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
Community Bank System, Inc.
(Exact name of registrant as specified in its charter)
Delaware 16-1213679
(State of incorporation or organization) (IRS Employer Identification No.)
5790 Widewaters Parkway, Dewitt, New York 13214
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
Title of each class
to be so registered
Stock Purchase Rights
Exhibit Index is on Page 7
Page 1 of 7
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Item 1. Description of Registrant's Securities to be Registered.
On February 21, 1995, the Board of Directors of Community Bank System,
Inc., a Delaware corporation (the "Company"), declared a dividend payable
February 24, 1995 of one right (a "Right") for each outstanding share of common
stock, par value $1.25 per share ("Common Stock"), of the Company held of record
at the close of business on February 21, 1995 (the "Record Time"), or issued
thereafter and prior to the Separation Time (as hereinafter defined). The Rights
will be issued pursuant to a Stockholder Protection Rights Agreement, dated as
of February 21, 1995 (the "Rights Agreement"), between the Company and Community
Bank, National Association, a national banking organization, as Rights Agent
(the "Rights Agent"). Each Right entitles its registered holder to purchase from
the Company, after the Separation Time, one share of Common Stock for $85.00
(the "Exercise Price"), subject to adjustment.
The Rights will be evidenced by the Common Stock certificates until the
close of business on the earlier of (either, the "Separation Time") (i) the
tenth day (or such later date as the Board of Directors of the Company may from
time to time fix by resolution adopted prior to the Separation Time that would
otherwise have occurred) after the date on which any Person (as defined in the
Rights Agreement) (other than the Company, a majority-owned subsidiary of the
Company or an employee stock ownership or other employee benefit plan of the
Company or a majority-owned subsidiary of the Company) commences a tender or
exchange offer which, if consummated, would result in such Person's becoming the
Beneficial Owner of 15% or more of the outstanding shares of Common Stock (any
Person having such Beneficial Ownership being referred to as an "Acquiring
Person") and (ii) the first date (the "Flip-in Date") of public announcement by
the Company or an Acquiring Person that an Acquiring Person has become such,
other than as a result of a Flip-over Transaction or Event (as defined below);
provided that if the foregoing results in the Separation Time being prior to the
Record Time, the Separation Time shall be the Record Time and provided further
that if a tender or exchange offer referred to in clause (i) is cancelled,
terminated or otherwise withdrawn prior to the Separation Time, such offer shall
be deemed never to have been made. The Rights Agreement provides that, until the
Separation Time, the Rights will be transferred with and only with the Common
Stock. Common Stock certificates issued after the Record Time but prior to the
Separation Time shall evidence one Right for each share of Common Stock
represented thereby and shall contain a legend incorporating by reference the
terms of the Rights Agreement (as such may be amended from time to time).
Notwithstanding the absence of the aforementioned legend, certificates
evidencing shares of Common Stock outstanding at the Record Time shall also
evidence one Right for each share of Common Stock evidenced thereby. Promptly
following the Separation Time, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of Common Stock at
the Separation Time.
The Rights will not be exercisable until the Business Day (as defined in
the Rights Agreement) following the Separation Time. The Rights will expire on
the earliest of (i) the Exchange Time (as defined below), (ii) the close of
business on February 21, 2005 and (iii) the date on which the Rights are
redeemed as described below (in any such case, the "Expiration
Page 2 of 7
<PAGE>
Time").
The Exercise Price and the number of Rights outstanding, or in certain
circumstances the securities purchasable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution in the event of a
Common Stock dividend on, or a subdivision or a combination into a smaller
number of shares of, Common Stock, or the issuance or distribution of any
securities or assets in respect of, in lieu of or in exchange for Common Stock.
In the event that prior to the Expiration Time, a Flip-in Date occurs, the
Company shall take such action as shall be necessary to ensure and provide that
each Right (other than Rights beneficially owned by the Acquiring Person or any
affiliate or associate thereof, which Rights shall become void) shall constitute
the right to purchase from the Company, upon the exercise thereof in accordance
with the terms of the Rights Agreement, that number of shares of Common Stock of
the Company having an aggregate Market Price, on the date of the public
announcement of an Acquiring Person's becoming such (the "Stock Acquisition
Date") that gave rise to the Flip-in Date, equal to twice the Exercise Price for
an amount in cash equal to the then current Exercise Price. In addition, the
Board of Directors of the Company may, at its option, at any time after a
Flip-in Date and prior to the time that an Acquiring Person becomes the
Beneficial Owner of more than 50% of the outstanding shares of Common Stock,
elect to exchange all (but not less than all) of the then outstanding Rights
(other than Rights Beneficially Owned by the Acquiring Person or any affiliate
or associate thereof, which Rights become void) for shares of Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date of the Separation Time (the "Exchange Ratio"). Immediately upon such
action by the Board of Directors (the "Exchange Time"), the right to exercise
the Rights will terminate and each Right will thereafter represent only the
right to receive a number of shares of Common Stock equal to the Exchange Ratio.
In the event that prior to the Expiration Time the Company enters into,
consummates or permits to occur a transaction or series of transactions on or
after the Stock Acquisition Date in which, directly or indirectly, (A) the
Company shall consolidate or merge with any other Person or (B) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer) assets (i) aggregating more than 50% of the assets
(measured by either book value or fair market value) or (ii) generating more
than 50% of the operating income or cash flow, of the Company and its
subsidiaries (taken as a whole) to any other Person (other than the Company or
one or more of its wholly owned subsidiaries) or to two or more such Persons
which are affiliated or otherwise acting in concert or (C) any Acquiring Person
shall (i) obtain, with or without consideration, over any period of 12
consecutive calendar months, any additional shares of any class of capital stock
of the Company or any of its Subsidiaries equal in the aggregate to more than 1%
of the outstanding shares of such class, or securities exercisable or
exchangeable for or convertible into more than 1% of the outstanding shares of
any class of capital stock of the Company or any of its Subsidiaries (in each
case other
Page 3 of 7
<PAGE>
than as part of a pro rata distribution to all holders of such stock
or pursuant to the exercise of rights or warrants, or the conversion or exchange
of securities, issued pro rata in such a distribution), (ii) sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise acquire or dispose of,
to, from, or with, as the case may be, the Company or any of its Subsidiaries,
over any period of 12 consecutive calendar months, assets (x) having an
aggregate fair market value of more than $15,000,000 or (y) on terms and
conditions less favorable to the Company than the Company would be able to
obtain through arm's-length negotiations with an unaffiliated third party, (iii)
receive any compensation for services from the Company or any of its
Subsidiaries, other than compensation for full-time employment as a regular
employee at rates in accordance with the Company's (or its Subsidiaries') past
practices, or (iv) receive the benefit, directly or indirectly (except
proportionately as a shareholder), over any period of 12 consecutive calendar
months, of any loans, advances, guarantees, pledges, insurance, reinsurance or
other financial assistance or any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries involving an aggregate principal amount
in excess of $5,000,000 or an aggregate cost or transfer of benefits from the
Company or any of its Subsidiaries in excess of $5,000,000 or, in any case, on
terms and conditions less favorable to the Company than the Company would be
able to obtain through arm's-length negotiations with a third party, or (D) as a
result of any reclassification of securities (including any reverse stock
split), or recapitalization, of the Company, or any merger or consolidation of
the Company with any of its Subsidiaries or any other transaction or series of
transactions (whether or not with or into or otherwise involving an Acquiring
Person), the proportionate share of the outstanding shares of any class of
equity or convertible securities of the Company or any of its Subsidiaries which
is directly or indirectly owned by any Acquiring Person is increased by more
than 1%, then the Company shall take such action as shall be necessary to
ensure, and shall not enter into, consummate or permit to occur such Flip-over
Transaction or Event until it shall have entered into a supplemental agreement
with the Person engaging in such Flip-over Transaction or Event (the "Flip-over
Entity"), for the benefit of the holders of the Rights, providing, that upon
consummation or occurrence of the Flip-over Transaction or Event (i) each Right
shall thereafter constitute the right to purchase from the Flip-over Entity,
upon exercise thereof in accordance with the terms of the Rights Agreement, that
number of shares of common stock of the Flip-over Entity having an aggregate
Market Price on the date of consummation or occurrence of such Flip-over
Transaction or Event equal to twice the Exercise Price for an amount in cash
equal to the then current Exercise Price and (ii) the Flip-over Entity shall
thereafter be liable for, and shall assume, by virtue of such Flip-over
Transaction or Event and such supplemental agreement, all the obligations and
duties of the Company pursuant to the Rights Agreement. For purposes of the
foregoing description, the term "Acquiring Person" shall include any Acquiring
Person and its Affiliates and Associates (other than the Company, a wholly owned
Subsidiary of the Company or an employee stock ownership or other employee
benefit plan of the Company or a wholly owned Subsidiary of the Company),
counted together as a single Person (a "Flip-over Transaction or Event").
The Board of Directors of the Company may, at its option, at any time prior
to the Flip-in Date, redeem all (but not less than all) the then outstanding
Rights at a price (calculated to the nearest one one-hundredth of a cent) equal
to the Exercise Price, as in effect at the
Page 4 of 7
<PAGE>
Redemption Time, divided by 8500 (initially $0.01 per Right) (the
"Redemption Price"), as provided in the Rights Agreement. Immediately upon the
action of the Board of Directors of the Company electing to redeem the Rights,
without any further action and without any notice, the right to exercise the
Rights will terminate and each Right will thereafter represent only the right to
receive the Redemption Price in cash for each Right so held.
The holders of Rights will, solely by reason of their ownership of Rights,
have no rights as stockholders of the Company, including, without limitation,
the right to vote or to receive dividends.
The Rights will not prevent a takeover of the Company. The Rights, however,
may have certain anti-takeover effects. The Rights may cause substantial
dilution to a person or group that acquires 15% or more of the Common Stock
unless the Rights are first redeemed by the Board of Directors of the Company.
Nevertheless, the Rights should not interfere with a transaction that is in the
best interests of the Company and its stockholders on or prior to the Flip-in
Date, because the Rights can be redeemed before the consummation of such
transaction.
As of February 21, 1995 there were 2,788,150 shares of Common Stock issued
(of which all shares were outstanding and no shares were held in treasury). As
long as the Rights are attached to the Common Stock, the Company will issue one
Right with each new share of Common Stock so that all such shares will have
Rights attached.
The Rights Agreement (which includes as Exhibit A the forms of Rights
Certificate and Election to Exercise) is attached hereto as an exhibit and is
incorporated herein by reference. The foregoing description of the Rights is
qualified in its entirety by reference to the Rights Agreement and such
exhibit[s] thereto.
Item 2. Exhibits.
Exhibit No. Description
- - - - ----------- -----------
(1) Rights Agreement.
(2) Forms of Rights Certificate and of Election to
Exercise, included in Exhibit A to the Rights
Agreement.
Page 5 of 7
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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, thereunto duly authorized.
COMMUNITY BANK SYSTEM, INC.
By /s/ SANFORD A. BELDEN
--------------------------
Name: Sanford A. Belden
Title: President and CEO
Date: February 27, 1995
Page 6 of 7
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EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
- - - - ----------- ----------- -------------
(1) Stockholder Protection Rights
Agreement, dated as of
February 21, 1995 (the
"Rights Agreement"), between
Community Bank System, Inc.
and Community Bank, National
Association, as Rights Agent.
(2) Forms of Rights Certificate
and of Election to Exercise,
included in Exhibit A to the
Rights Agreement.
Page 7 of 7
EXHIBIT 1
- - - - -------------------------------------------------------------------------------
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
dated as of
February 21, 1995
between
COMMUNITY BANK SYSTEM, INC.
and
COMMUNITY BANK, NATIONAL ASSOCIATION
as Rights Agent
- - - - -------------------------------------------------------------------------------
<PAGE>
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
Table of Contents
Page
Article I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions....................................... 1
Article II
THE RIGHTS
Section 2.1 Summary of Rights.......................................... 8
Section 2.2 Legend on Common Stock Certificates........................ 8
Section 2.3 Exercise of Rights; Separation of Rights................... 9
Section 2.4 Adjustments to Exercise Price; Number of Rights ........... 11
Section 2.5 Date on Which Exercise is Effective........................ 13
Section 2.6 Execution, Authentication, Delivery
and Dating of Rights Certificates........................ 13
Section 2.7 Registration, Registration of Transfer and Exchange ....... 14
Section 2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates.. 15
Section 2.9 Persons Deemed Owners...................................... 16
Section 2.10 Delivery and Cancellation of Certificates.................. 16
Section 2.11 Agreement of Rights Holders................................ 17
Article III
ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF
CERTAIN TRANSACTIONS
Section 3.1 Flip-in.................................................... 18
Section 3.2 Flip-over.................................................. 20
Article IV
THE RIGHTS AGENT
Section 4.1 General.................................................... 21
Section 4.2 Merger or Consolidation or Change of
Name of Rights Agent..................................... 22
Section 4.3 Duties of Rights Agent..................................... 23
Section 4.4 Change of Rights Agent..................................... 25
<PAGE>
Page
Article V
MISCELLANEOUS
Section 5.1 Redemptions................................................ 26
Section 5.2 Expiration................................................. 27
Section 5.3 Issuance of New Rights Certificates........................ 27
Section 5.4 Supplements and Amendments................................. 27
Section 5.5 Fractional Shares.......................................... 27
Section 5.6 Rights of Action........................................... 28
Section 5.7 Holder of Rights Not Deemed a Stockholder.................. 28
Section 5.8 Notice of Proposed Actions................................. 29
Section 5.9 Notices.................................................... 29
Section 5.10 Suspension of Exercisability............................... 30
Section 5.11 Costs of Enforcement....................................... 30
Section 5.12 Successors................................................. 30
Section 5.13 Benefits of this Agreement................................. 30
Section 5.14 Descriptive Headings....................................... 31
Section 5.15 Governing Law.............................................. 31
Section 5.16 Counterparts............................................... 31
Section 5.17 Severability............................................... 31
EXHIBITS
Exhibit A Form of Rights Certificate (Together with Form of
Election to Exercise)
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STOCKHOLDER PROTECTION RIGHTS AGREEMENT
STOCKHOLDER PROTECTION RIGHTS AGREEMENT (this "Agreement"), dated as of
February 21, 1995, between Community Bank System, Inc., a Delaware corporation
(the "Company"), and Community Bank, National Association, a national banking
association, as Rights Agent (the "Rights Agent", which term shall include any
successor Rights Agent hereunder).
WHEREAS, the Board of Directors of the Company has (a) authorized and
declared a dividend of one right ("Right") in respect of each share of Common
Stock (as hereinafter defined) held of record as of the close of business on
February 21, 1995 (the "Record Time") and (b) authorized the issuance of one
Right in respect of each share of Common Stock issued after the Record Time and
prior to the Separation Time (as hereinafter defined);
WHEREAS, each Right entitles the holder thereof, after the Separation Time,
to purchase securities of the Company (or, in certain cases, of certain other
entities) pursuant to the terms and subject to the conditions set forth herein;
and
WHEREAS, the Company desires to appoint the Rights Agent to act on behalf
of the Company, and the Rights Agent is willing so to act, in connection with
the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
Article I
Certain Definitions
1.1 Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:
"Acquiring Person" shall mean any Person who is a Beneficial Owner of 15%
or more of the outstanding shares of Common Stock; provided, however, that the
term "Acquiring Person" shall not include any Person who is the Beneficial Owner
of 15% or more of the outstanding shares
<PAGE>
of Common Stock on the date of this Agreement or who shall become the Beneficial
Owner of 15% or more of the outstanding shares of Common Stock solely as a
result of an acquisition by the Company of shares of Common Stock, until such
time hereafter or thereafter as such Person shall become the Beneficial Owner
(other than by means of a stock dividend or stock split) of any additional
shares of Common Stock.
"Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 under the Securities Exchange Act of 1934, as such Rule
is in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner", and to have "Beneficial
Ownership", of, and to "Beneficially Own", any securities as to which such
Person or any of such Person's Affiliates or Associates is or may be deemed to
be the beneficial owner pursuant to Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as such Rules are in effect on the date of this Agreement,
as well as any securities as to which such Person or any of such Person's
Affiliates or Associates has the right to become Beneficial Owner (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the "Beneficial
Owner", or to have "Beneficial Ownership", of, or to "Beneficially Own", any
security (i) solely because such security has been tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's Affiliates or
Associates until such tendered security is accepted for payment or exchange,
(ii) solely because such Person or any of such Person's Affiliates or Associates
has or shares the power to vote or direct the voting of such security pursuant
to a revocable proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and regulations
under the Securities Exchange Act of 1934, except if such power (or the
arrangements relating thereto) is then reportable under Item 6 of
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Schedule 13D under the Securities Exchange Act of 1934 (or any similar
provision of a comparable or successor report), (iii) solely because of the
grant by the Company to such Person, in connection with the execution of an
agreement to acquire the Company, of options to acquire such security or (iv)
held for or pursuant to the terms of any employee stock ownership or other
employee benefit plan of the Company or a majority-owned Subsidiary of the
Company. For purposes of this Agreement, in determining the percentage of the
outstanding shares of Common Stock with respect to which a Person is the
Beneficial Owner, all shares as to which such Person is deemed the Beneficial
Owner shall be deemed outstanding.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York are generally authorized or
obligated by law or executive order to close.
"Close of Business" on any given date shall mean the time on such date (or,
if such date is not a Business Day, the time on the next succeeding Business
Day) at which the offices of the transfer agent for the Common Stock (or, after
the Separation Time, the offices of the Rights Agent) are closed to the public.
"Common Stock" shall mean the shares of Common Stock, par value $1.25 per
share, of the Company.
"Exchange Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 3.1(c) hereof.
"Exercise Price" shall mean, as of any date, the price at which a holder
may purchase the securities issuable upon exercise of one whole Right. Until
adjustment thereof in accordance with the terms hereof, the Exercise Price shall
equal $85.00.
"Expiration Time" shall mean the earliest of (i) the Exchange Time, (ii)
the Redemption Time and (iii) the close of business on the tenth-year
anniversary of the date hereof.
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"Flip-in Date" shall mean any Stock Acquisition Date which is not the
result of a Flip-over Transaction or Event.
"Flip-over Stock" of any Person shall mean the capital stock (or similar
equity interest) with the greatest voting power in respect of the election of
directors (or similar persons responsible for direction of the business and
affairs) of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately controls such
first-mentioned Person.
"Flip-over Transaction or Event" shall mean a transaction or series of
transactions after the time when an Acquiring Person has become such in which,
directly or indirectly, (A) the Company shall consolidate or merge with any
other Person or (B) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer) assets (i) aggregating
more than 50% of the assets (measured by either book value or fair market value)
or (ii) generating more than 50% of the operating income or cash flow, of the
Company and its Subsidiaries (taken as a whole) to any other Person (other than
the Company or one or more of its wholly owned Subsidiaries) or to two or more
such Persons which are affiliated or otherwise acting in concert, (C) any
Acquiring Person shall (i) obtain, with or without consideration, over any
period of 12 consecutive calendar months, any additional shares of any class of
capital stock of the Company or any of its Subsidiaries equal in the aggregate
to more than 1% of the outstanding shares of such class, or securities
exercisable or exchangeable for or convertible into more than 1% of the
outstanding shares of any class of capital stock of the Company or any of its
Subsidiaries (in each case other than as part of a pro rata distribution to all
holders of such stock or pursuant to the exercise of rights or warrants, or the
conversion or exchange of securities, issued pro rata in such a distribution),
(ii) sell, purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, to, from, or with, as the case may be, the Company or any
of its Subsidiaries, over any period of 12 consecutive calendar months, assets
(x) having an aggregate fair market value of more
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than $15,000,000 or (y) on terms and conditions less favorable to the Company
than the Company would be able to obtain through arm's-length negotiations with
an unaffiliated third party, (iii) receive any compensation for services from
the Company or any of its Subsidiaries, other than compensation for full-time
employment as a regular employee at rates in accordance with the Company's (or
its Subsidiaries') past practices, or (iv) receive the benefit, directly or
indirectly (except proportionately as a shareholder), over any period of 12
consecutive calendar months, of any loans, advances, guarantees, pledges,
insurance, reinsurance or other financial assistance or any tax credits or other
tax advantage provided by the Company or any of its Subsidiaries involving an
aggregate principal amount in excess of $5,000,000 or an aggregate cost or
transfer of benefits from the Company or any of its Subsidiaries in excess of
$5,000,000 or, in any case, on terms and conditions less favorable to the
Company than the company would be able to obtain through arm's-length
negotiations with a third party, or (D) as a result of any reclassification of
securities (including any reverse stock split), or recapitalization, of the
Company, or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions (whether or not
with or into or otherwise involving an Acquiring Person), the proportionate
share of the outstanding shares of any class of equity or convertible securities
of the Company or any of its Subsidiaries which is directly or indirectly owned
by any Acquiring Person is increased by more than 1%. For purposes of the
foregoing description, the term "Acquiring Person" shall include any Acquiring
Person and its Affiliates and Associates (other than the Company, a wholly owned
Subsidiary of the Company or an employee stock ownership or other employee
benefit plan of the Company or a wholly owned Subsidiary of the Company),
counted together as a single Person.
"Market Price" per share of any securities on any date shall mean the
average of the daily closing prices per share of such securities (determined as
described below) on each of the 20 consecutive Trading Days through and
including the Trading Day immediately preceding such date; provided, however,
that if an event of a type analogous to any of the events described in Section
2.4
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hereof shall have caused the closing prices used to determine the Market
Price on any Trading Days not to be fully comparable with the closing price on
such date, each such closing price so used shall be appropriately adjusted in
order to make it fully comparable with the closing price on such date. The
closing price per share of any securities on any date shall be the last sale
price or, in case no such sale takes place or is quoted on such date, the
average of the closing bid and asked prices for each share of such securities,
in either case as reported on the Nasdaq National Market or, if the securities
are not reported on the Nasdaq National Market, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the securities are listed or
admitted to trading or, if the securities are not listed or admitted to trading
on any national securities exchange, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other system then in
use, or, if on any such date the securities are not listed or admitted to
trading on any national securities exchange or quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the securities selected by the Board of
Directors of the Company; provided, however, that if on any such date the
securities are not listed or admitted to trading on a national securities
exchange or traded in the over-the-counter market, the closing price per share
of such securities on such date shall mean the fair value per share of
securities on such date as determined in good faith by the Board of Directors of
the Company, after consultation with a nationally recognized investment banking
firm, and set forth in a certificate delivered to the Rights Agent.
"Person" shall mean any individual, firm, partnership, association, group
(as such term is used in Rule 13d-5 under the Securities Exchange Act of 1934,
as such Rule is in effect on the date of this Agreement), corporation or other
entity.
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<PAGE>
"Redemption Price" shall mean an amount (calculated to the nearest one
one-hundredth of a cent) equal to the Exercise Price, as in effect at the
Redemption Time, divided by 8500 (i.e., initially $0.01).
"Redemption Time" shall mean the time at which the right to exercise the
Rights shall terminate pursuant to Section 5.1 hereof.
"Separation Time" shall mean the close of business on the earlier of (i)
the tenth day (or such later date as the Board of Directors of the Company may
from time to time fix by resolution adopted prior to the Separation Time that
would otherwise have occurred) after the date on which any Person (other than
the Company, a majority-owned Subsidiary of the Company or an employee stock
ownership or other employee benefit plan of the Company or a majority-owned
Subsidiary of the Company) commences a tender or exchange offer which, if
consummated, would result in such Person's becoming an Acquiring Person and (ii)
the Flip-in Date; provided that, if the foregoing results in the Separation Time
being prior to the Record Time, the Separation Time shall be the Record Time and
provided further that, if any tender or exchange offer referred to in clause (i)
of this definition is cancelled, terminated or otherwise withdrawn prior to the
Separation Time, such offer shall be deemed, for purposes of this definition,
never to have been made.
"Stock Acquisition Date" shall mean the first date of public announcement
by the Company (by any means) or by an Acquiring Person (by means of filing a
Schedule 13D under the Securities Exchange Act of 1934 (or any comparable or
successor report or schedule) or an amendment thereto) that an Acquiring Person
has become such.
"Subsidiary" of any specified Person shall mean any corporation or other
entity of which a majority of the voting power of the equity securities or a
majority of the equity interest is Beneficially Owned, directly or indirectly,
by such Person.
"Trading Day", when used with respect to any securities, shall mean a day
on which The Nasdaq National Market is open for the transaction of business or,
if such securities are not
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listed or admitted to trading on The Nasdaq National Market, a day on which the
principal national securities exchange on which such securities are listed or
admitted to trading is open for the transaction of business or, if such
securities are not listed or admitted to trading on any national securities
exchange, a Business Day.
Article II
The Rights
2.1 Summary of Rights. As soon as practicable after the Record Time, the
Company will mail a copy of a letter to stockholders summarizing the terms of
the Rights to each holder of record of Common Stock as of the Record Time, at
such holder's address as shown by the records of the Company.
2.2 Legend on Common Stock Certificates. Certificates for the Common Stock
issued after the Record Time but prior to the Separation Time shall evidence one
Right for each share of Common Stock represented thereby and shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
Until the Separation Time (as defined in the Rights Agreement referred to
below), this certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement, dated as of February
21, 1995 (as such may be amended from time to time, the "Rights
Agreement"), between Community Bank System, Inc. (the "Company") and
Community Bank, National Association, as Rights Agent, the terms of which
are hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may be
terminated, may be exchanged for shares of Common Stock or other
securities or assets of the Company, may expire, may become void (if they
are "Beneficially Owned" by an "Acquiring Person" or an Affiliate or
Associate thereof, as such terms are defined in the Rights Agreement, or
by any transferee of any of the foregoing) or may be evidenced by separate
certificates and may no longer be evidenced by this certificate. The
Company will mail or arrange for the mailing of a copy of the Rights
Agreement to the holder of this certificate without charge within five
days after the receipt of a written request therefor.
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Certificates representing shares of Common Stock that are issued and outstanding
at the Record Time shall evidence one Right for each share of Common Stock
evidenced thereby notwithstanding the absence of the foregoing legend.
2.3 Exercise of Rights; Separation of Rights. (a) Subject to adjustment as
herein set forth, each Right will entitle the holder thereof, after the
Separation Time, to purchase, for the Exercise Price, one share of Common Stock.
(b) Until the Separation Time, (i) no Right may be exercised and (ii) each
Right will be evidenced by the certificate for the associated share of Common
Stock (together, in the case of certificates issued prior to the Record Time,
with the letter mailed to the record holder thereof pursuant to Section 2.1) and
will be transferable only together with, and will be transferred by a transfer
(whether with or without such letter) of, such associated share. Notwithstanding
any other provision of this Agreement, any Rights held by the Company or any of
its Subsidiaries shall be void.
(c) After the Separation Time and prior to the Expiration Time, the Rights
(i) may be exercised and (ii) will be transferable independent of Common Stock.
Promptly following the Separation Time, the Rights Agent will mail to each
holder of record of Common Stock as of the Separation Time, at such holder's
address as shown by the records of the Company (the Company hereby agreeing to
furnish copies of such records to the Rights Agent for this purpose), (x) a
certificate (a "Rights Certificate") in substantially the form of Exhibit A
hereto appropriately completed, representing the number of Rights held by such
holder at the Separation Time and having such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or quotation system on which
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the Rights may from time to time be listed or traded, or to conform to usage,
and (y) a disclosure statement describing the Rights.
(d) Subject to Section 5.10, Rights may be exercised on any Business Day
after the Separation Time and prior to the Expiration Time by submitting to the
Rights Agent the Rights Certificate evidencing such Rights with an Election to
Exercise (an "Election to Exercise") substantially in the form attached to the
Rights Certificate duly completed, accompanied by payment in cash, or by
certified check or money order payable to the order of the Company, of a sum
equal to the Exercise Price multiplied by the number of Rights being exercised
and a sum sufficient to cover any transfer tax or charge which may be payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or the issuance or delivery of certificates for shares or
depositary receipts (or both) in a name other than that of the holder of the
Rights being exercised.
(e) Upon receipt of a Rights Certificate, with an Election to Exercise
accompanied by payment as set forth in Section 2.3(d) above, and subject to
Section 5.10, the Rights Agent will thereupon promptly (i)(A) requisition from a
transfer agent stock certificates for the number of shares to be purchased (the
Company hereby irrevocably authorizing its transfer agents to comply with all
such requisitions) and (B) if the Company elects pursuant to Section 5.5 hereof
not to issue certificates representing fractional shares, requisition from the
depositary selected by the Company depositary receipts representing the
fractional shares to be purchased or requisition from the Company the amount of
cash to be paid in lieu of fractional shares in accordance with Section 5.5
hereof and (ii) after receipt of such certificates, depositary receipts and/or
cash, deliver the same to or upon the order of the registered holder of such
Rights Certificate, registered (in the case of certificates or depositary
receipts) in such name or names as may be designated by such holder.
(f) In case the holder of any Rights shall exercise less than all the
Rights evidenced by such holder's Rights Certificate, a new Rights Certificate
evidencing the Rights
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remaining unexercised will be issued by the Rights Agent to such holder or to
such holder's duly authorized assigns.
(g) The Company covenants and agrees that it will (i) take all such action
as may be necessary to ensure that all shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (subject to
payment of the Exercise Price), be duly and validly authorized, executed, issued
and delivered and fully paid and nonassessable; (ii) take all such action as may
be necessary to comply with any applicable requirements of the Securities Act of
1933 or the Securities Exchange Act of 1934, and the rules and regulations
thereunder, and any other applicable law, rule or regulation, in connection with
the issuance of any shares upon exercise of Rights; (iii) use its best efforts
to cause all shares issued upon exercise of Rights to be listed, upon issuance,
on The Nasdaq National Market; and (iv) pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of
the original issuance or delivery of the Rights Certificates or of any shares
issued upon the exercise of Rights, provided that the Company shall not be
required to pay any transfer tax or charge which may be payable in respect of
any transfer involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for shares in a name other than that of the
holder of the Rights being transferred or exercised.
2.4 Adjustments to Exercise Price; Number of Rights. (a) In the event the
Company shall at any time after the Record Time and prior to the Separation Time
(i) declare or pay a dividend on Common Stock payable in Common Stock, (ii)
subdivide the outstanding Common Stock or (iii) combine the outstanding Common
Stock into a smaller number of shares of Common Stock, (x) the Exercise Price in
effect after such adjustment will be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the number of shares of Common
Stock (the "Expansion Factor") that a holder of one share of Common Stock
immediately prior to such dividend, subdivision or combination would hold
thereafter as a result thereof and (y) each Right
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held prior to such adjustment will become that number of Rights equal to the
Expansion Factor, and the adjusted number of Rights will be deemed to be
distributed among the shares of Common Stock with respect to which the original
Rights were associated (if they remain outstanding) and the shares issued in
respect of such dividend, subdivision or combination, so that each such share of
Common Stock will have exactly one Right associated with it. Each adjustment
made pursuant to this paragraph shall be made as of the payment or effective
date for the applicable dividend, subdivision or combination.
In the event the Company shall at any time after the Record Time and prior
to the Separation Time issue any shares of Common Stock otherwise than in a
transaction referred to in the preceding paragraph, each such share of Common
Stock so issued shall automatically have one new Right associated with it, which
Right shall be evidenced by the certificate representing such share.
(b) In the event the Company shall at any time after the Record
Time and prior to the Separation Time issue or distribute any securities or
assets in respect of, in lieu of or in exchange for Common Stock (other than
pursuant to a regular periodic cash dividend or a dividend paid solely in Common
Stock) whether by dividend, in a reclassification or recapitalization (including
any such transaction involving a merger, consolidation or binding share
exchange), or otherwise, the Company shall make such adjustments, if any, in the
Exercise Price, number of Rights and/or securities or other property purchasable
upon exercise of Rights as the Board of Directors of the Company, in its sole
discretion, may deem to be appropriate under the circumstances in order to
adequately protect the interests of the holders of Rights generally, and the
Company and the Rights Agent shall amend this Agreement as necessary to provide
for such adjustments.
(c) Each adjustment to the Exercise Price made pursuant to this Section
2.4 shall be calculated to the nearest cent. Whenever an adjustment to the
Exercise Price is made pursuant to this Section 2.4, the Company shall (i)
promptly prepare a certificate setting forth such adjustment
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and a brief statement of the facts accounting for such adjustment, (ii) promptly
file with the Rights Agent and with each transfer agent for the Common Stock a
copy of such certificate and (iii) mail a brief summary thereof to each holder
of Rights.
(d) Irrespective of any adjustment or change in the securities purchasable
upon exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the securities so purchasable which were
expressed in the initial Rights Certificates issued hereunder.
2.5 Date on Which Exercise is Effective. Each person in whose name any
certificate for shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the shares represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Exercise Price for such Rights (and any applicable taxes and other governmental
charges payable by the exercising holder hereunder) was made; provided, however,
that if the date of such surrender and payment is a date upon which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the stock transfer books of the
Company are open.
2.6 Execution, Authentication, Delivery and Dating of Rights Certificates.
(a) The Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that
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such individuals or any of them have ceased to hold such offices prior to the
countersignature and delivery of such Rights Certificates.
Promptly after the Company learns of the Separation Time, the Company will
notify the Rights Agent of such Separation Time and will deliver Rights
Certificates executed by the Company to the Rights Agent for countersignature,
and the Rights Agent shall manually countersign and deliver such Rights
Certificates to the holders of the Rights pursuant to Section 2.3(c) hereof. No
Rights Certificate shall be valid for any purpose until manually countersigned
by the Rights Agent.
(b) Each Rights Certificate shall be dated the date of countersignature
thereof.
2.7 Registration, Registration of Transfer and Exchange. (a) After the
Separation Time, the Company will cause to be kept a register (the "Rights
Register") in which, subject to such reasonable regulations as it may prescribe,
the Company will provide for the registration and transfer of Rights. The Rights
Agent is hereby appointed "Rights Registrar" for the purpose of maintaining the
Rights Register for the Company and registering Rights and transfers of Rights
after the Separation Time as herein provided. In the event that the Rights Agent
shall cease to be the Rights Registrar, the Rights Agent will have the right to
examine the Rights Register at all reasonable times after the Separation Time.
After the Separation Time and prior to the Expiration Time, upon surrender
for registration of transfer or exchange of any Rights Certificate, and subject
to the provisions of Section 2.7(c) below, the Company will execute, and the
Rights Agent will countersign and deliver, in the name of the holder or the
designated transferee or transferees, as required pursuant to the holder's
instructions, one or more new Rights Certificates evidencing the same aggregate
number of Rights as did the Rights Certificate so surrendered.
(b) All Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be the valid obligations of the Company, and such
Rights shall be entitled to the
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same benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
(c) Every Rights Certificate surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company or the Rights Agent, as the case
may be, duly executed by the holder thereof or such holder's attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.7, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto.
(d) The Company shall not be required to register the transfer or exchange
of any Rights after the Rights have been redeemed under Section 5.1 hereof.
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates. (a) If any
mutilated Rights Certificate is surrendered to the Rights Agent prior to the
Expiration Time, the Company shall execute and the Rights Agent shall
countersign and deliver in exchange therefor a new Rights Certificate evidencing
the same number of Rights as did the Rights Certificate so surrendered.
(b) If there shall be delivered to the Company and the Rights Agent prior
to the Expiration Time (i) evidence to their satisfaction of the destruction,
loss or theft of any Rights Certificate and (ii) such security or indemnity as
may be required by them to save each of them and any of their agents harmless,
then, in the absence of notice to the Company or the Rights Agent that such
Rights Certificate has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Rights Agent shall countersign and deliver, in
lieu of any such destroyed, lost or stolen Rights Certificate, a new Rights
Certificate evidencing the same number of Rights as did the Rights Certificate
so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights Certificate under
this Section 2.8, the Company may require the payment of a sum sufficient to
cover any tax or other
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governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent) connected
therewith.
(d) Every new Rights Certificate issued pursuant to this Section 2.8 in
lieu of any destroyed, lost or stolen Rights Certificate shall evidence an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.9 Persons Deemed Owners. Prior to due presentment of a Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) for
registration of transfer, the Company, the Rights Agent and any agent of the
Company or the Rights Agent may deem and treat the person in whose name such
Rights Certificate (or, prior to the Separation Time, such Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary. As used in this
Agreement, unless the context otherwise requires, the term "holder" of any
Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated shares of Common Stock).
2.10 Delivery and Cancellation of Certificates. All Rights Certificates
surrendered upon exercise or for redemption, registration of transfer or
exchange shall, if surrendered to any person other than the Rights Agent, be
delivered to the Rights Agent and, in any case, shall be promptly cancelled by
the Rights Agent. The Company may at any time deliver to the Rights Agent for
cancellation any Rights Certificates previously countersigned and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Rights Certificates so delivered shall be promptly cancelled by the Rights
Agent. No Rights Certificates shall be countersigned in lieu of or in exchange
for any Rights Certificates cancelled as provided in this Section 2.10, except
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as expressly permitted by this Agreement. The Rights Agent shall destroy all
cancelled Rights Certificates and deliver a certificate of destruction to the
Company.
2.11 Agreement of Rights Holders. Every holder of Rights by accepting the
same consents and agrees with the Company and the Rights Agent and with every
other holder of Rights that:
(a) prior to the Separation Time, each Right will be transferable only
together with, and will be transferred by a transfer of, the associated share of
Common Stock;
(b) after the Separation Time, the Rights Certificates will be
transferable only on the Rights Register as provided herein;
(c) prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Common Stock certificate) for registration of
transfer, the Company, the Rights Agent and any agent of the Company or the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Separation Time, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary;
(d) Rights beneficially owned by certain Persons will under the
circumstances set forth in Section 3.1(b) become void; and
(e) this Agreement may be supplemented or amended from time to time
pursuant to Section 2.4(b) or 5.4 hereof.
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Article III
Adjustments to the Rights in the Event of Certain Transactions
3.1 Flip-in. (a) In the event that prior to the Expiration Time a Flip-in
Date shall occur, the Company shall take such action as shall be necessary to
ensure and provide that, except as provided below, each Right shall constitute
the right to purchase from the Company, upon exercise thereof in accordance with
the terms hereof (but subject to Section 5.10 hereof), that number of shares of
Common Stock having an aggregate Market Price on the Stock Acquisition Date
equal to twice the Exercise Price for an amount in cash equal to the Exercise
Price (such right to be appropriately adjusted in order to protect the interests
of the holders of Rights generally in the event that on or after such Stock
Acquisition Date an event of a type analogous to any of the events described in
Section 2.4(a) or (b) shall have occurred with respect to the Common Stock).
(b) Notwithstanding the foregoing, any Rights that are or were Beneficially
Owned on or after the Stock Acquisition Date by an Acquiring Person or an
Affiliate or Associate thereof or by any transferee, direct or indirect, of any
of the foregoing shall become void and any holder of such Rights (including
transferees) shall thereafter have no right to exercise or transfer such Rights
under any provision of this Agreement. If any Rights Certificate is presented
for assignment or exercise and the Person presenting the same will not complete
the certification set forth at the end of the form of assignment or notice of
election to exercise and provide such additional evidence of the identity of the
Beneficial Owner and its Affiliates and Associates (or former Beneficial Owners
and their Affiliates and Associates) as the Company shall reasonably request,
then the Company shall be entitled to conclusively deem the Beneficial Owner
thereof to be an Acquiring Person or an Affiliate or Associate thereof or a
transferee of any of the foregoing and accordingly will deem the Rights
evidenced thereby to be void and not transferable or exercisable.
(c) The Board of Directors of the Company may, at its option, at any time
after a Flip-in Date and prior to the time that an Acquiring Person becomes the
Beneficial Owner of more
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than 50% of the outstanding shares of Common Stock, elect to exchange all (but
not less than all) the then outstanding Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 3.1(b)) for shares
of Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted in order to protect the interests of holders of Rights
generally in the event that after the Separation Time an event of a type
analogous to any of the events described in Section 2.4(a) or (b) shall have
occurred with respect to the Common Stock (such exchange ratio, as adjusted from
time to time, being hereinafter referred to as the "Exchange Ratio").
Immediately upon the action of the Board of Directors of the Company
electing to exchange the Rights, without any further action and without any
notice, the right to exercise the Rights will terminate and each Right will
thereafter represent only the right to receive a number of shares of Common
Stock equal to the Exchange Ratio. Promptly after the action of the Board of
Directors electing to exchange the Rights, the Company shall give notice
thereof (specifying the steps to be taken to receive shares of Common Stock in
exchange for Rights) to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice in accordance with Section 5.9.
(d) In the event that there shall not be sufficient treasury shares or
authorized but unissued shares of Common Stock of the Company to permit the
exercise or exchange in full of the Rights in accordance with Section 3.1(a) or
(c), the Company shall either (i) call a meeting of stockholders seeking
approval to cause sufficient additional shares to be authorized (provided that
if such approval is not obtained the Company will take the action specified in
clause (ii) of this sentence) or (ii) take such action as shall be necessary to
ensure and provide, to the extent permitted by applicable law and any agreements
or instruments in effect on the Stock Acquisition Date to which it is a party,
that each Right shall thereafter constitute the right to receive, (x) at the
Company's option, either (A) in return for the Exercise Price, debt or equity
securities (including Preferred Stock) or other assets (or a combination
thereof) having a fair value equal to twice the
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Exercise Price, or (B) without payment of consideration (except as otherwise
required by applicable law), debt or equity securities (including Preferred
Stock) or other assets (or a combination thereof) having a fair value equal to
the Exercise Price, or (y) if the Board of Directors of the Company elects to
exchange the Rights in accordance with Section 3.1(c), debt or equity securities
(including Preferred Stock) or other assets (or a combination thereof) having a
fair value equal to the product of the Market Price of a share of Common Stock
on the Flip-in Date times the Exchange Ratio in effect on the Flip-in Date,
where in any case set forth in (x) or (y) above the fair value of such debt or
equity securities or other assets shall be as determined in good faith by the
Board of Directors of the Company, after consultation with a nationally
recognized investment banking firm.
3.2 Flip-over. (a) Prior to the Expiration Time, the Company shall not
enter into any agreement with an Acquiring Person with respect to, consummate or
permit to occur any Flip-over Transaction or Event unless and until it shall
have entered into a supplemental agreement with the Person engaging in such
Flip-over Transaction or Event (the "Flip-over Entity"), for the benefit of the
holders of the Rights, providing, that upon consummation or occurrence of the
Flip-over Transaction or Event (i) each Right shall thereafter constitute the
right to purchase from the Flip-over Entity, upon exercise thereof in accordance
with the terms hereof, that number of shares of Flip-over Stock of the Flip-over
Entity having an aggregate Market Price on the date of consummation or
occurrence of such Flip-over Transaction or Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right to be
appropriately adjusted in order to protect the interests of the holders of
Rights generally in the event that after such date of consummation or occurrence
an event of a type analogous to any of the events described in Section 2.4(a) or
(b) shall have occurred with respect to the Flip-over Stock) and (ii) the
Flip-over Entity shall thereafter be liable for, and shall assume, by virtue of
such Flip-over Transaction or Event and such supplemental agreement, all the
obligations and duties of the Company pursuant to this Agreement. The provisions
of this Section 3.2 shall apply to successive Flip-over Transactions or Events.
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(b) Prior to the Expiration Time, unless the Rights will be redeemed
pursuant to Section 5.1 hereof in connection therewith, the Company shall not
enter into any agreement with respect to, consummate or permit to occur any
Flip-over Transaction or Event if at the time thereof there are any rights,
warrants or securities outstanding or any other arrangements, agreements or
instruments which would eliminate or otherwise diminish in any respect the
benefits intended to be afforded by this Rights Agreement to the holders of
Rights upon consummation of such transaction.
Article IV
The Rights Agent
4.1 General. (a) The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any certificate for securities
purchasable upon exercise of Rights, Rights Certificate, certificate or other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or
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other paper or document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper person or persons.
4.2 Merger or Consolidation or Change of Name of Rights Agent. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the shareholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 4.4 hereof. In case at the time
such successor Rights Agent succeeds to the agency created by this Agreement any
of the Rights Certificates have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates have not been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates will have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at such
time any of the Rights Certificates 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.
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4.3 Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by a person believed by the Rights Agent to be the
Chairman of the Board, the President or any Vice President and by the Treasurer
or any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the
certificates for securities purchasable upon exercise of Rights or the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to have been
made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
authorization, execution and
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delivery hereof by the Rights Agent) or in respect of the validity or execution
of any certificate for securities purchasable upon exercise of Rights or Rights
Certificate (except its countersignature thereof); nor will it be responsible
for any breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor will it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 3.1(b) hereof) or any adjustment required under the
provisions of Section 2.4, 3.1 or 3.2 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights after receipt of the certificate contemplated by Section 2.4
describing any such adjustment); nor will it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any securities purchasable upon exercise of Rights or any Rights or as to
whether any securities purchasable upon exercise of Rights will, when issued, be
duly and validly authorized, executed, issued and delivered and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
persons for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such person.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in Common Stock, Rights or other
securities of the Company or
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<PAGE>
become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
4.4 Change of Rights Agent. The Rights Agent may resign and be discharged
from its duties under this Agreement upon 90 days notice (or such lesser notice
as is acceptable to the Company) in writing mailed to the Company and to each
transfer agent of Common Stock by registered or certified mail, and to the
holders of the Rights in accordance with Section 5.9. The Company may remove the
Rights Agent upon 30 days notice in writing, mailed to the Rights Agent and to
each transfer agent of the Common Stock by registered or certified mail, and to
the holders of the Rights in accordance with Section 5.9. If the Rights Agent
should resign or be removed or otherwise become incapable of acting, the Company
will appoint a successor to the Rights Agent. If the Company fails to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of any Rights (which holder shall,
with such notice, submit such holder's Rights Certificate for inspection by the
Company), then the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States,
the State of New York or the State
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<PAGE>
of Delaware, in good standing, having its principal office in the State of New
York or the State of Delaware, which is authorized under such laws to exercise
the powers of the Rights Agent contemplated by this Agreement and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent will be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the holders of the
Rights. Failure to give any notice provided for in this Section 4.4, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Article V
Miscellaneous
5.1 Redemption. (a) The Board of Directors of the Company may, at its
option, at any time prior to the Flip-in Date, elect to redeem all (but not less
than all) the then outstanding Rights at the Redemption Price.
(b) Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights (or, if the resolution of the Board of Directors
electing to redeem the Rights states that the redemption will not be effective
until the occurrence of a specified future time or event, upon the occurrence of
such future time or event), without any further action and without any notice,
the right to exercise the Rights will terminate and each Right will thereafter
represent only the right to receive the Redemption Price in cash. Promptly after
the Rights are redeemed, the
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<PAGE>
Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice in accordance
with Section 5.9.
5.2 Expiration. No Person shall have any rights pursuant to this Agreement
or any Right after the Expiration Time, except, if the Rights are exchanged or
redeemed, as provided in Section 3.1(c) or 5.1 hereof.
5.3 Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement.
5.4 Supplements and Amendments. The Company and the Rights Agent may from
time to time supplement or amend this Agreement without the approval of any
holders of Rights (i) in any respect prior to the Flip-in Date (other than to
change the Exercise Price, the Redemption Price or the Expiration Time, except
as contemplated elsewhere herein), (ii) to make any changes following the close
of business on the Flip-in Date which the Company may deem necessary or
desirable and which shall not materially adversely affect the interests of the
holders of Rights generally or (iii) in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be inconsistent
with any other provisions herein or otherwise defective. The Rights Agent will
duly execute and deliver any supplement or amendment hereto requested by the
Company which satisfies the terms of the preceding sentence.
5.5 Fractional Shares. If the Company elects not to issue certificates
representing fractional shares upon exercise of Rights, the Company shall, in
lieu thereof, (a) evidence such fractional shares by depositary receipts issued
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that each holder of a
depositary receipt shall have all of the rights, privileges and preferences to
which he
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<PAGE>
would be entitled as a beneficial owner of such fractional share, or (b) pay to
the registered holder of such Rights the same fraction of the Market Price of
one share of the stock issuable upon such exercise on the day of exercise.
5.6 Rights of Action. Subject to the terms of this Agreement, rights of
action in respect of this Agreement, other than rights of action vested solely
in the Rights Agent, are vested in the respective holders of the Rights; and any
holder of any Rights, without the consent of the Rights Agent or of the holder
of any other Rights, may, on such holder's own behalf and for such holder's own
benefit and the benefit of other holders of Rights, enforce, and may institute
and maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, such holder's right to exercise such holder's
Rights in the manner provided in such holder's Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
5.7 Holder of Rights Not Deemed a Stockholder. No holder, as such, of any
Rights shall be entitled to vote, receive dividends or be deemed for any purpose
the holder of shares or any other securities which may at any time be issuable
on the exercise of such Rights, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder of any Rights, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 5.8 hereof), or to receive dividends or subscription rights,
or otherwise, until such Rights shall have been exercised in accordance with the
provisions hereof.
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<PAGE>
5.8 Notice of Proposed Actions. In case the Company shall propose after
the Separation Time and prior to the Expiration Time (i) to effect or permit
(in cases where the Company's permission is required) occurrence of any Flip-in
Date or Flip-over Transaction or Event or (ii) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 5.9 hereof, a
notice of such proposed action, which shall specify the Flip-in Date or the
date on which such Flip-over Transaction or Event, liquidation, dissolution, or
winding up is to take place, and such notice shall be so given at least 20
Business Days prior to the date of the taking of such proposed action.
5.9 Notices. Notices or demands authorized or required by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights to or on
the Company shall be sufficiently given or made if delivered or sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Community Bank System, Inc.
5790 Widewaters Parkway
Dewitt, New York 13214
Attention: Corporate Secretary
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
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<PAGE>
Community Bank, National Association
5790 Widewaters Parkway
Dewitt, New York 13214
Attention: Corporate Trust Department
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice.
5.10 Suspension of Exercisability. To the extent that the Company
determines in good faith that some action need be taken pursuant to Section
3.1(d) or to comply with federal or state securities laws, the Company may
suspend the exercisability of the Rights for a period of up to ninety (90) days
following the date of the occurrence of the Separation Time or the Flip-in Date
in order to take such action or comply with such laws. In the event of any such
suspension, the Company shall issue as promptly as practicable a public
announcement stating that the exercisability of the Rights has been temporarily
suspended.
5.11 Costs of Enforcement. The Company agrees that if the Company or any
other Person the securities of which are purchasable upon exercise of Rights
fails to fulfill any of its obligations pursuant to this Agreement, then the
Company or such Person will reimburse the holder of any Rights for the costs and
expenses (including legal fees) incurred by such holder in actions to enforce
his rights pursuant to any Rights or this Agreement.
5.12 Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
5.13 Benefits of this Agreement. Nothing in this Agreement shall be
construed to
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<PAGE>
give to any Person other than the Company, the Rights Agent and the holders of
the Rights any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent and the holders of the Rights.
5.14 Descriptive Headings. Descriptive headings appear herein for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
5.15 Governing Law. This Agreement and each Right issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be governed by and construed in accordance with the laws of such
state applicable to contracts to be made and performed entirely within such
state.
5.16 Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
5.17 Severability. If any term or provision hereof or the application
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
COMMUNITY BANK SYSTEM, INC.
By: /s/ SANFORD A. BELDEN
-------------------------------
Name: Sanford A. Belden
Title: President and CEO
COMMUNITY BANK, NATIONAL ASSOCIATION
By: /s/ SANFORD A. BELDEN
-------------------------------
Name: Sanford A. Belden
Title: President and CEO
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<PAGE>
EXHIBIT A
[Form of Common Stock Rights Certificate]
Certificate No. W- ______________Rights
THE RIGHTS ARE SUBJECT TO REDEMPTION OR
MANDATORY EXCHANGE, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS OR AFFILIATES OR ASSOCIATES
THEREOF (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR TRANSFEREES OF ANY OF THE
FOREGOING WILL BE VOID.
Rights Certificate
COMMUNITY BANK SYSTEM, INC.
This certifies that ______________________________, or registered assigns,
is the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Protection Rights Agreement, dated as of February
21, 1995 (as such may be amended from time to time, the "Rights Agreement"),
between Community Bank System, Inc., a Delaware corporation (the "Company"), and
Community Bank, National Association, a national banking association, as Rights
Agent (the "Rights Agent," which term shall include any successor Rights Agent
under the Rights Agreement), to purchase from the Company at any time after the
Separation Time (as such term is defined in the Rights Agreement) and prior to
the close of business on February 21, 2005, one fully paid share of Common
Stock, par value $1.25 per share (the "Common Stock"), of the Company (subject
to adjustment as provided in the Rights Agreement) at the Exercise Price
referred to below, upon presentation and surrender of this Rights Certificate
with the Form of Election to Exercise duly
A-1
<PAGE>
executed at the principal office of the Rights Agent. The Exercise Price shall
initially be $85.00 per Right and shall be subject to adjustment in certain
events as provided in the Rights Agreement.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase
securities of an entity other than the Company or securities or assets of the
Company other than Common Stock, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available without cost upon written request.
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 an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the type and number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be (a) redeemed by the Company under certain circumstances
at its option at a
A-2
<PAGE>
redemption price of $0.01 per Right or (b) exchanged by the Company under
certain circumstances at its option for one share of Common Stock per Right (or,
in certain cases, other securities or assets of the Company), subject in each
case to adjustment in certain events 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 any securities
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 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 Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
A-3
<PAGE>
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Date:
--------------------
ATTEST: COMMUNITY BANK SYSTEM, INC.
- - - - -------------------------
Secretary By
------------------------------
Countersigned:
COMMUNITY BANK, NATIONAL ASSOCIATION
By
---------------------------------
Authorized Signature
A-4
<PAGE>
[Form of Reverse Side of Common Stock 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: _____________, 19__
Signature Guaranteed: ______________________________________
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-5
<PAGE>
..............................................................................
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
shares of Common Stock, that the Rights evidenced by this Rights Certificate are
not, and, to the knowledge of the undersigned, have never been, Beneficially
Owned by an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement).
-----------------------------------
Signature
..............................................................................
NOTICE
In the event the certification set forth above is not completed in connection
with a purported assignment, the Company will deem the Beneficial Owner of the
Rights evidenced by the enclosed Rights Certificate to be an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement) or a
transferee of any of the foregoing and accordingly will deem the Rights
evidenced by such Rights Certificate to be void and not transferable or
exercisable.
A-6
<PAGE>
[To be attached to each Common Stock Rights Certificate]
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise the Rights Certificate.)
TO: COMMUNITY BANK SYSTEM, INC.
The undersigned hereby irrevocably elects to exercise ____________________
whole Common Stock Rights represented by the attached Rights Certificate to
purchase the shares of Common Stock issuable upon the exercise of such Common
Stock Rights and requests that certificates for such shares be issued in the
name of:
-------------------------------------
Address:
-----------------------------
-------------------------------------
Social Security or Other Taxpayer
Identification Number:
---------------
If such number of Common Stock Rights shall not be all the Common Stock
Rights evidenced by this Rights Certificate, a new Rights Certificate for the
balance of such Common Stock Rights shall be registered in the name of and
delivered to:
-------------------------------------
Address:
-----------------------------
-------------------------------------
Social Security or Other Taxpayer
Identification Number:
---------------
Dated: ________________, 19__
Signature Guaranteed:
-------------------------------------
Signature
(Signature must correspond to name as
written upon the face of this Rights
Certificate in every particular,
without alteration or enlargement or
any change whatsoever)
A-7
<PAGE>
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
..............................................................................
(To be completed if true)
The undersigned hereby represents, for the benefit of all holders of Rights and
shares of Common Stock, that the Rights evidenced by the enclosed Rights
Certificate are not, and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).
-----------------------------------
Signature
..............................................................................
NOTICE
In the event the certification set forth above is not completed in
connection with a purported exercise, the Company will deem the Beneficial
Owner of the Rights evidenced by the enclosed Rights Certificate to be an
Acquiring Person or an Affiliate thereof (as defined in the Rights Agreement)
or a transferee of any of the foregoing and accordingly will deem the Rights
evidenced by such Rights Certificate to be void and not transferable or
exercisable.
A-8
Forms of Rights Certificate and of Election to Exercise, included in
Exhibit A to the Rights Agreement.
