......................................................19
5.2 Expiration.......................................................20
5.3 Issuance of New Rights Certificates..............................20
5.4 Supplements and Amendments.......................................20
5.5 Fractional Shares................................................20
5.6 Rights of Action.................................................21
5.7 Holder of Rights Not Deemed a Shareholder........................21
5.8 Notice of Proposed Actions.......................................21
5.9 Notices..........................................................21
5.10 Suspension of Exercisability.....................................22
5.11 Costs of Enforcement.............................................22
5.12 Successors.......................................................22
I
5.13 Benefits of this Agreement.......................................22
5.14 Descriptive Headings.............................................23
5.15 Governing Law....................................................23
5.16 Counterparts.....................................................23
5.17 Severability.....................................................23
EXHIBIT A - Form of Preferred Stock Rights Certificate.......................A-1
ii
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
SHAREHOLDER PROTECTION RIGHTS AGREEMENT (this "Agreement"), dated as of
May 1, 1997, between Arrow Financial Corporation, a New York corporation (the
"Company"), and Glens Falls National Bank and Trust Company, a national banking
association, as Rights Agent (the "Rights Agent," which term shall include any
successor Rights Agent hereunder).
WHEREAS, on April 30, 1997, the Board of Directors of the Company
(a) authorized and declared a dividend of one right ("Right") in respect of each
share of Common Stock (as hereinafter defined) held of record as of the close of
business on May 12, 1997 (the "Record Time") (other than shares of Common Stock
held in the Company's treasury on such date), and (b) authorized the issuance of
one Right in respect of each share of Common Stock issued (whether originally
issued or issued from the treasury) after the Record Time and prior to the
Separation Time (as hereinafter defined); and
WHEREAS, each Right entitles the holder thereof, after the Separation
Time, 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, the Company desires to appoint the Rights Agent to act as
provided herein, and the Rights Agent is willing so to act, in connection with
the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and in certain other respects as
provided herein;
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
Article I
Certain Definitions
1.1 Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
"Acquiring Person" shall mean any Person who shall be a Beneficial
Owner of 20% or more of the outstanding shares of Common Stock at any time after
the date of this Agreement, whether or not such Person continues to be such a
Beneficial Owner, provided, however, that the term "Acquiring Person" shall not
include any Person (I) who is the Beneficial Owner of 20% or more of the
outstanding shares of Common Stock on the date of this Agreement or (ii) 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 outstanding
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.
"Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as such Rule is in effect on the date of this
Agreement.
A Person shall be deemed the "Beneficial Owner", and to have
"Beneficial Ownership" of, and to "Beneficially Own", any securities as to which
such Person or any of such Person's Affiliates or Associates is or may be deemed
to be the beneficial owner pursuant to Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, as such Rules are in effect on the date of this
Agreement, as well as any securities as to which such Person or any of such
Person's Affiliates or Associates has the right to become Beneficial Owner
(whether such right is exercisable immediately or only after the passage of
time) 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, however, that a Person shall not be
deemed the "Beneficial Owner", or to have "Beneficial Ownership" of, or to
"Beneficially Own", any security (I) solely because such security has been
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered security is accepted
for payment or exchange, (ii) solely because such Person or any of such Person's
Affiliates or Associates has or shares the power to vote or direct the voting of
such security pursuant to a revocable proxy given in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations under the Securities Exchange Act of 1934, except if such
power (or the arrangements relating thereto) is then reportable under Item 6 of
Schedule 13D under the Securities Exchange Act of 1934 (or any similar provision
of a comparable or successor report), (iii) solely because of the grant by the
Company to such Person, in connection with the execution of an agreement to
acquire the Company, of options to acquire such security or (iv) held for or
pursuant to the terms of any employee stock ownership or other employee benefit
plan of the Company or a majority-owned Subsidiary of the Company. For purposes
of this Agreement, in determining the percentage of the outstanding shares of
Common Stock with respect to which a Person (together with Affiliates and
Associates) is the Beneficial Owner, all shares
as to which such Person (with Affiliates or Associates) is
deemed the Beneficial Owner shall be deemed outstanding but all shares as to
which any other Person may be deemed the Beneficial Owner but as to which the
first Person (with Affiliates or Associates) is not the Beneficial Owner
and which are not issued and outstanding shall not be deemed outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in The City of New York are generally
authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean the time on such date
(or, if such date is not a Business Day, the time on the next succeeding
Business Day) at which the offices of the transfer agent for the Common Stock
(or, after the Separation Time, the offices of the Rights Agent) are closed to
the public.
2
"Common Stock" shall mean the shares of Common Stock, par value $1.00
per share, of the Company.
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1 hereof.
"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 $75.00.
"Expiration Time" shall mean the earliest of (I) the Exchange Time,
(ii) the Redemption Time and (iii) the Close of Business on the tenth-year
anniversary of the date hereof.
"Flip-in Date" shall mean any Stock Acquisition Date which is not the
result of a Flip-over Transaction or Event.
"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 similar persons responsible for direction of the
business and affairs) of such Person or, if such Person is a Subsidiary of
another Person, the Person that ultimately controls such first-mentioned Person
and that has issued and outstanding such capital stock (or similar equity
interest).
"Flip-over Transaction or Event" shall mean a transaction or series of
transactions after the time when an Acquiring Person has become such in which,
directly or indirectly, (I) the Company shall consolidate or merge or
participate in a binding share exchange with any other Person and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger or shall become, by virtue of such consolidation, merger or exchange, a
Subsidiary of such other Person or any one or more of such other
Person's Affiliates or Associates, or (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 any other Person
(other than the Company or one or more of its Subsidiaries) or to two or more
such Persons that are affiliated or otherwise acting in concert, (iii) any
Acquiring Person shall (A) obtain, with or without consideration, over any
period of 12 consecutive calendar months, any additional shares of any class of
capital stock of the Company or any of its Subsidiaries equal in the aggregate
to more than 1% of the outstanding shares of such class, or securities
exercisable or exchangeable for or convertible into more than 1% of the
outstanding shares of any class of capital stock of the Company or any of its
Subsidiaries (in each case other than as part of a pro rata distribution to all
holders of such stock or pursuant to the exercise of rights or warrants, or the
conversion or exchange of securities, issued pro rata in such a distribution),
(B) 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
3
of its Subsidiaries, over any period of 12 consecutive calendar months, assets
(x) having an aggregate fair market value of more than $8,000,000 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, 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 (D) 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 $5,000,000 or an aggregate cost or transfer of benefits from the
Company or any of its Subsidiaries in excess of $5,000,000 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 that
is directly or indirectly owned by any Acquiring Person is increased by more
than 1%. For purposes of the foregoing description, the term "Acquiring Person"
shall include any Acquiring Person and its Affiliates and Associates (other than
the Company, a wholly owned Subsidiary of the Company or an 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.
"Market Price" per share of any securities on any specified date shall
mean the average of the daily closing prices per share of such securities
(determined as described below) on each of the 20 consecutive Trading Days
through and including the Trading Day immediately preceding such specified 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 prices used to
determine the Market Price on any Trading Days not to be fully comparable with
the closing price on such specified date, each such closing price so used shall
be appropriately adjusted in order to make it fully comparable with the closing
price on such specified date. The closing price per share of any securities on
any date shall be the last sale price or, in case no such sale takes place or is
quoted on such date, the average of the closing bid and asked prices for each
share of such securities, in either case as reported on The Nasdaq National
Market or, if the securities are not reported on The Nasdaq National Market, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
securities are listed or admitted to trading or, if the securities are not
listed or admitted to trading on any national securities exchange, as reported
by the National Association of Securities Dealers, Inc. Automated Quotation
System or such other system then in use, or, if on such date the securities are
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
4
furnished by a professional market maker making a market in the securities
selected by the Board of Directors of the Company. If, on any specified date,
any securities are not listed or admitted to trading on a national securities
exchange or traded in the over-the-counter market, the "Market Price" per share
of such securities on such date shall mean (I) if such securities are any
security other than Preferred Stock, the fair value per share of such securities
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, or (ii) if
such securities are Preferred Stock, an amount equal to 100 (as such number may
be appropriately adjusted for any event of the type described or analogous to
the type described in Section 2.4 hereof) multiplied by the Market Price per
share of the Common Stock on such date as determined pursuant to this paragraph.
"Person" shall mean any individual, firm, partnership, association,
group (as such term is used in Rule 13d-5 under the Securities Exchange Act of
1934, as such Rule is in effect on the date of this Agreement), corporation or
other entity.
"Preferred Stock" shall mean the Series I Junior Participating
Preferred Stock, par value $5.00 per share, of the Company, having those
relative rights, preferences and limitations set forth in the Form of
Designation, Relative Rights, Preferences and Limitations set forth in Exhibit B
hereto.
"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 7500 (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 tenth day (or 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
that would otherwise have occurred) 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 (ii) the Flip-in 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 cancelled, terminated or otherwise
withdrawn prior to the Separation Time, such offer shall be deemed, for purposes
of this definition, never to have been made.
"Stock Acquisition Date" shall mean the first date of public
announcement by the Company (by any means) or by an Acquiring Person (by means
5
of filing a Schedule 13D under the Securities Exchange Act of 1934 (or any
comparable or successor report or schedule) or an amendment thereto) that an
Acquiring Person has become such.
"Subsidiary" of any specified Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or a majority of the equity interests is Beneficially Owned, directly
or indirectly, by such Person.
"Trading Day", when used with respect to any securities, shall mean a
day on which The Nasdaq National Market is open for the transaction of business
or, if such securities are not listed or admitted to trading on The Nasdaq
National Market, a day on which the principal national securities exchange on
which such securities are listed or admitted to trading is open for the
transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, 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. (a) Certificates for the
Common Stock issued after the Record Time but prior to the Separation Time or
the earlier Expiration 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 May 1, 1997 (as such may be amended
from time to time, the "Rights Agreement"), between Arrow Financial
Corporation (the "Company") and Glens Falls National Bank and Trust
Company, as 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, terminated,
exchanged for other securities or assets of the Company, expire, or
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.
6
With respect to such certificates containing the foregoing legend, until the
Separation Time (or the earlier Expiration Time), the Rights associated with the
Common Stock represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any of such certificates
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificates.
(b) 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, and the surrender for transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates.
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(a) or (b) hereof.
2.3 Exercise of Rights; Separation of Rights. (a) Subject to Sections
3.1, 5.1 and 5.10 and 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 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 (together, in the case of certificates issued prior to the Record Time,
with the letter mailed to the record holder thereof pursuant to Section 2.1) and
will be transferable only together with, and will be transferred by a transfer
(whether with or without such letter) of, such associated share. Notwithstanding
any other provision of this Agreement, any Rights held by the Company or any of
its Subsidiaries shall be void.
Subject to this Section 2.3 and to Sections 3.1, 5.1 and 5.10, after
the Separation Time and prior to the Expiration Time, the Rights (I) may be
exercised and (ii) will be transferable independent of Common Stock. Promptly
following the Separation Time, the Rights Agent or any properly appointed
registrar for the Rights ("Rights Registrar") will mail to each holder of
record of Common Stock as of the Separation Time (other than any Person whose
Rights have become void pursuant to Section 3.1(b)), 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 or Rights Registrar 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
7
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or quotation system on which the Rights may from time to time be listed
or traded, or to conform to usage, and (y) a disclosure statement describing the
Rights.
(d) Subject to Section 5.10, Rights may be exercised in whole or in part on
any Business Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent at the principal office of 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
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 and 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
Section 5.10, the Rights Agent will thereupon promptly (I)(A) requisition from a
transfer agent (or make available, if the Rights Agent is the transfer agent)
stock certificates for the 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 (or make available, if the Rights
Agent is the depositary) 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 and (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 remaining unexercised will be issued by the Rights Agent
or Rights Registrar to such holder or to such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (I) take all such action
as may be necessary to ensure that all shares or other securities delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares or other securities (subject to payment of the Exercise Price), be duly
and validly authorized, executed, issued and delivered and fully paid and
nonassessable; (ii) take all such action as may be necessary to comply with any
applicable requirements of the Securities Act of 1933 or the Securities Exchange
Act of 1934, and the rules and regulations thereunder, and any other applicable
8
law, rule or regulation, in connection with the issuance of any shares or other
securities upon exercise of Rights; (iii) use its best efforts to cause all
shares or other securities issued upon exercise of Rights to be listed, upon
issuance, on The Nasdaq National Market; and (iv) 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 or other securities 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 or
other securities 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 Time 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, (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 ("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 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 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.
9
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) make any appropriate public disclosure of such adjustment.
(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 is 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 Separation Time, the Company will notify the Rights
Agent of such Separation Time and will deliver Rights Certificates executed by
the Company for countersignature to the Rights Agent or Rights Registrar, and,
subject to
Section 3.1(b), the Rights Agent or Rights Registrar shall manually
countersign and deliver such Rights Certificates to the holders of the Rights
pursuant to Section 2.3 hereof. No Rights Certificate shall be valid for any
purpose until manually countersigned by the Rights Agent or Rights Registrar.
(b) Each Rights Certificate shall be dated the date of countersignature
thereof.
10
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 the initial "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 appoint some other qualified party to serve as
Rights Registrar, which the Rights Agent may do at any time after the
Separation
Time, upon two days' advance notice to the Company and subject to the Company's
prior approval, 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 and (d) below, the Company will execute, and
the Rights Agent or Rights Registrar 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) Subject to Section 3.1(b), 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.
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 or Rights
Registrar, 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 that have become void under Section 3.1(b), have been
exchanged under Section 3.1 or have been redeemed or terminated under Section
5.1.
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 or
Rights Registrar 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
11
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 or Rights
Registrar 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.
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 or
Rights Registrar) connected therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.8 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence an
original additional contractual obligation of the Company, whether or not the
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, the
Rights Registrar and any other 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 Rights evidenced thereby for all
purposes whatsoever and shall not be
required to honor or take into account 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, or,
if appropriate, the Rights Registrar, be
delivered to the Rights Agent, or, if appropriate, the Rights Registrar, and, in
any case, shall be promptly cancelled by
the Rights Agent, or, if appropriate, the Rights Registrar. The Company may at
any time deliver to the Rights Agent, or Rights Registrar, 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 cancelled by the Rights
Agent, or Rights Registrar. No Rights Certificates shall be countersigned in
lieu of or in exchange
for any Rights Certificates cancelled as provided in this Section 2.10, except
as expressly permitted by this Agreement. The Rights Agent, or Rights
Registrar, shall destroy all
cancelled Rights Certificates and deliver a certificate of destruction to the
Company.
12
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;
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, or Rights Registrar, and any other
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 shall not be required to
honor or take into account 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 Flip-in. (a) In the event that prior to the Expiration Time a
Flip-in Date shall occur, the Company shall take such action as shall be
necessary to ensure and provide that, except as set forth below in this Section
3.1, each Right shall constitute the right to purchase from the Company, upon
exercise thereof in accordance with the terms hereof (but subject to Section
5.10 hereof), in lieu of one one-hundredth of a share of Preferred Stock, that
number of shares of Common Stock having an aggregate Market Price on the Stock
Acquisition 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 Stock Acquisition 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, any Rights that are or were Beneficially
Owned on or after the Stock Acquisition Date by an Acquiring Person or an
Affiliate or Associate thereof or by any transferee, direct or indirect, of any
of the foregoing shall become void, without further action, and any holder of
13
such Rights (including transferees) shall thereafter have no right to exercise
or transfer such Rights under any provision of this Agreement. If any Rights
Certificate is presented for assignment or exercise and the Person presenting
the same will 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 deem the Rights evidenced thereby to be void and not
transferable or exercisable.
The Board of Directors of the Company may, at its option, at any time
after a Flip-in 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,
elect to exchange all (but not less than all) 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 (or, in the alternative, if the Board of Directors so
elects, for shares of Preferred Stock at an exchange ratio of one
one-hundredth of a share of Preferred 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 (other
than Rights that have become void pursuant to Section 3.1(b)) will thereafter
represent only the right to receive a number of shares of Common Stock (or, if
so elected by the Board of Directors, a number of one one-hundredths of a share
of Preferred 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 in exchange
for Rights) to the Rights Agent and any Rights Registrar and the holders of the
then outstanding Rights
(other than Rights that have become void pursuant to Section 3.1(b)), by
mailing such notice in accordance with Section 5.9., provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity
of such exchange.
(d) In the event that there shall not be sufficient treasury shares or
authorized but unissued shares of Common Stock or 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) call a meeting of
shareholders seeking approval to cause sufficient additional shares to be
authorized (provided that if such approval 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 Stock
Acquisition 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
14
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 Flip-in Date times the Exchange Ratio in effect on the
Flip-in 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 an Acquiring Person with respect to, 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), (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, and (iii) the
Flip-over Entity shall take such steps (including, but not limited to, the
authorization and reservation of a sufficient number of shares of Flip-over
Stock to permit exercise of all outstanding Rights in accordance with this
Section 3.2) in connection with such consummation or occurrence as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to shares of Flip-over Stock
thereafter deliverable upon exercise of the Rights. The provisions of this
Section 3.2 shall apply to successive Flip-over Transactions or Events. Any
Rights that are or were Beneficially Owned by an Acquiring Person or an
Affiliate or Associate thereof or by any transferee, direct or indirect, of any
of the foregoing that have not become null and void pursuant to the provisions
of Section 3.1(b) prior to the consummation or occurrence of a
Flip-over Transaction or Event shall become null and void, without further
action, as of that moment in time immediately preceding such consummation or
occurrence.
(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, consummate or permit to occur any
15
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 Rights Agreement to the holders of
Rights upon consummation of such transaction.
Article IV
The Rights Agent
4.1 General. (a) The Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of the Rights in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company agrees to pay to the Rights Agent and any Rights Registrar appointed
by the Rights Agent in accordance with Section 2.7(a) hereof reasonable
compensation for all
services rendered by it or them hereunder and, from time to time, on
demand of the Rights Agent or Rights Registrar, its reasonable expenses and
counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent and any Rights Registrar for, and to hold it or them harmless
against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, or Rights Registrar, for anything done or omitted
by it or them 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 and any Rights Registrar 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
Preferred Stock, Common Stock or 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 or them 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 corporate trust business
or 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 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
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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 shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
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.
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, and all such statements and recitals are and will be deemed to have been
made by the Company only.
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(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) or 3.2 (a) 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 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 Assistant 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.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company 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.
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4.4 Change of Rights Agent. The Rights Agent may resign and be
discharged from its duties under this Agreement upon 90 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 and Preferred 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 30 days' notice in writing, mailed
to the Rights Agent and to each transfer agent of the Common Stock and Preferred
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 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 (I) a corporation organized and doing
business under the laws of the United States, the State of New York or the State
of Delaware, in good standing, having its principal office in the State of New
York, 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, or (ii) an affiliate of the Rights Agent having such authority.
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 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 Preferred 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 Flip-in Date, elect to redeem all (but not less
than all) of 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.
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(b) Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights (or, if the resolution of the Board of Directors
electing to redeem the Rights states that the redemption will not be effective
until the occurrence of a specified future time or event, upon the occurrence of
such future time or event), 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 Rights are redeemed,
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
exchanged or redeemed, as provided in Section 3.1 or 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
holders of Rights (I) in any respect prior to the Flip-in Date (other than to
change the Exercise Price, the Redemption Price or the Expiration Time, except
as contemplated elsewhere herein), (ii) to make any changes following the close
of business on the Flip-in 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. The Company shall not be required to distribute,
or to issue certificates representing, fractional shares of Common Stock or
Preferred Stock (other than fractional shares of Preferred Stock which are
integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise exchange or
redemption of Rights. In lieu of fractional shares that the Company is not
required to distribute, the Company shall, in
the sole discretion of its Board of Directors, either (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
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
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fractional share, or (b) pay to the registered holder of such Rights in cash the
same fraction of the Market Price of one share of the stock issuable upon such
exercise on the day of exercise.
5.6 Rights of Action. Subject to the terms of this Agreement (including
Section 3.1(b)), 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 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 under, 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 or, if exchanged or
redeemed for shares or securities, so exchanged or redeemed, 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 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 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:
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Arrow Financial Corporation
250 Glen Street
Glen Falls, New York 12801
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:
Glens Falls National Bank and Trust Company
250 Glen Street
Glen Falls, New York 12801
Attention: Corporate Trust Department
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 Rights
Registrar 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.
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(d) or to comply with federal or state securities laws, the Company may
suspend the exercisability of the Rights for a reasonable period 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
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Agreement, and 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 laws of 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.
ARROW FINANCIAL CORPORATION
By: /s/ THOMAS L. HOY
Name: Thomas L. Hoy
Title: President and Chief Executive Officer
GLENS FALLS NATIONAL BANK AND TRUST
COMPANY
By: /s/ THOMAS L. HOY
Name: Thomas L. Hoy
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