<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) or (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOOTHILL INDEPENDENT BANCORP
(Exact name of registrant as specified in its charter)
California 95-3815805
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
510 South Grand Avenue, Glendora, CA 91741
(Address of principal executive offices) (Zip Code)
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 Not Applicable
Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase
Common Stock
(Title of Class)
<PAGE> 2
Item 1. Description of Registrant's Securities to be Registered.
On February 25, 1997 (the "Rights Dividend Declaration Date"), the
Board of Directors of Foothill Independent Bancorp (the "Company") declared a
dividend of one right (a "Right") to purchase one share of the Company's common
stock (the "Common Stock") and, under certain circumstances, other securities,
for each outstanding share of the Company's common stock, to be distributed to
shareholders of record at the close of business on March 18, 1997 (the "Record
Date"). The terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") dated as of February 25, 1997 between the Company and ChaseMellon
Shareholder Services, L.L.C.
The following is a brief description of the Rights. It is intended to
provide a general description only and is qualified in its entirety by reference
to the Rights Agreement which has been filed as an exhibit to this Registration
Statement on Form 8-A. Reference is made to Section L of this Summary of Terms
for definitions of certain terms that are used in the Rights Plan and in this
Summary.
A. Issuance of the Rights.
Each share of Common Stock outstanding at the close of business on the
Record Date (of which the total is approximately 4,528,000 shares) will receive
one Right. One additional Right (as such number may be adjusted pursuant to the
provisions of the Rights Agreement) shall be issued with each share of Common
Stock issued after the Record Date and prior to the earliest of (i) the
Distribution Date, (ii) consummation of a Section 13 Event, or (iii) the
Expiration Date (as each such term is defined below); except that, following the
Distribution Date and prior to the Expiration Date, the Company will issue one
Right (as such number may be adjusted pursuant to the provisions of the Rights
Agreement) for each share of Common Stock issued (x) pursuant to the exercise of
stock options under any employee stock option or other employee benefit plan
providing for the issuance of shares of Common Stock by the Company to
participants in such plan, or (y) on the exercise, conversion or exchange of
securities (other than the Rights or securities that are issued or issuable on
exercise of the Rights) that are issued by the Company prior to the Distribution
Date and are or become convertible or exercisable into or exchangeable for
shares of Common Stock of the Company prior to the Expiration Date ("Convertible
Securities").
B. Common Stock Certificates Represent the Rights Prior to the
Distribution Date.
Prior to the Distribution Date, no separate Rights certificates will be
issued. Instead, the Rights (i) will be evidenced by the certificates
representing the outstanding shares of Common Stock of the Company, and (ii)
will not be separately transferable, but will be transferred with and only with
such Common Stock certificates if and when they are transferred. Accordingly,
prior to the Distribution Date, if any, the surrender for transfer of any
certificate for Common Stock outstanding also will constitute the transfer of
the Rights associated with the Common Stock represented by such certificate. New
Common Stock certificates issued after the March 18, 1997 Record Date will
contain a legend incorporating the Rights Agreement by reference.
C. Distribution Date; Issuance of Rights Certificates.
The Rights will separate from the Common Stock and become exercisable
on the Distribution Date, which shall be the earlier of (i) ten (10) days after
the first date of public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock of the Company (the "Stock
Acquisition Date"), or (ii) ten (10) business days after commencement of a
tender or exchange offer by any person or group of affiliated or associated
persons, if upon consummation thereof, such person or group would be the
beneficial owner of 15% or more of the shares of Common Stock of the Company
then outstanding (irrespective of whether
2
<PAGE> 3
any shares are purchased or acquired in such tender or exchange offer). As
soon as practicable after the Distribution Date, Rights certificates will be
mailed to the persons that were holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
certificates alone will represent the Rights.
D. Exercise of the Rights.
1. Rights Initially Not Exercisable. Prior to the
--------------------------------
Distribution Date, the Rights are not exercisable.
2. Exercise of the Rights to Purchase Common Stock of the
------------------------------------------------------
Company (a "Flip-In"). If either of the following events (each, a
---------------------
"Section 11(a)(ii) Event" or a"Flip-In Event") occurs:
(a) Any person, group of persons or any entity becomes
an Acquiring Person by acquiring either individually, or
together with its affiliates or associates, 15% or more of the
Company's Common Stock, or
(b) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or recapitalization of the Company,
or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries,
other than a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not with or
into or otherwise involving an Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its Subsidiaries
which is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person,
then, on the exercise of any Right by any holder (other than a holder
that is an Acquiring Person or an affiliate or associate thereof), at
any time after the Company's Right of Redemption (as described below)
has expired and prior to the Expiration Date, the holder would be
entitled to receive, on payment of the then Exercise Price (which
initially will be $48.00 per Right), a number of newly issued shares of
Common Stock of the Company with an aggregate market value as of the
date of the occurrence of the Section 11(a)(ii) Event of two (2) times
the Exercise Price of the Right. For example, if the Company's Common
Stock was trading at $12.00 per share at the time of the occurrence of
the Section 11(a)(ii) Event (and assuming there had been no adjustments
to the initial Exercise Price of $48.00), each Right would entitle its
holder (other than the Acquiring Person and its affiliates and
associates) to purchase eight (8) shares of Common Stock of the
Company, with an aggregate market value of $96.00 as of the date of the
occurrence of the Section 11(a)(ii) Event, for the Exercise Price of
$48.00, or $6.00 per share. Rights held by the Acquiring Person or any
of its affiliates or associates will become null and void on the
occurrence of a Section 11(a)(ii) Event and, as a result, such Rights
(hereinafter, "Voided Rights") would not be exercisable by any of them
or by any of their respective transferees. If the Company does not have
sufficient number of shares of Common Shares available for all of the
Rights to be exercised, the Company may substitute for all or any of
the shares of Common Stock that would be issuable upon exercise of the
Rights, cash, assets, or other securities having the same aggregate
value as such shares of Common Stock.
3
<PAGE> 4
3. Exercise of the Rights to Purchase Common Stock of An
-----------------------------------------------------
Acquiring Company (a "Flip-Over"). If, following the Distribution Date,
---------------------------------
any of the following events (each, a "Section 13 Event" or a "Flip-Over
Event") occurs:
(a) The Company is merged or consolidated with another
company in a business combination transaction in which the
Company is not the surviving corporation, or
(b) The Company is merged or consolidated with another
company in a business combination transaction in which the
Company is the surviving corporation and all or part of the
Common Stock of the Company is exchanged for stock or other
securities of any other person, or for cash or any other
property, or a combination of any of the foregoing, or
(c) Any commercial bank that is a subsidiary of the
Company ( a "Subsidiary bank") is merged with and into or
consolidated with another company or business entity or
another company or business entity is merged with and into or
consolidated with a Subsidiary bank, or
(d) More than 50% of the assets or earning power of
the Company and its subsidiaries (taken as a whole) is sold or
transferred to another person or entity,
then, subject to the exception described below in this Section 3, each
holder of a Right (except for the holders or transferees of Voided
Rights) will become entitled thereafter to exercise the Right to
purchase, for the Exercise Price, a number of shares of common stock of
the acquiring or surviving company in any such transaction having a
value equal to two (2) times the Exercise Price of the Right. For
example, if a Section 13 Event has occurred (and assuming there has
been no adjustment in the initial Exercise Price of $48.00), each
holder of a Right (other than the holder of a Voided Right) would be
entitled to purchase $96.00 worth of newly issued shares of the
acquiring or surviving company (or its ultimate parent), based on the
market price of such shares on the date of the occurrence of the
Section 13 Event, for a purchase price of $48.00. A merger or
consolidation transaction of the type described in Paragraphs (a), (b)
or (c) of this Subsection 3 shall not constitute a Section 13 Event,
provided that (i) such transaction is consummated with a person who
acquired Common Stock pursuant to a Permitted Offer (or a wholly-owned
subsidiary of any such Person); (ii) the price per share of Common
Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of Common Stock whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of
consideration being offered to the remaining holders of Common Stock
pursuant to such transaction is the same form as the form of
consideration paid pursuant to such Permitted Offer. Upon consummation
of any such transaction that meets the foregoing criteria, all of the
Rights will expire.
E. Adjustment of Number of Rights, Purchase Price and Number of Shares of
Common Stock.
The Exercise Price payable and/or the number of shares of Common Stock
or other securities or property issuable upon exercise of the Rights are subject
to proportionate adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or reclassification
of, the Common Stock, (ii) in the event all holders of the Common Stock are
granted certain rights or warrants to subscribe for Common Stock or convertible
securities at less than the current market price of the Common Stock, or (iii)
upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding regular cash dividends) or of subscription
rights or warrants (other than those referred to above).
4
<PAGE> 5
F. Fractional Rights and Fractional Shares.
The Company is generally not required to issue fractional Rights or
fractional Shares of Common Stock and, in lieu thereof, an adjustment in cash
will be made based on the market price of the Rights or of the Common Stock (as
the case may be).
G. Redemption of the Rights.
In general, the Company may redeem all (but not less than all) of the
Rights at a price of $0.001 per Right (subject to adjustment to reflect stock
splits, stock dividends, or similar transactions) (the "Right of Redemption"),
at any time until the tenth (10th) day following the Stock Acquisition Date.
This redemption period may be extended by the Board of Directors (with the
concurrence of a majority of the Continuing Directors) by amending the Rights
Agreement, as described in Section I below, prior to the time when the Rights
become nonredeemable. The redemption price of $0.001 per Right may be paid in
cash, shares of Common Stock or any other consideration the Board of Directors
deems appropriate. Immediately upon the action of the Board of Directors
ordering a redemption of the Rights, the Rights will terminate and the only
right that the holders of Rights will thereafter have will be to receive the
redemption price.
H. Exchange of the Rights.
At any time after the Stock Acquisition Date and before any person or
group acquires 50% or more of the outstanding Common Stock, the Company may, if
approved by majority vote of the Board of Directors and also by majority vote of
the Continuing Directors, exchange some or all of the outstanding and
exercisable Rights for shares of Common Stock at a one-to-one exchange ratio
(appropriately adjusted to reflect stock splits, dividends or similar
transactions). After the Board orders the exchange of any or all of the Rights,
the Rights to be exchanged may not be exercised thereafter. If the authorized
and unissued shares of Common Stock are not sufficient to permit all of the then
outstanding Rights (other than Voided Rights) to be exchanged, the Board, by
majority vote, may effectuate the exchange with other consideration, including
issuance of debt and/or equity securities. In addition, if approved by majority
vote of the Board at any time before any person or group becomes an Acquiring
Person, the Company may exchange some or all of the Rights for other rights of
substantially equivalent value.
I. Amendments.
Other than those provisions relating to the redemption price or the
final Expiration Date of the Rights, any of the provisions of the Rights
Agreement may be supplemented or amended (including in a manner that may be
adverse to the holders of the Rights) by action of the Board of Directors of the
Company, taken without approval of the holders of the Rights holders (including
those affected by the supplement or amendment), prior to the Distribution Date.
After the Distribution Date, any provisions of the Rights Agreement (other than
those provisions relating to the redemption price and the Final Expiration Date
of the Rights) may be amended by the Board of Directors in order to (i) cure any
ambiguous, defective or inconsistent provision, (ii) shorten or lengthen any
time period, or (iii) otherwise change a provision which the Board of Directors
may deem necessary or desirable and which does not materially and adversely
affect the interests of holders of Rights (other than any Acquiring Person or
such Person's affiliates or associates); provided, the Rights Agreement may not
be amended to (x) make the Rights again redeemable after the Rights have ceased
to be redeemable, or (y) change any other time period unless such change is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of the Rights (other than by any Acquiring Person and
its affiliates).
5
<PAGE> 6
J. No Shareholder Rights Prior to Exercise.
Until a Right is exercised, a holder thereof, by reason of its
ownership of a Right, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends.
K. Anti-Takeover Effects.
The Rights are designed to protect and maximize the value of the
shareholders' interests in the Company in the event of an unsolicited takeover
attempt in a manner or on terms not approved by the Board of Directors. Takeover
attempts frequently include abusive tactics to deprive the Board of Directors
and shareholders of any real opportunity to determine the destiny of the
Company. The Rights have been declared by the Board in order to deter such
tactics, including a gradual accumulation in the open market of 15% or more of
the outstanding shares of Common Stock of the Company, followed by a merger or a
partial or two-tier tender offer that does not treat all shareholders equally.
These tactics can unfairly pressure shareholders, cash them out of their
investment without giving them any real choice and deprive them of the full
value of their shares.
The Rights are not intended to prevent a takeover of the Company and
will not do so. As described in Section G above, the rights may be redeemed by
the Company and, accordingly, the Rights should not interfere with any merger or
business combination approved by the Board of Directors.
Issuance of the Rights does not weaken the Company or interfere with
its business plans. The issuance of the Rights, alone, has no dilutive effect,
will not affect reported earnings per share, should not be taxable to the
Company or to its shareholders, and will not change the way in which the
Company's shares are presently traded. The Company's Board of Directors believes
that the Rights represent a sound and reasonable means of addressing the complex
issues of corporate policy created by the current takeover environment.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group that
attempts to acquire the Company on acquisition terms or in a manner not approved
by the Company's Board of Directors.
L. Certain Definitions.
The following terms, as used in this Summary and in the Rights
Agreement, have the following meanings:
"Acquiring Person" means, subject to certain limited
exceptions set forth in the Rights Agreement, any person or entity, or
group of persons or entities, which together with their affiliates or
associates own beneficially 15% or more or the shares of Common Stock
of the Company;
"Continuing Director" means any member of the Board of
Directors of the Company while such Person is a member of the Board,
provided that such member of the Board (i) is not an Acquiring Person
(as defined above), or an Affiliate or Associate of an Acquiring
Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and (ii) either was a member of the Board prior
to the date of the Rights Agreement or became a member of the Board
after the date of the Rights Agreement as a result of having been
nominated for election to, or having been elected to serve on, the
Board of Directors by vote or written consent of a majority of the then
Continuing Directors.
6
<PAGE> 7
"Expiration Date" means the earliest of (i) February 25,
2007; (ii) the date of redemption of the Rights; (iii) the date the
Board orders an exchange of the Rights (as described in Section H
above); or (iv) the date of consummation of a merger or acquisition
transaction involving the Company that is approved in advance by the
Board of Directors (including a majority of the Continuing Directors).
"Permitted Offer" means a tender offer for all outstanding
Common Stock made in the manner prescribed by Section 14(d) of the
Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder; provided, however, that such tender offer
occurs at a time when Continuing Directors are in office and a majority
of the Continuing Directors then in office has determined that the
offer is both adequate and otherwise in the best interests of the
Company and its shareholders (taking into account all factors that such
Continuing Directors deem relevant, including, without limitation,
prices that could reasonably be achieved if the Company or its assets
were sold on an orderly basis designed to realize maximum value).
Item 2. Exhibit.
The Shareholder Rights Agreement, dated as of February 25, 1997,
between Foothill Independent Bancorp and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, which includes as Exhibit A thereto the Form of Rights
Certificate to be distributed to holders of Rights after the Distribution Date
(as that term is defined in the Rights Agreement).
7
<PAGE> 8
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.
Dated: February 27, 1997 FOOTHILL INDEPENDENT BANCORP
By: /s/ GEORGE E. LANGLEY
-------------------------------------
George E. Langley
President and Chief Executive Officer
S-1
<PAGE> 9
EXHIBIT INDEX
Exhibit Sequential
Number Description Page No.
1 Rights Agreement, dated as of February 25, 1997,
between Foothill Independent Bancorp and ChaseMellon
Shareholder Services, L.L.C., which includes as
Exhibit A thereto the Form of Rights Certificate and
as Exhibit B thereto a Summary of Terms of
Shareholder Rights Plan.
<PAGE> 1
FOOTHILL INDEPENDENT BANCORP
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF FEBRUARY 25, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Section 1. Certain Definitions..............................................................................1
Section 2. Appointment of Rights Agent......................................................................4
Section 3. Issue of Rights Certificates.....................................................................4
Section 4. Form of Rights Certificates......................................................................5
Section 5. Countersignature and Registration................................................................6
Section 6 Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates....................................................6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....................................7
Section 8. Cancellation and Destruction of Rights Certificates..............................................8
Section 9. Reservation and Availability of Capital Stock....................................................9
Section 10. Common Stock Record Date........................................................................10
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.....................10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......................................15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............................15
Section 14. Fractional Rights and Fractional Shares.........................................................19
Section 15. Rights of Action................................................................................20
Section 16. Agreement of Rights Holders.....................................................................20
Section 17. Rights Certificate Holder Not Deemed a Shareholder..............................................20
Section 18. Concerning the Rights Agent.....................................................................21
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......................................21
Section 20. Duties of Rights Agent..........................................................................22
Section 21. Change of Rights Agent..........................................................................23
Section 22. Issuance of New Rights Certificates.............................................................24
Section 23. Redemption......................................................................................24
Section 24. Exchange........................................................................................25
Section 25. Notice of Certain Events........................................................................26
Section 26. Notices.........................................................................................27
Section 27. Supplements and Amendments......................................................................27
Section 28. Successors......................................................................................28
Section 29. Determinations and Actions by the Board of Directors, etc.......................................28
Section 30. Benefits of this Agreement......................................................................28
Section 31. Severability....................................................................................28
Section 32. Governing Law...................................................................................29
Section 33. Counterparts....................................................................................29
Section 34. Descriptive Headings............................................................................29
</TABLE>
-i-
<PAGE> 3
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 25, 1997 (the "Agreement"),
between Foothill Independent Bancorp, a California corporation (the "Company"),
and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on February 25, 1997 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of Common Stock, no par value, of the
Company outstanding at the close of business on March 18, 1997 (the "Record
Date"), and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock of the Company issued between the Record Date and the
Distribution Date (as defined in Section 3 hereof), each Right initially
representing the right to purchase one share of Common Stock of the Company,
upon the terms and subject to the conditions hereinafter set forth (the
"Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
but shall not include (i) the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan, or (ii) any Person who shall become the
Beneficial Owner of 15% or more of the outstanding shares of Common Stock solely
as a result of a reduction in the number of shares of Common Stock outstanding
due to 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, at
which time such Person shall become and be an Acquiring Person; provided,
however, that, notwithstanding the foregoing, no Person shall be deemed to be an
Acquiring Person if the Board of Directors of the Company determines in good
faith that a person who would otherwise be an "Acquiring Person" (but for the
operation of this proviso), has become such inadvertently, and such person
divests as promptly as possible a sufficient number of shares of Common Stock so
that such person would no longer be an "Acquiring Person."
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;
<PAGE> 4
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such person or
any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities
which a Person or any of such Person's Affiliates or Associates may be
deemed to have the right to acquire pursuant to any merger or other
acquisition agreement between the Company and such Person (or one or
more of its Affiliates or Associates) if such agreement has been
approved by the Board of Directors of the Company prior to there being
an Acquiring Person, or (C) securities issuable upon exercise of Rights
at any time prior to the occurrence of a Triggering Event, or (D)
securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any Original Rights;
(iii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right or
power to vote or dispose, or direct the voting or disposition, of or
has "beneficial ownership" (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act) of, including
pursuant to any agreement, arrangement or understanding, whether or not
in writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this subparagraph (iii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the General Rules
and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person, or any Affiliate or Associate thereof, on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iv) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso in
subparagraph (iii) of this paragraph (c)) or disposing of any voting
securities of the Company; provided, however, that nothing in this
paragraph (c) shall cause a person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such person's
participation in good faith in a firm commitment underwriting until the
expiration of forty (40) days after the date of such acquisition; and
provided further, however, that in no case shall an officer or director
of the Company be deemed (A) the Beneficial Owner of any securities
beneficially owned by another officer or director of the Company solely
by reason of actions undertaken by such persons in their capacity as
officers or directors of the Company, or (B) the Beneficial Owner of
securities held of record by the trustee of any employee benefit plan
of the Company or any Subsidiary of the Company for the benefit of any
employee of the Company or any Subsidiary of the Company by reason of
any influence that such officer or director may have over the voting of
the securities held in the plan other than any such securities held in
any such plan for the benefit of such officer or director.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of California are
authorized or obligated by law or executive order to close.
2
<PAGE> 5
(e) "Close of business" on any given date shall mean 5:00
P.M., California time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., California time, on the next succeeding
Business Day.
(f) "Common Stock" shall mean the Common Stock, no par value,
of the Company, except that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock of such Person with
the greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person.
(g) "Continuing Director" shall mean any member of the Board
of Directors of the Company (the "Board of Directors" or the "Board"), while
such Person is a member of the Board, provided that such member of the Board (i)
is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate or
Associate, and (ii) either was a member of the Board prior to the date of this
Agreement or became a member of the Board after the date of this Agreement as a
result of having been nominated for election to, or having been elected to serve
on, the Board of Directors by vote or written consent of a majority of the then
Continuing Directors.
(h) "Expiration Date" shall mean the earliest of (i) the close
of business on the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, (iii) the time at which the Board of
Directors orders the exchange of the Rights as provided in Section 24 hereof, or
(iv) the consummation of a transaction contemplated by Section 13(d) hereof.
(i) "Final Expiration Date" shall mean February 25, 2007.
(j) "Person" shall mean any individual, firm, corporation,
limited liability company, partnership or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(k) "Permitted Offer" shall mean a tender offer for all
outstanding Common Stock made in the manner prescribed by Section 14(d) of the
Exchange Act and the rules and regulations promulgated thereunder; provided,
however, that such tender offer occurs at a time when Continuing Directors are
in office and a majority of the Continuing Directors then in office has
determined that the offer is both adequate and otherwise in the best interests
of the Company and its shareholders (taking into account all factors that such
Continuing Directors deem relevant, including, without limitation, prices that
could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value).
(l) "Section 11(a)(ii) Event" shall mean any event described
in Clause (A) or Clause (B) of Section 11(a)(ii) hereof.
(m) "Section 13 Event" shall mean any event described in any
of Clauses (x), (y) or (z) of Section 13(a) hereof.
(n) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
(o) "Subsidiary" shall mean, with reference to any Person, any
corporation of which an amount of voting securities sufficient to elect at least
a majority of the directors of such corporation is beneficially owned, directly
or indirectly, by such Person, or otherwise controlled by such person.
(p) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
3
<PAGE> 6
(q) "Voting Power" shall mean, with respect to the Company,
any Subsidiary of the Company or any other corporation, the voting power of all
securities of the Company, such Subsidiary or such other corporation (as the
case may be) generally entitled to vote for the election of directors thereof.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Until the earlier of (i) the close of business on the
tenth (10th) day (or such later date as may be determined by action of a
majority of Continuing Directors then in office) after the Stock Acquisition
Date (or, if the tenth (10th) day after the Stock Acquisition Date occurs before
the Record Date, the close of business on the Record Date), or (ii) the close of
business on the tenth (10th) Business Day (or such later date as may be
determined by action of a majority of Continuing Directors then in office, but
in no event later than the Stock Acquisition Date) after the date that a tender
or exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding (irrespective of whether any shares of Common Stock are purchased or
acquired in such tender or exchange offer) (the earlier of (i) and (ii) being
herein referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (c) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the shares of
Common Stock that evidence such Rights (including a transfer to the Company). As
soon as practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of the Common
Stock as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(n) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates and may be transferred by the
transfer of the Rights Certificates as permitted hereby, separately and apart
from any transfer of one or more shares of Common Stock, and the holders of such
Rights Certificates as listed in the records of the Company or any transfer
agent or registrar for the Rights shall be the record holders thereof.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for the Common Stock outstanding as
of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates for the Common Stock and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until the
earlier of the Distribution Date or the Expiration
4
<PAGE> 7
Date, the transfer of any certificates representing shares of Common Stock in
respect of which Rights have been issued shall also constitute the transfer of
the Rights associated with such shares of Common Stock.
(c) Unless the Board of Directors by resolution adopted at or
before the time of the issuance (including pursuant to the exercise of rights
under the Company's benefit plans) of any Common Stock specifies to the
contrary, Rights shall be issued in respect of all shares of Common Stock which
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date; provided, however, that Rights also shall be issued
after the Distribution Date and prior to the Expiration Date in respect of
shares of Common Stock that are issued after the Distribution Date and prior to
the Expiration Date pursuant to (i) any employee stock option or other employee
benefit plan of the Company, or any Subsidiary of the Company ("Employee Plan
Shares"), or (ii) any securities of the Company that were issued by the Company
prior to a Distribution Date and are convertible or exercisable into or are
exchangeable for Common Stock of the Company ("Convertible Securities");
provided, however, that in no event shall any Right, or any securities issuable
or issued on exercise of any Right, constitute or be deemed to constitute, for
purposes of this Section 3, a Convertible Security. Certificates representing
shares of Common Stock issued by the Company prior to the Distribution Date
shall be deemed to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in the Rights Agreement between Foothill
Independent Bancorp, a California Corporation (the "Company") and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), dated as
of February 25 1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void.
In the event that the Company purchases or acquires any Common Stock after the
Record Date but prior to the Distribution Date (or, in the case of any Employee
Plan Shares or shares issued on the conversion, exercise or exchange of any
Convertible Securities prior to the Expiration Date), any Rights associated with
such shares of Common Stock shall be deemed canceled and retired so that the
Company shall not be entitled to exercise any Rights associated with shares of
Common Stock which are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of shares of Common Stock as shall be set forth therein
at the price set forth therein (such exercise price per share, the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
5
<PAGE> 8
(b) Any Rights Certificate issued pursuant to Section 3(a)
(including any Right Certificate issued in respect of any Employee Plan Shares
or shares of Common Stock issued on conversion, exercise or exchange of
Convertible Securities of the Company) or Section 22 hereof that represents
Rights beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom such Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights, or (B) a transfer 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 avoidance of Section
7(e) hereof, and any Rights Certificate issued pursuant to Section 6 or Section
11 hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned by the Rights Agent,
either manually or by facsimile signature, and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates, the Rights Certificate number and the date
of each of the Rights Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 4(b), Section 7(e),
Section 14 and Section 24 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the Expiration
Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling
the registered holder to purchase a like number of shares
6
<PAGE> 9
of Common Stock (or following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e), Section 14 and Section 24
hereof, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of shares of Common Stock (or other securities or property, as
the case may be) as to which such surrendered Rights are then exercisable, at or
prior to the Expiration Date.
(b) The Purchase Price for each share of Common Stock pursuant
to the exercise of a Right shall initially be $48.00, and shall be subject to
adjustment from time to time as provided in Section 11 hereof and shall be
payable in accordance with paragraph (c) of this Section 7.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per share of Common Stock (or other shares, securities or
property, as the case may be) to be purchased as set forth below and an amount
equal to any applicable transfer tax, the Rights Agent shall, subject to Section
7(e) and Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Common Stock (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the total number
of shares of Common Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Common Stock
issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent depository receipts representing such
number of shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common Stock represented by such receipts shall
be deposited by the transfer agent with the depository agent) and the Company
7
<PAGE> 10
will direct the depository agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 11 hereof, (iii) after receipt of such
certificates or depository receipts (as the case may be), cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certificate. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) may be made (x) in cash or by certified bank check or money order
payable to the order of the Company, or (y) by delivery of a certificate or
certificates (with appropriate stock powers executed in blank attached thereto)
evidencing a number of shares of Common Stock equal to the then Purchase Price
divided by the closing market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the Trading Date immediately preceding the
date of such exercise. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Triggering Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such (a "Post Transferee"), or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person had any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e) (a "Prior Transferee"), or (iv) any subsequent
transferee receiving transferred Rights from a Post Transferee or a Prior
Transferee, either directly or through one or more intermediate transferees,
shall become null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Rights Certificates or other person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof
8
<PAGE> 11
except as expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of Common
Stock, the number of shares of Common Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities) that, as provided in
this Agreement, including Section 11(a)(iii) hereof, will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Common Stock issuable and
deliverable upon the exercise of the Rights may be listed on any national
securities exchange or the NASDAQ National Market System (the "NMS"), the
Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange or the NMS upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933 (the "Act"), with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the date of the expiration of the Rights. The Company also will take such
action as may be appropriate under, or to ensure compliance with, the securities
or "blue sky" laws of the various states in connection with the exercisability
of the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification,
if any, in such jurisdiction shall have been obtained and until a registration
statement (if required) has been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Common Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for shares of Common Stock (and/or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the
9
<PAGE> 12
issuance or delivery of a number of shares of Common Stock (and/or other
securities, as the case may be) in respect of a name other than that of, the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of shares of
Common Stock (and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights until such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
SECTION 10. COMMON STOCK RECORD DATE. Each person in whose name any
certificate for a number of shares of Common Stock (and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of Common Stock
(and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Stock (and/or
other securities, as the case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Common Stock (and/or other securities, as the case may be) transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise preemptive rights, if any, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7 hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the effective date
of such subdivision, combination or reclassification, and the number and kind of
shares of Common Stock or other securities, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of Common
Stock or other securities, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Common Stock
transfer books of the Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) In the event:
(A) any Person shall become an Acquiring
Person, other than pursuant to any transaction set forth in Section
13(a) hereof, or
(B) during such time as there is an
Acquiring Person, there shall be any reclassification of securities
(including any reverse stock split), or recapitalization of the
Company, or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or
10
<PAGE> 13
series of transactions involving the Company or any of its
Subsidiaries, other than a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not with or into or
otherwise involving an Acquiring Person) which has the effect, directly
or indirectly, of increasing by more than 1% the proportionate share of
the outstanding shares of any class of equity securities of the Company
or any of its Subsidiaries which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person,
then, subject to Section 23 and Section 24, promptly after the occurrence of an
event described in Clause (A) or Clause (B) of Section 11(a)(ii) hereof, proper
provision shall be made so that each holder of a Right (except as provided below
or in Section 7(e) hereof) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of shares of Common Stock of the Company as shall
equal the result obtained by (x) multiplying the then current Purchase Price by
the then number of shares of Common Stock for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and
dividing that product (which, following such first occurrence, shall thereafter
be referred to as the "Purchase Price" for each Right and for all purposes of
this Agreement) by (y) 50% of the current market price (determined pursuant to
Section 11(d) hereof) per share of Common Stock on the date of such first
occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's charter but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), the Company shall: (A)
determine the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value") over (2) the Purchase Price (such
excess, the "Spread"), and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
other equity securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock which the Board of Directors of the
Company has deemed to have the same value as shares of Common Stock (such shares
of other equity securities, "common stock equivalents")), (4) debt securities of
the Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) hereinabove within
thirty (30) days following the later of (x) the first occurrence of a Section
11(a)(ii) Event, and (y) the date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then, the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which in the aggregate are equal to the
Spread. If the Board of Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, the thirty (30) day
period set forth above may be extended to the extent necessary, but not more
than ninety (90) days following the first occurrence of a Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Stock shall be the current
market price (as determined pursuant to Section
11
<PAGE> 14
11(d) hereof) per share of the Common Stock on the date of the first occurrence
of a Section 11(a)(ii) Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Stock on such
date.
(iv) The right to buy Common Stock of the Company
pursuant to Section 11(a)(ii) hereof shall not arise as a result of any Person
becoming an Acquiring Person through an acquisition of Common Stock pursuant to
a Permitted Offer.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five (45)
calendar days after such record date) Common Stock at a price per share of
Common Stock less than the then current market price (as determined pursuant to
Section 11(d) hereof) per share of Common Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding on such record date, plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
and/or equivalent common stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Common Stock outstanding on such record date, plus the number of
additional shares of Common Stock and/or equivalent common stock to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
the exercise of one Right. In case such subscription price may be paid by
delivery of consideration part or all of which may be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Common Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Subject to Section 11(e) hereof, such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
rights or warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
periodic cash dividend out of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Common Stock or a subdivision of the
outstanding Common Stock, but including any dividend payable in stock other than
Common Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
current market price (as determined pursuant to Section 11(d) hereof) per share
of Common Stock on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent) of the portion of
the cash, assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Common Stock and the
denominator of which shall be such current market price (as determined pursuant
to Section 11(d) hereof) per share of Common Stock; provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon the exercise of one Right. Subject to Section 11(e) hereof, such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
12
<PAGE> 15
(d) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current market
price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to Section
11(a)(iii) hereof, the "current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the current
market price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other than the Rights),
or (B) any subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, after the dividend date for such
dividend or distribution, or the record date for such subdivision, combination
or reclassification, then, and in each such case, the "current market price"
shall be properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by the Board of
Directors of the Company shall be used. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share of
Common Stock or other share, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Common Stock shall apply on like terms
to any such other shares.
13
<PAGE> 16
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of share of Common Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), below, upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest one-ten-thousandth) obtained
by (i) multiplying (x) the number of shares covered by a Right immediately prior
to this adjustment, by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of shares of Common Stock purchasable upon the exercise
of a Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one-ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of shares of Common Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per share and the number of shares which were
expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par or stated value, if any, of the
number of shares of Common Stock, or other securities, if any, issuable upon
exercise of the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable such number of shares of
Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of
14
<PAGE> 17
shares of Common Stock and other capital stock or securities, if any, that are
issuable upon such exercise over and above the number of shares of Common Stock
and other capital stock or securities, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Stock, (ii) issuance wholly for cash
of any shares of Common Stock at less than the current market price, (iii)
issuance wholly for cash of any shares of Common Stock or securities which by
their terms are convertible into or exchangeable for shares of Common Stock,
(iv) stock dividend or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its Common Stock
shall not be taxable to such shareholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i) declare
a dividend on the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator which
shall be the total number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(o) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under this
Rights Agreement, including the rights contained in Section 13.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing shares of Common Stock) in
accordance with Section 26 hereof. Notwithstanding the foregoing sentence, the
failure of the Company to make such certification or give such notice shall not
affect the validity of such adjustment or the force or effect of the requirement
for such adjustment. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Distribution Date,
directly or indirectly,
(w) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 13(h) hereof),
15
<PAGE> 18
and the Company shall not be the continuing or surviving corporation of
such consolidation or merger, or
(x) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 13(h) hereof)
shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or
(y) any Subsidiary of the Company that is a
commercial bank (a "Subsidiary bank"), shall consolidate with or merge
with and into any other Person, or any Person shall consolidate with or
merge with and into any Subsidiary bank, or
(z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer), in
one transaction or a series of related transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the Company in one
or more transactions each of which complies with Section 13(h) hereof),
then, subject to Section 13(d) below, in each such case, proper provision shall
be made so that: (i) following the Distribution Date each holder of a Right,
other than as provided in Section 7(e) hereof, shall thereafter be entitled to
receive, upon the exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, free and clear of any and all
liens, encumbrances, rights of call or of first refusal or other adverse claims,
such number of validly authorized and issued, fully paid, non-assessable and
freely tradable shares of Common Stock of the Principal Party (as such term is
hereinafter defined) as shall be equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of shares of Common Stock for
which a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the number of such shares
for which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and (2) dividing that product (which, following the
first occurrence of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d) hereof) per share of
the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; provided, however, that upon the subsequent occurrence
of any merger, consolidation, sale of all or substantially all assets,
recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had he, at the
time of such transaction, owned the shares of Common Stock of the Principal
Party purchasable upon the exercise of a Right, and such Principal Party shall
take such steps (including, but not limited to, reservation of shares of stock)
as may be necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights, warrants and
other
16
<PAGE> 19
property; and (v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in
clause (w) or (x) of Section 13(a), the Person that is the issuer of
any securities into which shares of Common Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation;
(ii) in the case of any transaction described in
clause (y) of Section 13(a), the surviving or resulting Person in such
merger or consolidation; and
(iii) in the case of any transaction described in
clause (z) of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary or an Affiliate of another Person the Common
Stock of which is and has been so registered, "Principal Party" shall refer to
such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, or an Affiliate of more than one Person, the Common Stocks of two or
more of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the greatest
aggregate market value; and (3) in the case such Person is owned, directly or
indirectly, by a joint venture or partnership formed by two or more Persons that
are not owned, directly or indirectly, by the same Person, the rules set forth
in (1) and (2) above shall apply to each of the chains of ownership having an
interest in such joint venture or partnership as if such party were a
"subsidiary" of both or all of such joint ventures or partners and the Principal
Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct or indirect interests in such Person bear
to the total of such interests.
(c) If, for any reason, the Rights cannot be exercised for
Common Stock of such Principal Party as provided in Section 13(a), then each
holder of Rights shall have the right to exchange its Rights for cash from such
Principal Party in an amount equal to the number of shares of Common Stock that
it would otherwise be entitled to purchase times 50% of the current per share
market price, as determined pursuant to Section 11(d) hereof, of such Common
Stock of such Principal Party. If, for any reason, the foregoing formulation
cannot be applied to determine the cash amount into which the Rights are
exchangeable, then the Board of Directors, based upon the advice of one or more
nationally recognized investment banking firms, and based upon the total value
of the Company, shall determine such amount reasonably and with good faith to
the holders of Rights. Any such determination shall be final and binding on the
Rights Agent.
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
clauses (w), (x) or (y) of Section 13(a) if: (i) such transaction is consummated
with a Person or Persons who acquired Common Stock pursuant to a Permitted Offer
(or a wholly-owned Subsidiary of any such Person or Persons); (ii) the price per
share of Common Stock offered in such transaction is not less than the price per
share of Common Stock paid to all holders of Common Stock whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of consideration
being offered to the remaining holders of Common Stock pursuant to such
transaction is the same form as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
17
<PAGE> 20
(e) The Company shall not consummate, nor will it permit any
subsidiary bank to consummate, any such consolidation, merger, sale or transfer
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company (or the Subsidiary bank, if appropriate) and
each Principal Party (and each other Person who will become a Principal Party as
a result of such consolidation, merger, sale or transfer) shall have executed
and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any consolidation,
merger or sale or transfer of assets mentioned in paragraph (a) of this Section
13, the Principal Party will:
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date;
(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Exchange Act;
(iii) use its best efforts, if the Common Stock of
the Principal Party shall become listed on a national securities
exchange, to list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on such securities
exchange and, if the Common Stock of the Principal Party shall not be
listed on a national securities exchange, to cause the Rights and the
securities purchasable upon exercise of the Rights to be reported by
NASDAQ or such other system then in use;
(iv) use its best efforts to qualify or register the
Rights and the securities purchasable on exercise thereof under the
blue sky laws of such jurisdictions as may be necessary or appropriate;
and
(v) obtain waivers of any rights of first refusal or
preemptive rights in respect of the shares of Common Stock of the
Principal Party subject to purchase upon exercise of outstanding
Rights.
(f) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
(g) The provisions of this Section 13 are intended to provide
to the holders of Rights a significant continuing equity interest in the
business of the Company following the consummation of any transaction of the
types described in paragraph (a) of this Section 13, and any attempt by any
Acquiring Person or Principal Party to avoid the provisions of this Section 13
or to limit the impact thereof shall not be given any effect.
(h) The Company covenants and agrees that:
(i) it shall not, at any time after the Distribution
Date, (A) consolidate with or merge with and into any other Person
(other than a Subsidiary of the Company in a transaction which would
not violate or breach Subsection 13(h)(ii) hereof), or (B) sell or
transfer (or permit any
18
<PAGE> 21
Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each
of which would not violate or breach Subsection 13(h)(ii) hereof), if
(x) at the time of or after such consolidation, merger or sale there
are any charter or bylaw provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect or any
other action taken which would diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or
sale, the shareholders of the Person who constitutes, or would
constitute, the "Principal Party" for the purposes of Section 13(a)
hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(ii) except as permitted by Section 23, Section 24 or
Section 27 hereof, after the Distribution Date, it will not take (or
permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(n)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to date on which such fractional Rights
would have been otherwise issuable. The closing price of the Rights for any day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one share of
Common Stock. For purposes of this Section 14(b), the current market value of
one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right.
19
<PAGE> 22
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance,
and to injunctive relief against actual or threatened violations, of any of the
obligations hereunder of any Person subject to this Agreement. Holders of Rights
that bring an action to enforce the provisions of this Agreement shall be
entitled to recover the reasonable costs and expenses, including reasonable
attorneys' fees, incurred by them in any such action.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent designated for such purposes, duly
endorsed or accompanied by proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be required to be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any temporary
restraining order, preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company shall use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as practicable.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder of
the Company, including, without limitation, 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, to
20
<PAGE> 23
receive dividends or subscription rights, or (except as otherwise provided in
Section 25 hereof) to receive notice of meetings or other actions affecting
shareholders.
SECTION 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent 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, of
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 in the premises. In no case shall the
Rights Agent be liable for special, indirect, incidental or consequential loss
or damage, even if the Rights Agent has been advised of the likelihood of such
loss or damage.
(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 Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
21
<PAGE> 24
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of 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 shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of "current market price") be proved or established by the
Company prior to taking or suffering any action hereunder such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by
the Chairman of the Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 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
evidenced by Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions.
22
<PAGE> 25
(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 pecuniary interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company and
receiving instructions as provided in Section 20(g).
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for an
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the law of the United States or of the State of California
(or of any other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of California),
in good standing, having a principal office in the State of California, which is
authorized under such laws to exercise stock transfer or corporate trust powers
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 $100,000,000, or (b) an Affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not
23
<PAGE> 26
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. REDEMPTION.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the close of business on the tenth (10th) day following the
Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred
prior to the Record Date, the close of business on the tenth (10th) day
following the Record Date), or such later date as may be determined by action of
the Board of Directors that has been approved by a majority of Continuing
Directors then in office and publicly announced by the Company, redeem all but
not less than all the then outstanding Rights at a redemption price of $.001 per
Right, as such amount may be appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price");
provided, however, if the Board of Directors of the Company authorizes
redemption of the Rights in either of the circumstances set forth in clauses (w)
or (x) below, then there must be Continuing Directors then in office and such
authorization shall require the concurrence of a majority of such Continuing
Directors: (w) such authorization occurs on or after the time a Person becomes
an Acquiring Person, or (x) such authorization occurs on or after the date of a
change (resulting from a proxy or consent solicitation) in a majority of the
directors in office at the commencement of such solicitation if any Person who
is a participant in such solicitation has stated (or, if upon the commencement
of such solicitation, a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event unless, concurrent with such solicitation, such
Person (or one or more of its Affiliates or Associates) is making a cash tender
offer pursuant to a Schedule 14D-1 (or any successor form) filed with the
Securities and Exchange Commission for all, and not less than all, of the
outstanding shares of Common Stock not beneficially owned by such Person (or by
its Affiliates or Associates); provided further, however, that if, following the
occurrence of a Stock Acquisition Date and following the expiration of the right
of redemption hereunder, but prior to any event described in clause (B) of
Section 11(a)(ii) or any of clauses (w), (x), (y) or (z) of Section 13(a)
hereof, (y) a person who is an Acquiring Person shall have transferred or
otherwise disposed of a number of shares of Common Stock in one transaction or
series of transactions, not directly or indirectly involving the Company, or any
of its Subsidiaries, which did not result in the occurrence of a Triggering
Event such that such Person is thereafter a Beneficial Owner of less than 15% of
the outstanding shares of Common Stock, and (z) there is no other Person,
immediately following the occurrence of the event described in clause (y), who
is an Acquiring Person, then, the right of redemption herein shall be reinstated
and thereafter be subject to the provisions of this Section 23. Notwithstanding
anything contained in this Agreement to the contrary, a Distribution Date shall
not
24
<PAGE> 27
occur and the Rights shall not be exercisable until such time as the Company's
right of redemption hereunder has expired. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the "current
market price", as defined in Section 11(d) hereof, of the Common Stock at the
time of redemption) or any other form of consideration deemed appropriate by the
Board of Directors.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last addresses it appears upon
the registry books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the Transfer Agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
SECTION 24. EXCHANGE.
(a) Subject to applicable laws, rules and regulations, and
subject to subsection 24(c) below, the Company may, at its option, by majority
vote of the Board of Directors and a majority vote of the Continuing Directors,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) hereof) for
Common Stock at an exchange ratio of one (1) share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Ratio of Exchange"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any
entity holding Common Stock for or pursuant to the terms of any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
rights shall be to receive that number of shares of Common Stock equal to the
number of such Rights held by such holder multiplied by the Ratio of Exchange.
The Company shall give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c) In the event that there shall not be sufficient shares of
Common Stock authorized but unissued to permit any exchange of Rights as
contemplated in accordance with Section 24(a), the Company shall either take
such action as may be necessary to authorize additional Common Stock for
issuance upon exchange of the Rights or alternatively, at the option of a
majority of the Board of Directors, with respect to each Right (i) pay cash in
an amount equal to the Current Value (as hereinafter defined), in lieu of
issuing Common Stock in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the
25
<PAGE> 28
Current Value (as defined below), in lieu of issuing Common Stock in exchange
for each such Right, where the value of such securities shall be determined by a
nationally recognized investment banking firm selected by the Board of Directors
by majority vote of the Board of Directors, or (iii) deliver any combination of
cash, property, Common Stock and/or other securities having a value equal to the
Current Value in exchange for each Right. For purposes of this Section 24(c)
only, the Current Value shall mean the product of the current per share market
price of Common Stock (determined pursuant to Section 11(d) on the date of the
occurrence of the event described above in subparagraph (a) of this Section 24)
multiplied by the number of shares of Common Stock for which the Right otherwise
would be exchangeable if there were sufficient shares available. To the extent
that the Company determines that some action need be taken pursuant to clauses
(i), (ii) or (iii) of this Section 24(c), the Board of Directors may temporarily
suspend the exercisability of the Rights for a period of up to sixty (60) days
following the date on which the event described in Section 24(a) shall have
occurred, in order to seek any authorization of additional shares of Common
Stock and/or to decide the appropriate form of distribution to be made pursuant
to the above provision and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, there
shall be paid to the registered holders of the Rights Certificates with regard
to which such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the current per share market value
of a whole share of Common Stock (as determined pursuant to the second sentence
of Section 11(d) hereof).
(e) The Company may, at its option, by majority vote of the
Board of Directors, at any time before any Person has become an Acquiring
Person, exchange all or part of the then outstanding Rights for rights of
substantially equivalent value, as determined reasonably and with good faith by
the Board of Directors, based upon the advice of one or more nationally
recognized investment banking firms. Immediately upon the action of the Board of
Directors ordering the exchange of any Rights pursuant to this subsection (e) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of rights in exchange
therefor as has been determined by the Board of Directors in accordance with the
first sentence of this subsection (e). The Company shall give public notice of
any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the transfer
agent for the Common Stock of the Company. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by which the
exchange of the Rights will be effected.
SECTION 25. NOTICE OF CERTAIN EVENTS. In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Common Stock or to make any
other distribution to the holders of Common Stock (other than a regular periodic
cash dividend out of earnings or retained earnings of the Company), or (ii) to
offer to the holders of Common Stock rights or warrants to subscribe for or to
purchase any additional shares of Common Stock or shares of stock of any class
or any other securities, rights or options, or (iii) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock), or (iv) to effect
any consolidation or merger of the Company or any Subsidiary bank into or with
any other Person (other than a Subsidiary of the Company in a transaction which
does not violate either of subsections (i) or (ii) of Section 13(h) hereof), or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions none of which violates either of
26
<PAGE> 29
subsections (i) or (ii) of Section 13(h) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least ten (10) days prior to the record date for
determining holders of the shares of Common Stock for purposes of such action,
and in the case of any such other action, at least ten (10) days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Common Stock whichever shall be the earlier.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Foothill Independent Bancorp
510 Grand Avenue
Glendora, California 91741
Attention: Chief Executive Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
Mellon Bank Center
400 So. Hope Street, 4th Floor
Los Angeles, California
Attention: Martha O. Mijango,
Assistant Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement in any manner which the Company may deem
to be necessary or desirable (and irrespective of whether such amendment or
supplement adversely affects the interests of the holders of the Rights) without
the approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date, the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii)
to correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder (which lengthening or shortening, following the first
occurrence of an event set forth in clauses (w) and (x) of the first proviso to
Section 23(a) hereof, shall be effective only if there are Continuing Directors
and shall require the concurrence of a majority of such Continuing Directors),
or (iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an
27
<PAGE> 30
Acquiring Person or an Affiliate or Associate of an Acquiring Person); provided,
however, this Agreement may not be supplemented or amended (A) after the Rights
have ceased to be redeemable in order to then lengthen, pursuant to clause (iii)
of this sentence, a time period during which the Rights may be redeemed, or (B)
to lengthen any other time period specified in this Agreement unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights (other than any holder
that is an Acquiring Person or an affiliate or associate thereof) shall be
deemed coincident with the interests of the holders of Common Stock.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement. The Board of
Directors of the Company (with, where specifically provided for herein, the
concurrence of the Continuing Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board (with, where specifically provided for herein,
the concurrence of the Continuing Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
(with, where specifically provided for herein, the concurrence of the Continuing
Directors) in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board or the Continuing Directors to any liability to the
holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
SECTION 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company (with the concurrence of a majority of the Continuing
Directors) determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of business on the tenth (10th)
day following the date of such determination by the Board of Directors.
28
<PAGE> 31
SECTION 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each such counterparts shall for all purposes deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
29
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ATTEST: FOOTHILL INDEPENDENT BANCORP,
a California corporation
/s/ DONNA MILTENBERGER By: /s/ GEORGE E. LANGLEY
- ------------------------------- -------------------------------------
Name: Donna Miltenberger Name: George E. Langley
------------------------ -----------------------------
Title: Executive Vice President Title: President and Chief
------------------------ Executive Officer
-----------------------------
ATTEST: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
/s/ DEREK LENINGTON By: /s/ MARTHA O. MIJANGO
- ------------------------------ ------------------------------------
Name: Derek Lenington Name: Martha O. Mijango
----------------------- ---------------------------------
Title: Vice President Title: Assistant Vice President
----------------------- ---------------------------------
30
<PAGE> 33
EXHIBIT A
Form of Rights Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER ___________,____ OR EARLIER IF TERMINATED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(E) OF SUCH RIGHTS AGREEMENT.](1)
Rights Certificate
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of February 25, 1997 as such agreement may be amended from
time to time in accordance with its terms (the "Rights Agreement"), between
Foothill Independent Bancorp, a California corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., West Coast time, on February 25,
2007 at the office of the Rights Agent designated for such purpose, or at the
office of its successor as Rights Agent, one fully paid non-assessable share of
Common Stock (the "Common Shares"), of the Company, at a purchase price of
$48.00 per Common Share (the "Purchase Price"), upon presentation and surrender
of this Rights Certificate with the form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of Common Shares which may be purchased upon
exercise hereof) set forth above, are the number and Purchase Price as of
February 25, 1997, based on the Common Shares as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number and kind of
Common Shares or other securities which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.
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
- ------------------
(1) The portion of the legend in bracket shall be inserted only if
applicable and shall replace the preceding sentence.
A-1
<PAGE> 34
Certificates, which limitations of rights include the temporary suspension of
the exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Rights Certificate (i) may be redeemed by the Company, at its option, at
a redemption price of $.001 per Right or (ii) may be exchanged by the Company in
whole or in part for Common Shares, substantially equivalent rights or other
consideration as determined by the Company.
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 evidencing Rights entitling the holder to purchase a like aggregate
amount of securities as the Rights evidenced by the Rights Certificate or 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.
No fractional portion of a Common Share will be issued upon the
exercise of any Right or Rights evidenced hereby but in lieu thereof a cash
payment will 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 Common
Shares or 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 shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
The Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
A-2
<PAGE> 35
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _________, _____.
ATTEST: FOOTHILL INDEPENDENT BANCORP
______________________________ By: _______________________________
Countersigned:
[RIGHTS AGENT]
as Rights Agent
By: __________________________
Authorized Signature
A-3
<PAGE> 36
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED ____________________________________________________
hereby sells, assigns and transfers unto _______________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________________
______________________________________________________ Attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.
Dated: ___________________, _____
______________________________
Signature
Signature Guaranteed:
The signatures should be guaranteed by an eligible guarantor
institution (banks, stock brokers, savings and loan associations and credit
unions with members in an approved signature guarantee medallion program)
pursuant to S.E.C. Rule 17Ad-15.
A-4
<PAGE> 37
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person, or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: ___________________, ______
______________________________
Signature
Signature Guaranteed:
The signatures should be guaranteed by an eligible guarantor
institution (banks, stock brokers, savings and loan associations and credit
unions with members in an approved signature guarantee medallion program)
pursuant to S.E.C. Rule 17Ad-15.
A-5
<PAGE> 38
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate)
To: __________________________
The undersigned hereby irrevocable elects to exercise _________________
Rights represented by this Rights Certificate to purchase the number of Common
Shares issuable upon the exercise of such Rights and requests that certificates
for such number of 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 evidenced 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:
The signatures should be guaranteed by an eligible guarantor
institution (banks, stock brokers, savings and loan associations and credit
unions with members in an approved signature guarantee medallion program)
pursuant to S.E.C. Rule 17Ad-15.
A-6
<PAGE> 39
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person, or an Affiliate or Associate of any such Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: ___________________, _____
______________________________
Signature
Signature Guaranteed:
The signatures should be guaranteed by an eligible guarantor
institution (banks, stock brokers, savings and loan associations and credit
unions with members in an approved signature guarantee medallion program)
pursuant to S.E.C. Rule 17Ad-15.
A-7
<PAGE> 40
Form of Reverse Side of Rights Certificate -- continued
NOTICE
The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
A-8
<PAGE> 41
EXHIBIT B
SUMMARY OF TERMS
OF
SHAREHOLDER RIGHTS PLAN
FOR
FOOTHILL INDEPENDENT BANCORP
On February 25, 1997 (the "Rights Dividend Declaration Date"), the
Board of Directors of Foothill Independent Bancorp (the "Company") declared a
dividend of one right (a "Right") to purchase one share of the Company's common
stock (the "Common Stock") and, under certain circumstances, other securities,
for each outstanding share of the Company's common stock, to be distributed to
shareholders of record at the close of business on March 18, 1997 (the "Record
Date"). The terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") dated as of February 25, 1997 between the Company and ChaseMellon
Shareholder Services, L.L.C.
The following is a brief description of the Rights. It is intended to
provide a general description only and is qualified in its entirety by reference
to the Rights Agreement which has been filed as an exhibit to the Company's
Registration Statement on Form 8-A filed with the Securities and Exchange
Commission concurrently herewith. Reference is made to Section L of this Summary
of Terms for definitions of certain terms that are used in the Rights Plan and
in this Summary.
A. Issuance of the Rights.
Each share of Common Stock outstanding at the close of business on the
Record Date (of which the total is approximately 4,528,000 shares) will receive
one Right. One additional Right (as such number may be adjusted pursuant to the
provisions of the Rights Agreement) shall be issued with each share of Common
Stock issued after the Record Date and prior to the earliest of (i) the
Distribution Date, (ii) consummation of a Section 13 Event, or (iii) the
Expiration Date (as each such term is defined below); except that, following the
Distribution Date and prior to the Expiration Date, the Company will issue one
Right (as such number may be adjusted pursuant to the provisions of the Rights
Agreement) for each share of Common Stock issued (x) pursuant to the exercise of
stock options under any employee stock option or other employee benefit plan
providing for the issuance of shares of Common Stock by the Company to
participants in such plan, or (y) on the exercise, conversion or exchange of
securities (other than the Rights or securities that are issued or issuable on
exercise of the Rights) that are issued by the Company prior to the Distribution
Date and are or become convertible or exercisable into or exchangeable for
shares of Common Stock of the Company prior to the Expiration Date ("Convertible
Securities").
B. Common Stock Certificates Represent the Rights Prior to the
Distribution Date.
Prior to the Distribution Date, no separate Rights certificates will be
issued. Instead, the Rights (i) will be evidenced by the certificates
representing the outstanding shares of Common Stock of the Company, and (ii)
will not be separately transferable, but will be transferred with and only with
such Common Stock certificates if and when they are transferred. Accordingly,
prior to the Distribution Date, if any, the surrender for transfer of any
certificate for Common Stock outstanding also will constitute the transfer of
the Rights associated with the Common Stock represented by such certificate. New
Common Stock certificates issued after the March 18, 1997 Record Date will
contain a legend incorporating the Rights Agreement by reference.
C. Distribution Date; Issuance of Rights Certificates.
The Rights will separate from the Common Stock and become exercisable
on the Distribution Date, which shall be the earlier of (i) ten (10) days after
the first date of public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock of the Company (the "Stock
Acquisition Date"), or (ii) ten (10) business days after commencement of a
tender or exchange offer by any person or group of affiliated or associated
persons, if upon consummation thereof, such person or group would be the
beneficial owner of 15% or more of the shares of Common Stock of the Company
then outstanding (irrespective of whether
B-1
<PAGE> 42
any shares are purchased or acquired in such tender or exchange offer). As
soon as practicable after the Distribution Date, Rights certificates will be
mailed to the persons that were holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
certificates alone will represent the Rights.
D. Exercise of the Rights.
1. Rights Initially Not Exercisable. Prior to the
--------------------------------
Distribution Date, the Rights are not exercisable.
2. Exercise of the Rights to Purchase Common Stock of the
------------------------------------------------------
Company (a "Flip-In"). If either of the following events (each, a
---------------------
"Section 11(a)(ii) Event" or a"Flip-In Event") occurs:
(a) Any person, group of persons or any entity becomes
an Acquiring Person by acquiring either individually, or
together with its affiliates or associates, 15% or more of the
Company's Common Stock, or
(b) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or recapitalization of the Company,
or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries,
other than a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not with or
into or otherwise involving an Acquiring Person) which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its Subsidiaries
which is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person,
then, on the exercise of any Right by any holder (other than a holder
that is an Acquiring Person or an affiliate or associate thereof), at
any time after the Company's Right of Redemption (as described below)
has expired and prior to the Expiration Date, the holder would be
entitled to receive, on payment of the then Exercise Price (which
initially will be $48.00 per Right), a number of newly issued shares of
Common Stock of the Company with an aggregate market value as of the
date of the occurrence of the Section 11(a)(ii) Event of two (2) times
the Exercise Price of the Right. For example, if the Company's Common
Stock was trading at $12.00 per share at the time of the occurrence of
the Section 11(a)(ii) Event (and assuming there had been no adjustments
to the initial Exercise Price of $48.00), each Right would entitle its
holder (other than the Acquiring Person and its affiliates and
associates) to purchase eight (8) shares of Common Stock of the
Company, with an aggregate market value of $96.00 as of the date of the
occurrence of the Section 11(a)(ii) Event, for the Exercise Price of
$48.00, or $6.00 per share. Rights held by the Acquiring Person or any
of its affiliates or associates will become null and void on the
occurrence of a Section 11(a)(ii) Event and, as a result, such Rights
(hereinafter, "Voided Rights") would not be exercisable by any of them
or by any of their respective transferees. If the Company does not have
sufficient number of shares of Common Shares available for all of the
Rights to be exercised, the Company may substitute for all or any of
the shares of Common Stock that would be issuable upon exercise of the
Rights, cash, assets, or other securities having the same aggregate
value as such shares of Common Stock.
B-2
<PAGE> 43
3. Exercise of the Rights to Purchase Common Stock of An
-----------------------------------------------------
Acquiring Company (a "Flip-Over"). If, following the Distribution Date,
---------------------------------
any of the following events (each, a "Section 13 Event" or a "Flip-Over
Event") occurs:
(a) The Company is merged or consolidated with another
company in a business combination transaction in which the
Company is not the surviving corporation, or
(b) The Company is merged or consolidated with another
company in a business combination transaction in which the
Company is the surviving corporation and all or part of the
Common Stock of the Company is exchanged for stock or other
securities of any other person, or for cash or any other
property, or a combination of any of the foregoing, or
(c) Any commercial bank that is a subsidiary of the
Company ( a "Subsidiary bank") is merged with and into or
consolidated with another company or business entity or
another company or business entity is merged with and into or
consolidated with a Subsidiary bank, or
(d) More than 50% of the assets or earning power of
the Company and its subsidiaries (taken as a whole) is sold or
transferred to another person or entity,
then, subject to the exception described below in this Section 3, each
holder of a Right (except for the holders or transferees of Voided
Rights) will become entitled thereafter to exercise the Right to
purchase, for the Exercise Price, a number of shares of common stock of
the acquiring or surviving company in any such transaction having a
value equal to two (2) times the Exercise Price of the Right. For
example, if a Section 13 Event has occurred (and assuming there has
been no adjustment in the initial Exercise Price of $48.00), each
holder of a Right (other than the holder of a Voided Right) would be
entitled to purchase $96.00 worth of newly issued shares of the
acquiring or surviving company (or its ultimate parent), based on the
market price of such shares on the date of the occurrence of the
Section 13 Event, for a purchase price of $48.00. A merger or
consolidation transaction of the type described in Paragraphs (a), (b)
or (c) of this Subsection 3 shall not constitute a Section 13 Event,
provided that (i) such transaction is consummated with a person who
acquired Common Stock pursuant to a Permitted Offer (or a wholly-owned
subsidiary of any such Person); (ii) the price per share of Common
Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of Common Stock whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of
consideration being offered to the remaining holders of Common Stock
pursuant to such transaction is the same form as the form of
consideration paid pursuant to such Permitted Offer. Upon consummation
of any such transaction that meets the foregoing criteria, all of the
Rights will expire.
E. Adjustment of Number of Rights, Purchase Price and Number of Shares of
Common Stock.
The Exercise Price payable and/or the number of shares of Common Stock
or other securities or property issuable upon exercise of the Rights are subject
to proportionate adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or reclassification
of, the Common Stock, (ii) in the event all holders of the Common Stock are
granted certain rights or warrants to subscribe for Common Stock or convertible
securities at less than the current market price of the Common Stock, or (iii)
upon the distribution to holders of the Common Stock of evidences of
indebtedness or assets (excluding regular cash dividends) or of subscription
rights or warrants (other than those referred to above).
B-3
<PAGE> 44
F. Fractional Rights and Fractional Shares.
The Company is generally not required to issue fractional Rights or
fractional Shares of Common Stock and, in lieu thereof, an adjustment in cash
will be made based on the market price of the Rights or of the Common Stock (as
the case may be).
G. Redemption of the Rights.
In general, the Company may redeem all (but not less than all) of the
Rights at a price of $0.001 per Right (subject to adjustment to reflect stock
splits, stock dividends, or similar transactions) (the "Right of Redemption"),
at any time until the tenth (10th) day following the Stock Acquisition Date.
This redemption period may be extended by the Board of Directors (with the
concurrence of a majority of the Continuing Directors) by amending the Rights
Agreement, as described in Section I below, prior to the time when the Rights
become nonredeemable. The redemption price of $0.001 per Right may be paid in
cash, shares of Common Stock or any other consideration the Board of Directors
deems appropriate. Immediately upon the action of the Board of Directors
ordering a redemption of the Rights, the Rights will terminate and the only
right that the holders of Rights will thereafter have will be to receive the
redemption price.
H. Exchange of the Rights.
At any time after the Stock Acquisition Date and before any person or
group acquires 50% or more of the outstanding Common Stock, the Company may, if
approved by majority vote of the Board of Directors and also by majority vote of
the Continuing Directors, exchange some or all of the outstanding and
exercisable Rights for shares of Common Stock at a one-to-one exchange ratio
(appropriately adjusted to reflect stock splits, dividends or similar
transactions). After the Board orders the exchange of any or all of the Rights,
the Rights to be exchanged may not be exercised thereafter. If the authorized
and unissued shares of Common Stock are not sufficient to permit all of the then
outstanding Rights (other than Voided Rights) to be exchanged, the Board, by
majority vote, may effectuate the exchange with other consideration, including
issuance of debt and/or equity securities. In addition, if approved by majority
vote of the Board at any time before any person or group becomes an Acquiring
Person, the Company may exchange some or all of the Rights for other rights of
substantially equivalent value.
I. Amendments.
Other than those provisions relating to the redemption price or the
final Expiration Date of the Rights, any of the provisions of the Rights
Agreement may be supplemented or amended (including in a manner that may be
adverse to the holders of the Rights) by action of the Board of Directors of the
Company, taken without approval of the holders of the Rights holders (including
those affected by the supplement or amendment), prior to the Distribution Date.
After the Distribution Date, any provisions of the Rights Agreement (other than
those provisions relating to the redemption price and the Final Expiration Date
of the Rights) may be amended by the Board of Directors in order to (i) cure any
ambiguous, defective or inconsistent provision, (ii) shorten or lengthen any
time period, or (iii) otherwise change a provision which the Board of Directors
may deem necessary or desirable and which does not materially and adversely
affect the interests of holders of Rights (other than any Acquiring Person or
such Person's affiliates or associates); provided, the Rights Agreement may not
be amended to (x) make the Rights again redeemable after the Rights have ceased
to be redeemable, or (y) change any other time period unless such change is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of the Rights (other than by any Acquiring Person and
its affiliates).
B-4
<PAGE> 45
J. No Shareholder Rights Prior to Exercise.
Until a Right is exercised, a holder thereof, by reason of its
ownership of a Right, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends.
K. Anti-Takeover Effects.
The Rights are designed to protect and maximize the value of the
shareholders' interests in the Company in the event of an unsolicited takeover
attempt in a manner or on terms not approved by the Board of Directors. Takeover
attempts frequently include abusive tactics to deprive the Board of Directors
and shareholders of any real opportunity to determine the destiny of the
Company. The Rights have been declared by the Board in order to deter such
tactics, including a gradual accumulation in the open market of 15% or more of
the outstanding shares of Common Stock of the Company, followed by a merger or a
partial or two-tier tender offer that does not treat all shareholders equally.
These tactics can unfairly pressure shareholders, cash them out of their
investment without giving them any real choice and deprive them of the full
value of their shares.
The Rights are not intended to prevent a takeover of the Company and
will not do so. As described in Section G above, the rights may be redeemed by
the Company and, accordingly, the Rights should not interfere with any merger or
business combination approved by the Board of Directors.
Issuance of the Rights does not weaken the Company or interfere with
its business plans. The issuance of the Rights, alone, has no dilutive effect,
will not affect reported earnings per share, should not be taxable to the
Company or to its shareholders, and will not change the way in which the
Company's shares are presently traded. The Company's Board of Directors believes
that the Rights represent a sound and reasonable means of addressing the complex
issues of corporate policy created by the current takeover environment.
However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors. The Rights may cause substantial dilution to a person or group that
attempts to acquire the Company on acquisition terms or in a manner not approved
by the Company's Board of Directors.
L. Certain Definitions.
The following terms, as used in this Summary and in the Rights
Agreement, have the following meanings:
"Acquiring Person" means, subject to certain limited
exceptions set forth in the Rights Agreement, any person or entity, or
group of persons or entities, which together with their affiliates or
associates own beneficially 15% or more or the shares of Common Stock
of the Company;
"Continuing Director" means any member of the Board of
Directors of the Company while such Person is a member of the Board,
provided that such member of the Board (i) is not an Acquiring Person
(as defined above), or an Affiliate or Associate of an Acquiring
Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, and (ii) either was a member of the Board prior
to the date of the Rights Agreement or became a member of the Board
after the date of the Rights Agreement as a result of having been
nominated for election to, or having been elected to serve on, the
Board of Directors by vote or written consent of a majority of the then
Continuing Directors.
B-5
<PAGE> 46
"Expiration Date" means the earliest of (i) February 25,
2007; (ii) the date of redemption of the Rights; (iii) the date the
Board orders an exchange of the Rights (as described in Section H
above); or (iv) the date of consummation of a merger or acquisition
transaction involving the Company that is approved in advance by the
Board of Directors (including a majority of the Continuing Directors).
"Permitted Offer" means a tender offer for all outstanding
Common Stock made in the manner prescribed by Section 14(d) of the
Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder; provided, however, that such tender offer
occurs at a time when Continuing Directors are in office and a majority
of the Continuing Directors then in office has determined that the
offer is both adequate and otherwise in the best interests of the
Company and its shareholders (taking into account all factors that such
Continuing Directors deem relevant, including, without limitation,
prices that could reasonably be achieved if the Company or its assets
were sold on an orderly basis designed to realize maximum value).
B-6
