<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 1996
COMMERCIAL BANCSHARES, INCORPORATED
---------------------------------------------
(Exact name of as specified in charter)
West Virginia 0-20232 55-0622108
- ---------------------- ------------------ ------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
415 Market Street, Parkersburg, West Virginia 26101
- ----------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 304/424-0300
------------
<PAGE>
Item 5. Other Events
------------
On August 14, 1996, the Board of Directors of Commercial Bancshares,
Incorporated, a West Virginia corporation (the "Company"), declared a dividend
distribution of one Right for each outstanding share of common stock (the
"Common Stock"), of the Company to shareholders of record at the close of
business on August 30, 1996 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company 1/1000th of a share (a "Unit) of
a new series of preferred stock designated "Junior Participating Cumulative
Preferred Stock, Series A" ("Series A"). Shareholders will receive one Right
per share of Common Stock held of record at the close of business on the Record
Date. The exercise price of each Right will be $116, subject to adjustment (the
"Purchase Price").
Rights will also attach to shares of Common Stock issued after the
Record Date but prior to the Distribution Date unless the Board of Directors
determines otherwise at the time of issuance. The description and terms of the
Rights are set forth in a Rights Agreement (the "Agreement"), dated as of August
14, 1996 between the Company and Fifth Third Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate certificates
evidencing the Rights (the "Rights Certificates") will be distributed. The
Rights will separate from the Common Stock and a distribution of the Rights
Certificates will occur (the "Distribution Date") upon the earlier of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), or (ii) 10 business days following
the commencement of a tender offer or exchange offer that would result in a
person or group beneficially owning 10% or more of such outstanding shares of
Common Stock. Until the Distribution Date, (i) the rights will be evidenced by
the Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after the
Record Date will contain a notation incorporating the Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on August 13, 2006 (the "Final Expiration
Date"), unless earlier redeemed by the Company as described below. As soon as
practicable after the Distribu-
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<PAGE>
tion Date, Rights Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date, and thereafter such
separate Rights Certificates alone will represent the Rights.
Rights may not be transferred, directly or indirectly, (i) to any
person who is, or as a result of such transfer would be, the beneficial owner of
10% or more of the Rights, or (ii) to any Affiliate or Associate of any such
Person. Any purported or attempted transfer of a Right in violation of this
provision shall be without effect and any Right that has been the subject of any
such purported or attempted transfer shall be deemed to be held beneficially by
the Person who attempted to make such purported or attempted transfer.
While each Right will initially provide for the acquisition of one
Unit of Series A at the Purchase Price, the Agreement provides that if (i) an
Acquiring Person purchases 20% or more of the outstanding Common Stock, or (ii)
at any time following the Distribution Date, the Company is the surviving
corporation in a merger with an Acquiring Person and its Common Stock is not
changed or exchanged, or (iii) an Acquiring Person effects a statutory share
exchange with the Company after which the Company is not a subsidiary of any
Acquiring Person, each holder of a Right (except as set forth below) will
thereafter have the right to receive, upon exercise and payment of the Purchase
Price, a Unit of Series A (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to twice the amount of the
Purchase Price.
In the event that, at any time following the first to occur of the
Stock Acquisition Date or the Distribution Date, (i) the Company is acquired in
a merger, statutory share exchange, or other business combination in which the
Company is not the surviving corporation (other than a transaction described in
the preceding paragraph), or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except as set forth below)
shall thereafter have the right to receive, upon exercise and payment of the
Purchase Price, common stock of the acquiring company having a value equal to
twice the Purchase Price. The events set forth in this paragraph and in the
preceding paragraph are referred to as the "Triggering Events."
At any time after any person becomes an Acquiring Person, the Company
may exchange all or part of the Rights (except as set forth below) for shares of
Common Stock (an "Exchange") at an exchange ratio of one share per Right, as
appropriately adjusted to reflect any stock split transaction, except that the
Company may not effect such Exchange at any time after any Person (with
-3-
<PAGE>
certain exceptions), together with all Affiliates and Associates of such person,
becomes the Beneficial Owner of 50% or more of the shares of Common Stock then
outstanding.
Upon the occurrence of a Triggering Event that entitles Rights holders
to purchase securities or assets of the Company, Rights that are or were owned
by the Acquiring Person that is a party to such Triggering Event or any
Affiliate or Associate of an Acquiring Person on or after such Acquiring
Person's Stock Acquisition Date, to the extent permitted by applicable law,
shall be null and void and shall not thereafter be exercised by any Person
(including subsequent transferees). Upon the occurrence of a Triggering Event
that entitles Rights holders to purchase common stock of a third party, or upon
the authorization of an Exchange, Rights that are or were owned by any Acquiring
Person or any Affiliate or Associate of any Acquiring Person on or after such
Acquiring Person's Stock Acquisition Date, to the extent permitted by applicable
law, shall be null and void and shall not thereafter be exercised by any person
(including subsequent transferees).
The Purchase Price payable, and the number of shares of Common Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustments from time to time to prevent dilution.
At any time before the earlier of (1) 10 days following the Stock
Acquisition Date, (2) the occurrence of a Triggering Event, or (3) the Final
Expiration Date, the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (the "Redemption Price"). Under certain circumstances
set forth in the Agreement, the decision to redeem shall require the concurrence
of a majority of the Disinterested Directors, as defined below. After the
redemption period has expired, the Company's right of redemption may be
reinstated if (i) an Acquiring Person reduces his beneficial ownership to less
than 10% of the outstanding shares of Common Stock in a transaction or series of
transactions not involving the Company, or (ii) there is a merger or other
business combination involving the Company in which all holders of Common Stock
are treated alike and which does not involve an Acquiring Person. Immediately
upon the action of the Board of Directors of the Company ordering redemption of
the Rights, with, where required, the concurrence of the Disinterested
Directors, the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The term "Disinterested Directors" means any member of the Board of
Directors of the Company who is not an officer or employee of the Company or any
of its subsidiaries and who was a
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<PAGE>
member of the Board of Directors of the Company prior to the time that any
Person became an Acquiring Person, and any successor to a Disinterested Director
who is not an officer or employee of the Company or any of its subsidiaries if
such successor is recommended or elected to succeed by a majority of the
Disinterested Directors then on the Board of Directors of the Company, but the
term "Disinterested Directors" does not include an Acquiring Person, or any
Affiliate or Associate of any Acquiring Person, or a nominee or representative
of the foregoing entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
At any time prior to the earlier of the Distribution Date or the
occurrence of a Triggering Event and subject to the conditions described below,
the Company may amend any of the provisions of the Agreement. From and after
the earlier of the Distribution Date or the occurrence of a Triggering Event,
the Company may amend the Agreement to cure any ambiguity and to make changes
that do not adversely affect the holders of Rights (excluding the interests of
any Acquiring Person). Notwithstanding the foregoing, the Agreement may not be
amended to reduce the Redemption Price or provide for an earlier Final
Expiration Date, and at any time when there is an Acquiring Person, the
Agreement may be amended only if the Board of Directors of the Company, with the
concurrence of a majority of the Disinterested Directors then in office,
determines that such amendment is in the best interests of the Company and the
holders of its rights (excluding the interests of any Acquiring Person).
The Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that acquires more than 10% of
the outstanding shares of Common Stock of the Company if a Triggering Event
thereafter occurs without the Rights having been redeemed or in the event of an
Exchange. However, the Rights should not interfere with any merger or other
business combination approved by the Board of Directors and the shareholders
because the Rights are redeemable under certain circumstances.
-5-
<PAGE>
Item 7. Exhibits
--------
4.1 Rights Agreement, dated as of August 14, 1996
between the Company and Fifth Third Bank, Cincinnati,
Ohio, as Rights Agent.
28.1 Press Release issued August 19, 1996.
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<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMERCIAL BANCSHARES, INCORPORATED
Date: September 9, 1996 By: /s/ Larry G. Johnson
----------------------
Larry G. Johnson
Chief Financial Officer
-7-
<PAGE>
TABLE OF EXHIBITS
-----------------
4.1 Rights Agreement, dated as of
August 14, 1996 between the Company
and Fifth Third Bank, Cincinnati,
Ohio, as Rights Agent.
28.1 Press Release issued August 19, 1996.
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<PAGE>
EXHIBIT 4.1
_______________________________________________________________
COMMERCIAL BANCSHARES, INCORPORATED
and
FIFTH THIRD BANK
Rights Agent
_______________
Rights Agreement
Dated as of August 14, 1996
_________________________________________________________________
<PAGE>
Table of Contents
- -----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <S> <C>
1 Certain Definitions................. 2
2 Appointment of Rights Agent......... 9
3 Issue of Rights Certificates........ 10
4 Form of Rights Certificates......... 15
5 Countersignature and Registration... 16
6 Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or
Stolen Rights Certificates......... 18
7 Exercise of Rights; Purchase
Price; Expiration Date of Rights,
Restriction on Transfer of Rights.. 20
8 Cancellation and Destruction of
Rights Certificates................ 26
9 Reservation and Availability of
Preferred Stock.................... 26
10 Preferred Stock Record Date......... 29
11 Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights................... 30
12 Certificates of Adjusted Purchase
Price or Number of Shares.......... 51
13 Consolidation, Merger, Share
Exchange or Sale or Transfer
of Assets or Earning Power......... 51
14 Fractional Rights and Fractional
Shares............................. 57
15 Rights of Action.................... 59
16 Agreement of Rights Holders......... 60
17 Rights Certificate Holder Not Deemed
a Shareholder...................... 61
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
18 Concerning the Rights Agent......... 62
19 Merger or Consolidation or Change of
Name of Rights Agent............... 63
20 Duties of Rights Agent.............. 65
21 Change of Rights Agent.............. 69
22 Issuance of New Rights Certificates. 71
23 Redemption and Termination.......... 72
24 Exchange............................ 75
25 Notice of Certain Events............ 78
26 Notices............................. 80
27 Supplements and Amendments.......... 81
28 Successors.......................... 83
29 Determinations and Actions
by the Board of Directors, etc..... 83
30 Benefits of this Agreement.......... 84
31 Severability........................ 84
32 Governing Law....................... 85
33 Counterparts........................ 85
34 Descriptive Headings................ 85
</TABLE>
Exhibit A -- Form of Articles of Serial Designation
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
ii
<PAGE>
RIGHTS AGREEMENT
----------------
This Rights Agreement, dated as of August 14, 1996 (the "Agreement"),
between COMMERCIAL BANCSHARES, INCORPORATED, a West Virginia corporation (the
"Company"), and Fifth Third Bank, an Ohio bank (the "Rights Agent"), provides as
follows:
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, on August 14, 1996 (the "Rights Dividend Declaration Date"), the
Board of Directors of the Company authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of Common
Stock (as hereinafter defined) of the Company outstanding at the close of
business on September 13, 1996 (the "Record Date"), and authorized the issuance
of one Right for each share of Common Stock issued between the Record Date and
the earliest of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined), each Right representing the right, upon the terms and
subject to the conditions hereinafter set forth, to purchase one Unit (as
hereinafter defined and as such number may be adjusted pursuant to the
provisions of this Agreement) of Junior Participating Cumulative Preferred
Stock, Series A, of the Company having the rights, powers and preferences set
forth in the Articles of Serial Designation of the Articles of Incorporation of
the Company attached hereto as Exhibit A and
---------
1
<PAGE>
that each Right shall be in the form of the Rights Certificate attached hereto
as Exhibit B (the "Rights");
---------
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter defined)
who or which, together with all Affiliates and Associates (as hereinafter
defined) of such Person, shall at any time become the Beneficial Owner (as
hereinafter defined) of 10% or more of the shares of Common Stock then
outstanding, but shall not include the Company, any Subsidiary (as hereinafter
defined) of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 10% or more of the shares of Common Stock
of the Company then outstanding; provided, however, that if a Person shall
--------
become the Beneficial Owner of 10% or more of the Common Stock of the Company
then outstanding by reason of share purchases by the Company and shall, after
such
2
<PAGE>
share purchases by the Company, become the Beneficial Owner of any additional
Common Stock of the Company, then such Person shall be deemed to be an
"Acquiring Person."
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended and as in effect on the date of
this Agreement (the "Exchange Act").
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's Affiliates or
Associates owns, directly or indirectly;
(ii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a Person
--------
shall not be deemed to be the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange offer made
by such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for
3
<PAGE>
purchase or exchange or (B) securities issuable upon exercise of these
Rights;
(iii) that such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote, including
pursuant to any agreement, arrangement or understanding, whether or not in
writing; provided, however, that a Person shall not be deemed the
--------
"Beneficial Owner" of, or to "beneficially own," any security under this
subparagraph (iii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in response
to a public proxy solicitation made pursuant to, and in accordance with,
the applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iv) that are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except
4
<PAGE>
pursuant to a revocable proxy as described in the proviso to subparagraph
(iii) of this Section 1 (c)) or disposing of any voting securities of the
Company;
provided, however, that notwithstanding any provision of this Section 1(c), any
- --------
Person engaged in business as an underwriter of securities who acquires any
securities of the Company through such Person's participation in good faith in a
firm commitment underwriting registered under the Securities Act of 1933, as
amended (the "Act"), shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," such securities until the expiration of 40 days after the
date of acquisition; and provided, further, that in no case shall an officer or
director of the Company be deemed (x) the beneficial owner of any securities
beneficially owned by another officer or director of the Company solely by
reason of actions undertaken by such persons in their capacity as officers or
directors of the Company, or (y) the beneficial owner of securities held of
record by the trustee of any employee benefit plan of the Company or any
Subsidiary of the Company for the benefit of any employee of the Company or any
Subsidiary of the Company, other than the officer or director, by reason of any
influence that such officer or director may have over the voting of the
securities held in the plan.
5
<PAGE>
(d) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the States of Ohio or West Virginia are
authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
Charleston, West Virginia time, on such date; provided, however, that if such
--------
date is not a Business Day it shall mean 5:00 P.M., Charleston, West Virginia
time, on the next succeeding Business Day.
(f) "Common Stock" shall mean the common stock, $5.00 par value, of
the Company, except that "Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other equity interest having
power to control or direct the management, of such Person.
(g) "Disinterested Director" shall mean any member of the Board of
Directors of the Company who if elected by stockholders was elected at a
regularly scheduled meeting of stockholders and who is not an officer or
employee of the Company or any of its Subsidiaries and who is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or a nominee or
representative of an Acquiring Person or any such Affiliate or Associate and who
was a member of the Board of Directors of the Company prior to the time that any
Person became an Acquiring Person, and any successor to a Disinterested Director
who is not
6
<PAGE>
an officer or employee of the Company or any of its Subsidiaries and who is not
an Acquiring Person or an Affiliate or Associate of an Acquiring Person or a
nominee or representative of an Acquiring Person or of any such Affiliate or
Associate and who was recommended for election or elected to succeed the
Disinterested Director by a majority of the Disinterested Directors then on the
Board of Directors of the Company.
(h) "Distribution Date" shall mean the earlier of (i) the close of
business on the tenth day after the Stock Acquisition Date (as hereinafter
defined) (or, if the tenth day after the Stock Acquisition Date occurs before
the Record Date, the close of business on the Record Date), or (ii) the close of
business on the tenth business day after the date that a tender or exchange
offer by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14e-2(a) of the General Rules and Regulations under
the Exchange Act if, upon consummation thereof, such Person would become an
Acquiring Person.
(i) "Equivalent Shares" shall mean shares of Preferred Stock (as
hereinafter defined) and any other class or series of capital stock of the
Company that is entitled to participate in
7
<PAGE>
dividends and other distributions, including distributions upon the liquidation,
dissolution or winding up of the Company, on a proportional basis with the
Common Stock. In calculating the number of any class or series of Equivalent
Shares for purposes of Section 11 hereof, the number of shares, or fractions of
a share, of such class or series of capital stock that is entitled to the same
dividend or distribution as a whole share of Common Stock shall be deemed to be
one share.
(j) "Exchange Date" shall mean the date on which the Board of
Directors authorizes the exchange of Rights for shares of Common Stock pursuant
to Section 24 hereof.
(k) "Expiration Date" shall mean the earliest of (i) the close of
business on the Final Expiration Date, or (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, or (iii) the Exchange Date.
(l) "Final Expiration Date" shall mean August 13, 2006.
(m) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(n) "Preferred Stock" shall mean shares of Junior Participating
Cumulative Preferred Stock, Series A, without par value, of the Company.
(o) "Purchase Price" means the purchase price for a Unit set forth in
Section 7(b).
8
<PAGE>
(p) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii)(A) or (B) hereof.
(q) "Section 13 Event" shall mean any event described in clause (w),
(x), (y) or (z) of Section 13(a) hereof.
(s) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(t) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which an amount of voting securities sufficient
to elect a majority of the directors or Persons having similar authority of such
corporation or other entity is beneficially owned, directly or indirectly, by
such Person, or otherwise controlled by such Person.
(u) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
(v) "Unit" shall mean one one-thousandth of a share of Preferred
Stock.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
---------------------------
Rights Agent to act as agent for the Company and the holders of the Rights (who,
subject to the provisions of Section 7(e) hereof and in accordance with Section
3 hereof, shall prior to the Distribution Date also be holders of Common Stock)
in accordance with the terms and conditions hereof, and
9
<PAGE>
the Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
----------------------------
(a) Until the Distribution Date and subject to the provisions of
Section 7(e) hereof, (x) the Rights shall be evidenced (subject to the
provisions of paragraphs (b) and (c) of this Section 3) by the certificates for
the Common Stock registered in the names of the holders of the Common Stock
(which certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights shall be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Company will prepare and execute and the Rights
Agent will countersign, and the Rights Agent shall, if requested by the Company,
send by first-class, insured, postage prepaid mail, to each record holder of
Rights as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit B hereto (the "Rights
---------
Certificates"), evidencing such number of Rights owned by such holder. In the
event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to this Agreement, at the time of distribution of the Rights
10
<PAGE>
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution
Date, the Rights shall be evidenced solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
shall send a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit C (the "Summary of Rights"), by first-class, postage prepaid
---------
mail, to each record holder of the Common Stock as of the close of business on
the Record Date, at the address of such holder shown on the records of the
Company. With respect to certificates for the Common Stock outstanding as of
the Record Date and subject to the provisions of Section 7(e) hereof, until the
Distribution Date, the Rights shall be evidenced by such certificates for the
Common Stock and the registered holders of such Common Stock shall also be the
registered holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been issued
shall also constitute, subject to the provisions of Section 7(e) hereof, the
transfer of the Rights associated with such shares of Common Stock.
11
<PAGE>
(c) Unless the Board of Directors by resolution adopted at or before
the time of the issuance (including pursuant to the exercise of rights under the
Company's benefit plans) of any shares of Common Stock specifies to the
contrary, Rights shall be issued in respect of all shares of Common Stock that
are issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date (other than shares issued upon exercise or exchange
of the Rights), subject to Sections 7(e) and 11(a)(ii) hereof. In addition,
subject to Sections 7(e) and 11(a)(ii) hereof, in connection with the issuance
or sale of shares of Common Stock on or following the Distribution Date and
prior to the Expiration Date, the Company (x) shall, with respect to shares of
Common Stock so issued or sold upon the exercise, conversion or exchange of
options, warrants, securities, notes or debentures issued by the Company prior
to the Distribution Date, and (y) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that, in the case of either clause (x) or (y), (i)
--------
no such Rights Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued, and (ii) no such Rights
Certificate
12
<PAGE>
shall be issued if, and to the extent that, appropriate adjustment (giving
effect to the provisions of Sections 11(a)(ii) and 13 hereof) shall otherwise
have been made in lieu of the issuance thereof. Subject to the provisions of
Sections 7(e) hereof, certificates representing both shares of Common Stock and
Rights issued after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date, and certificates representing shares of Common
Stock outstanding on the Record Date that are delivered upon transfer or
exchange of such Common Stock shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Commercial
Bancshares, Incorporated (the "Company") and Fifth Third Bank dated as
of August 14, 1996 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate
a copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor.
Under no circumstances shall the Rights evidenced by this certificate
be transferred, directly or indirectly, (i) to any Person who is, or
as a result of such transfer would be, the beneficial owner of 10% or
more of the Rights (including Rights that are null and void pursuant
to Section 11(a)(ii) of the Rights Agreement), or (ii) to any
Affiliate or Associate of any such Person (as such terms are defined
in the Rights Agreement). Any purported or attempted transfer of a
Right in violation of the foregoing provisions shall be without effect
without any further action on the part of the Company or the Rights
Agent, and any Right that has been the subject of any such purported
or attempted transfer shall for purposes of the Rights Agreement and
the
13
<PAGE>
Rights Certificate be deemed to be held beneficially by the Person who
attempted to make such purported or attempted transfer and,
thereafter, shall continue to be exercisable by such Person or, in the
case of a transfer not prohibited by the Rights Agreement, such
Person's transferee, pursuant to the Rights Agreement. As set forth in
the Rights Agreement, Rights that are owned or that were beneficially
owned by any Person who is or was an Acquiring Person (as defined in
the Rights Agreement) (or by any Affiliate or Associate of an
Acquiring Person) at or after the time such Person (or any Affiliate
or Associate thereof) became an Acquiring Person shall become null and
void.
With respect to such certificates containing the legend recited at the end of
Section 4, until the earlier of (i) the Distribution Date or (ii) the Expiration
- ---------
Date, subject to the provisions of Section 7(e) hereof, the Rights associated
with the Common Stock represented by such certificates shall be evidenced by
such certificates alone and registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates. In the event that the
Company purchases or acquires any shares of Common Stock after the Record Date
but prior to the Distribution Date, any Rights associated with such shares of
Common Stock shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the shares of Common Stock
which are no longer outstanding.
With respect to certificates evidencing Common Stock transferred to
any Person to whom transfer of the associated
14
<PAGE>
Rights was prohibited by the transfer restrictions contained in Section 7(e),
such certificates shall bear the following legend:
This certificate neither evidences nor entitles the holder hereof to
any Rights pursuant to the Rights Agreement between Commercial
Bancshares, Incorporated and Fifth Third Bank, dated as of August 14,
1996.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in Exhibit B hereto and may have such marks of
---------
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Distribution Date, and on their face shall entitle the holders
thereof to purchase such number of Units of Preferred Stock as shall be set
forth therein at the price set forth therein (such exercise price per Unit,
being hereinafter referred to as the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise
15
<PAGE>
of each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) The Company shall notify the Rights Agent, and, if such
notification is given orally, the Company shall confirm promptly the same in
writing, at such time as the Company has notice that any Person constitutes an
Acquiring Person or an Affiliate or Associate of an Acquiring Person, and until
such notice is received by the Rights Agent the Rights Agent may conclusively
presume for all purposes that the legend recited at the end of Section 4 need be
---------
imprinted only on Rights Certificates beneficially owned by Persons that the
Company has previously identified to the Rights Agent as constituting an
Acquiring Person or an Affiliate or Associate of an Acquiring Person and
transferees of any such Persons.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chief Executive Officer, President or any Vice President, either manually
or by facsimile signature, and shall have affixed thereto the Company's seal or
a facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by an authorized signatory of the Rights
Agent but it shall not be necessary for the same signatory to countersign all of
the Rights Certificates issued hereunder. The Rights Certificates shall be
16
<PAGE>
manually countersigned by the Rights Agent and shall not be valid for the
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
(b) Following any purported or attempted transfer of Rights in
violation of the transfer restrictions set forth in Section 7(e) hereof, and
until the creation of separate books for registration and transfer of Rights
Certificates pursuant to the following sentence, the Rights Agent will keep or
cause to be kept interim books for registration and transfer of Rights that were
the subject of such purported or attempted transfer showing the names and
addresses of the Person or Persons who attempted to make such purported or
attempted transfer, the number of Rights continued to be exercisable by such
Person or Persons, and any
17
<PAGE>
subsequent transfer of Rights by such Person or Persons on a "when issued" basis
that is not prohibited by the transfer restrictions contained in Section 7(e).
Following the Distribution Date, the Rights Agent will keep or cause to be kept,
at its principal office or offices designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
- ----------------------------------------------------------------------
(a) Subject to the provisions of Section 7(e) and Sections 13, 14 and
23 hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) as
the Rights Certificate or Certificates surrendered then entitle such holder (or
former holder in the case of a transfer) to purchase. Any registered
18
<PAGE>
holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner), the transferee or Affiliates or Associates thereof as
the Company shall reasonably request. Thereupon the Rights Agent shall, subject
to Section 7(e) and Section 14 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the case may
be, as so requested. The Company may require payment from the holder of the
Rights of a sum sufficient to pay any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case
19
<PAGE>
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to them, and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights;
--------------------------------------------------------------
Restriction on Transfer of Rights.
- ---------------------------------
(a) Subject to Section 7(e) hereof, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(ii), Section 11(a)(iii),
Section 13, Section 23(a) and Section 24 hereof) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate, with the
form of election to purchase and the certificate on the reverse side thereof
duly executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together, except as otherwise provided
in Section 11(a)(ii), with payment of the aggregate Purchase Price with respect
to the total number of Units of Preferred Stock (or other securities or
property, as the case may
20
<PAGE>
be) as to which surrendered Rights are then exercisable, at or prior to the
Expiration Date.
(b) The Purchase Price for each Unit of Preferred Stock pursuant to
the exercise of a Right shall initially be
$116 and shall be subject to adjustment from time to time as provided in Section
11 and Section 13 hereof and shall be payable in accordance with paragraph (c)
below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per Unit of Preferred Stock (or other securities or property, as the case
may be) to be purchased as set forth below and an amount equal to any applicable
transfer tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly, (i) (A) requisition from any transfer agent of the shares of Preferred
Stock (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of Units of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of Units of Preferred Stock
as are to be purchased (in which case
21
<PAGE>
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the Purchase Price
(as such amount may be reduced (including to zero) pursuant to Section
11(a)(iii) hereof) may be made in cash or by certified bank check or bank draft
payable to the order of the Company. In the event that the Company is obligated
to issue other securities of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company will make all
arrangements necessary so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, subject to Sections 7(e),
11(a)(ii) and 14 a new Rights Certificate evidencing Rights equivalent to the
Rights remaining
22
<PAGE>
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of, the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14 hereof.
(e) For purposes of this Section 7(e), a Person (a "Related Person")
shall be deemed to be the "Beneficial Owner" of, and to "beneficially own," any
Rights which such Related Person is the "Beneficial Owner" of, or "beneficially
owns" as a result of the definition in Section 1(c) hereof, and any Rights that
(x) are beneficially owned by any other Person (A) with which such Related
Person (or any of such Related Person's Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), directly or
indirectly, with respect to the exercise or non-exercise of, or the taking of
any action or non-action with respect to, any right, power or privilege or
economic benefit incident to the ownership of such Rights or the securities
obtainable upon exercise thereof or (B) who has agreed, arranged or otherwise
committed (whether or not in writing) directly or indirectly, to exercise or not
to exercise, or to take any other action or non-action with respect to, any
right, power or privilege or economic benefit incident to the ownership of such
Rights or the securities obtainable upon exercise thereof on behalf of, for the
benefit of, at the request of or as a result of any inducement
23
<PAGE>
of, at the request of or as a result of any inducement by, such Related Person
(or any of such Related Person's Affiliates or Associates) or (y) are
beneficially owned or otherwise held by any Person, directly or indirectly, as a
result of, or in connection with, any action contemplated by clause (x) above or
(z) were beneficially owned by such Related Person at any time after such
Related Person became an Acquiring Person. Notwithstanding anything in this
Agreement to the contrary, Rights, including Rights evidenced by certificates
for Common Stock, shall not at any time be transferable, directly or indirectly,
(i) to any Person who is, or as a result of such transfer would be, the
beneficial owner of 10% or more of the Rights, or (ii) to any Affiliate or
Associate of a Person referred to in the foregoing subparagraph. Any purported
or attempted transfer of a Right on or after the Record Date in violation of the
foregoing provisions shall be without effect without any further action on the
part of the Company or the Rights Agent, and any Right that has been the subject
of any such purported or attempted transfer shall for purposes of this Agreement
and the Rights Certificate be deemed to be held beneficially by the Person who
attempted to make such purported or attempted transfer and, thereafter, shall
continue to be exercisable by such Person or, in the case of a transfer not
prohibited by the Agreement, such Person's transferee, for shares of Preferred
Stock (or other securities, cash or other assets, as
24
<PAGE>
the case may be) pursuant to this Agreement. The Company may require (or cause
the Rights Agent or any transfer agent of the Company to require) any Person who
submits a Rights Certificate for transfer on the registry books or to exercise
the Rights represented thereby to establish to the satisfaction of the Company
in its sole discretion that such attempted transfer is not in violation of the
provisions of this Section 7(e). The Company shall use all reasonable efforts
to ensure that the provisions of this Section 7(e), Section 11(a)(ii), Section
13 and Section 24 are complied with, but shall have no liability to any holder
of Rights Certificates or any other Person as a result of its failure to make
any determinations with respect to a beneficial owner of 10% or more of the
Rights or its Affiliate or Associate hereunder. The foregoing restrictions on
transferability of Rights shall not affect the transferability of Common Stock
associated with such Rights.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or
25
<PAGE>
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
---------------------------------------------------
All Rights Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
-----------------------------------------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock, the number of shares of Preferred Stock that, except as
provided in Section 11(a)(iii)
26
<PAGE>
hereof, will be sufficient from time to time to permit the exercise in full of
all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, any other securities) issuable and deliverable
upon the exercise of the Rights may be included in the NASDAQ National Market
System or listed on any national securities exchange, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be included in the NASDAQ
National Market System or listed on such exchange upon official notice of
issuance.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities,
27
<PAGE>
and (B) the date of the expiration of the Rights. The Company will also take
such action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement. Upon any such suspension, the
Company shall issue a public announcement stating, and notify the Rights Agent,
that the exercisability of the Rights has been temporarily suspended. The
Company shall also issue a public announcement at such time as the suspension is
no longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (or other
securities, as the case may be) delivered upon exercise of the Rights shall, at
the time of delivery of the certificates for such shares (subject to payment of
the Purchase Price), be duly authorized, validly issued, fully paid and
nonassessable.
28
<PAGE>
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for shares of Preferred Stock (or other securities, as the case
may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax that may be payable in respect of any transfer
or delivery of Rights Certificates to a Person other than, or the issuance or
delivery of a number of Units of Preferred Stock in respect of a name other than
that of, the registered holder of the Rights surrendered for exercise or to
issue or deliver any certificates for a number of Units of Preferred Stock in a
name other than that of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
---------------------------
certificate for a number of Units of Preferred Stock is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such fractional shares of Preferred Stock represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and
29
<PAGE>
payment of the Purchase Price (and all applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
- --------
which the Preferred Stock transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next succeeding Business
Day on which the Preferred Stock transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a shareholder of the Company
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
----------------------------------------------------------
Number of Rights.
- ----------------
The Purchase Price, and the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable
in shares of Preferred
30
<PAGE>
Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this
Section 11(a), the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and
kind of shares of Preferred Stock or capital stock, as the case may
be, that, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of the
Company were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs that would require
an adjustment under both this
31
<PAGE>
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii) Subject to Section 24 hereof, in the event that at any time after
the Rights Dividend Declaration Date:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, directly or indirectly, shall merge into the Company or
otherwise combine with the Company and the Company shall be the continuing
or surviving corporation of such merger or combination and the Common Stock
of the Company shall remain outstanding and unchanged or shall effect a
statutory share exchange with the Company after which the Company is not a
Subsidiary of any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, or
(B) any Person, alone or together with any Affiliate or Associate
of such Person, shall become the Beneficial Owner of 20% or more of the
shares of Common Stock then outstanding, other than pursuant to any
transaction set forth in Section 13(a) hereof; then, upon the occurrence of
any event described in Section 11(a)(ii)(A) hereof and promptly after the
date of the occurrence of an event described in Section 11(a)(ii)(B)
32
<PAGE>
hereof, proper provision shall be made by the Company so that each record
holder of a Right (except as provided below and after giving effect to the
transfer restrictions contained in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof for the Purchase Price in
accordance with terms of this Agreement, such number of Units of Preferred
Stock (or, at the option of the Company and to the extent available, such
number of shares of Common Stock) as shall equal the result obtained by
multiplying the Purchase Price by a fraction, the numerator of which is the
number of Units of Preferred Stock for which a Right would otherwise then
be exercisable and the denominator of which is 50% of the current market
price of shares of Common Stock on the date of the occurrence of a Section
11(a)(ii) Event (such result being hereinafter referred to as the
"Adjustment Shares"). Notwithstanding the foregoing, to the extent
permitted by applicable law, upon the occurrence of any Section 11(a)(ii)
Event, any Rights that are or were beneficially owned by the Acquiring
Person that is the subject of the Section 11(a)(ii) Event, or by any
Affiliate or Associate of such Acquiring Person on or after such Acquiring
Person's Stock Acquisition Date, shall be null and void without any further
action, and thereafter may not be exercised by any Person (including any
subsequent transferee) for Units of Preferred Stock or other
33
<PAGE>
securities or assets pursuant to any provision hereof and shall no longer
confer any rights upon any Person.
No Rights Certificate shall be issued pursuant to Section 3 that represents
Rights beneficially owned by an Acquiring Person whose Rights become void
pursuant to the preceding sentence or any Associate or Affiliate thereof; no
Rights Certificate shall be issued at any time upon the transfer of any Rights
to any Acquiring Person whose Rights are void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Rights Certificate representing Rights
which have become null and void pursuant to this Section 11(a)(ii) which is
delivered to the Rights Agent for transfer shall be canceled.
(iii) To the extent that the number of shares of Preferred Stock and
Common Stock that are authorized by the Company's Articles of Incorporation
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph (ii) of this
Section 11(a), and subject to such limitations as are necessary to prevent
a default under any agreement for money borrowed to which the Company is a
party and subject to any limitations contained in Sections 31-1-99 and 31-
1-100 of the West Virginia Corporation Act, or imposed by the Board of
Governors of the Federal Reserve
34
<PAGE>
System, the Department of Banking of West Virginia or any other regulatory
agency having authority over the Company, the Company shall: (A) determine
the excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (the "Current Value"), over (2) the Purchase Price
(such excess being hereinafter referred to as the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for such
unavailable Adjustment Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) other equity
securities of the Company, (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having, together with the
Adjustment Shares issued upon exercise of such Right, an aggregate value
equal to the Current Value, where such aggregate value has been determined
by the Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not have
--------
made adequate provision to deliver value pursuant to clause (B) above
within 30 days following the first occurrence of a Section 11(a)(ii) Event,
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price,
shares of Preferred Stock or Common Stock (to the extent such
35
<PAGE>
securities are available) and then, if necessary, cash, which securities
and/or assets in the aggregate are equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely
that sufficient additional shares of Preferred Stock or Common Stock could
be authorized for issuance upon exercise in full of the Rights, the 30 day
period set forth above may be extended to the extent necessary, but not
more than 90 days following the first occurrence of a Section 11(a)(ii)
Event, in order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) and Section 11(a)(ii) hereof, that such action
shall apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public
36
<PAGE>
announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock shall be
the current market price (as determined pursuant to Section 11(d) hereof)
per share of the Common Stock on the date of the first occurrence of a
Section 11(a)(ii) Event.
(b) If at any time after the date of this Agreement the Company shall
fix a record date for the issuance of rights, options or warrants to all
holders of Common Stock or of any class or series of Equivalent Shares
entitling such holders (for a period expiring within 45 calendar days after
such record date) to subscribe for or to purchase Common Stock or
Equivalent Shares (or securities convertible into Common Stock or
Equivalent Shares) at a price per share (or having a conversion price per
share, if a security convertible into Common Stock or Equivalent Shares)
less than the current market price of such Common Stock or Equivalent
Shares on such record date, then, in each such case, each Right outstanding
immediately prior to such record date shall thereafter evidence the right
to purchase, for the Purchase Price, that number of Units of Preferred
Stock obtained by multiplying the number of Units of Preferred Stock
issuable upon exercise of a Right immediately prior to such record date by
a fraction, the numerator of which shall be the total number of shares of
37
<PAGE>
Common Stock and Equivalent Shares (if any) outstanding on such record date
plus the number of additional shares of Common Stock or Equivalent Shares,
as the case may be, to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible) and the denominator of which shall be the total number of
shares of Common Stock and Equivalent Shares (if any) outstanding on such
record date plus the number of shares of Common Stock or Equivalent Shares,
as the case may be, which the aggregate offering price of the total number
of shares of Common Stock or Equivalent Shares, as the case may be, so to
be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current
market price. In case such subscription price may be paid in a
consideration, part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent. Common Stock and Equivalent
Shares owned by or held for the account of the Company or any Subsidiary of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or
warrants are not
38
<PAGE>
so issued, each Right shall be adjusted to evidence the right to receive
that number of Units of Preferred Stock which such Right would have
entitled the holder to receive, for the Purchase Price, if such record date
had not been fixed.
(c) If at any time after the date of this Agreement the Company shall
fix a record date for the making of a distribution to all holders of Common
Stock or of any class or series of Equivalent Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of cash (other than a
regular quarterly cash dividend of the Company in compliance with Sections
31-1-99 and 31-1-100 the West Virginia Corporation Act), evidences of
indebtedness, assets, securities (other than Common Stock or Preferred
Stock) or subscription rights, options or warrants (excluding those
referred to in Section 11(b)), then, in each such case, each Right
outstanding immediately prior to such record date shall thereafter evidence
the right to purchase, for the Purchase Price, that number of Units of
Preferred Stock obtained by multiplying the number of Units of Preferred
Stock issuable upon exercise of a Right immediately prior to such record
date by a fraction, the numerator of which shall be the current market
price of a share of Common Stock or an Equivalent Share on the record
39
<PAGE>
date and the denominator of which shall be the current market price of a
share of Common Stock or an Equivalent Share on such record date less the
fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the cash, evidences of
indebtedness, assets or securities so to be distributed or of such
subscription rights, options or warrants applicable to a share of Common
Stock or an Equivalent Share, as the case may be. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, each Right shall be adjusted to
evidence the right to receive that number of Units of Preferred Stock which
such Right would have entitled the holder to receive, for the Purchase
Price, if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common
Stock for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the "current
40
<PAGE>
market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common
Stock for the 10 consecutive Trading Days immediately following such
date; provided, however, that in the event that the current market
--------
price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of
the requisite 30 Trading Day or 10 Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification,
then, and in each such case, the "current market price" shall be
properly adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or
41
<PAGE>
admitted to trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the
last quoted sale price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on
any such date the shares of Common Stock are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the fair
value of such shares on such date as determined in good faith by the
Board of Directors of the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national
42
<PAGE>
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, "current market price"
per share shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and shall
be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the
same manner as set forth above for the Common Stock in Section
11(d)(i) hereof (other than the last sentence thereof). If the
current market price per share of Preferred Stock cannot be determined
in the manner provided above or if the Preferred Stock is not publicly
held or listed or traded in a manner described in clause (i) of this
Section 11(d), the "current market price" per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to
43
<PAGE>
the Common Stock and Preferred Stock occurring after the date of this
Agreement) multiplied by the current market price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the "current market price" of one one-
thousandth of a share of Preferred Stock shall be equal to the
"current market price" of one share of Preferred Stock divided by
1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent in the Purchase Price; provided,
--------
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e),
44
<PAGE>
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction that mandates such
adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
13(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock other than Preferred Stock, thereafter
the number of such other shares so receivable upon exercise of any Right and if
required, the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11(a), (b),
(c), (e), (g), (h), (i), (j) and (l), and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the Preferred Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Units of Preferred Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of Units of Preferred
45
<PAGE>
Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after the adjustment in the number of Rights shall be exercisable for the number
of Units of Preferred Stock for which a Right was exercisable immediately prior
to such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(h), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
46
<PAGE>
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of Units of Preferred Stock issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per Unit and the number of Units that were expressed
in the initial Rights Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then stated value, if any, of the number of Units
of Preferred Stock issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable such number of Units of Preferred Stock at such adjusted Purchase
Price.
47
<PAGE>
(k) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date of the number of Units
of Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of Units of Preferred
Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise before giving effect to such adjustment; provided, however,
--------
that the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Board of Directors of the Company
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities that by their terms are
convertible into or exchangeable for shares of Preferred Stock,
48
<PAGE>
(iv) stock dividend or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such shareholders.
(m) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(n)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(n) hereof), (iii)
effect a statutory share exchange with any Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(n) hereof), or (iv)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(n) hereof), if at the time of or immediately after such
consolidation, merger, statutory share exchange or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in effect
that would diminish or otherwise eliminate the benefits intended to be afforded
by the Rights.
49
<PAGE>
(n) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27 hereof, take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of Common Stock following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to such
event by a fraction the numerator of which shall be the total number of shares
of Common Stock outstanding immediately prior to the occurrence of the event and
the denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
50
<PAGE>
Section 12. Certificates of Adjusted Purchase Price or Number of Shares.
-----------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate, and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained.
Section 13. Consolidation, Merger, Share Exchange or Sale or Transfer of
------------------------------------------------------------
Assets or Earning Power.
- -----------------------
(a) In the event that, following the first to occur of the Stock
Acquisition Date or the Distribution Date, directly or indirectly, (w) the
Company shall consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with Section
11(n) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (x) any Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(n)
hereof) shall consolidate with, or merge with or into, the Company, and the
Company shall be the
51
<PAGE>
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
shares of Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, (y) the Company
shall be a party to a statutory share exchange with any other Person (other than
a Subsidiary of the Company in a transaction that complies with Section 11(n)
hereof) after which the Company is a Subsidiary of any other Person, or (z) the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(n) hereof),
then, and in each such case, proper provision shall be made so that: (i) each
record holder of a Right, except as provided below and after giving effect to
the transfer restrictions contained in Section 7(e) hereof, shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, nonassessable and freely tradeable
shares of Common Stock of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances,
52
<PAGE>
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the number of
Units of Preferred Stock for which a Right would otherwise be exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such Units for which a Right was otherwise
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of
a Section 13 Event, shall be referred to as the "Purchase Price" for each Right
for all purposes of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the Common Stock
of such Principal Party on the date of consummation of such Section 13 Event;
and (ii) such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient
53
<PAGE>
number of shares of its Common Stock) in connection with the consummation of any
such transaction as may be necessary to ensure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the Rights;
and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event. Notwithstanding the
foregoing, upon the occurrence of any Section 13 Event, any Rights that are or
were beneficially owned by any Acquiring Person or by any Affiliate or Associate
of any Acquiring Person on or after such Acquiring Person's Stock Acquisition
Date shall be null and void without any further action immediately upon such
occurrence, and thereafter may not be exercised by any Person (including any
subsequent transferee) for Units of Preferred Stock or other securities or
assets pursuant to any provision hereof and shall no longer confer any rights
upon any Person.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (w), (x)
or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the Company
are converted in such merger, consolidation or statutory share exchange,
and if no securities are so issued, the
54
<PAGE>
Person that is the other party to such merger, consolidation or statutory
share exchange; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions; provided, however, that in any such case,
--------
(1) if the Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is
the issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
statutory share exchange, sale or transfer unless the Principal Party shall have
a sufficient number of authorized shares of its Common Stock that have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior
55
<PAGE>
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further providing that, as soon
as practicable after the date of any consolidation, merger, statutory share
exchange or sale of assets mentioned in paragraph (a) of this Section 13, the
Principal Party will
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or statutory share exchanges or sales or other transfers. In the
event that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore
56
<PAGE>
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(o) hereof, or to
distribute Rights Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights
57
<PAGE>
are listed or admitted to trading, or if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted price, or, if
not so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by NASDAQ or such other system then in use or, if on
any such date the Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors of the Company.
If on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one one-
thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence fractional shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-
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<PAGE>
thousandth of a share of Preferred Stock. For purposes of this Section 14(b),
the current market value of one one-thousandth of a share of Preferred Stock
shall be one one-thousandth of the current market price of a share of Preferred
Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Right or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock in respect of which Rights have been issued); and any registered
holder of any Rights Certificate (or, prior to the Distribution Date, of such
Common Stock), without the consent of the Rights Agent or of the holder of any
other Rights Certificate (or, prior to the Distribution Date, of such Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the
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holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
---------------------------
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) any restriction on transfer imposed or deemed to be imposed by
this Agreement is valid and enforceable against the holder and any transferee of
the holder;
(d) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as
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the absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Rights Certificate or the
associated Common Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company, subject to
the penultimate sentence of Section 7(e) hereof, nor the Rights Agent shall be
required to be affected by any notice to the contrary; and
(e) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
--------
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder.
--------------------------------------------------
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose
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the holder of Units of Preferred Stock or any other securities of the Company
that may at any time be issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in Section 24 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense incurred without gross
negligence, bad faith or willful
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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 in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, instruction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Rights Agent or any successor
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Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such corporation would be
--------
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases
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such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chief Executive Officer, President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for
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any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the transferability or exercisability of the
Rights or adjustment required under the provisions of Section 11 or Section 13
or any other provision hereof or responsible for the manner, method or amount of
any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any such
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adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock will, when so issued,
be duly authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chief Executive Officer, President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions. At any time the
Rights Agent may apply to the Company for written instructions with respect to
any matter arising in connection with the Rights Agent's duties and obligations
arising under this Agreement. Such application by
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<PAGE>
the Rights Agent for written instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent with respect to its duties or obligations under this
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective and the Rights Agent shall not be liable for any
action taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall be not less
than one Business Day after the Company receives such application, without the
Company's consent) unless, prior to taking or initiating any such action (or the
effective date in the case of an omission), the Rights Agent has received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents,
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and the Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or misconduct;
provided, however, reasonable care was exercised in the selection and continued
- --------
employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common
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<PAGE>
Stock and Preferred Stock, by registered or certified mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock and Preferred Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the states of Ohio, New York, Virginia or West Virginia (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking institution in the states of Ohio, New York, Virginia or
West Virginia), in good standing, having a principal office in the states of
Ohio, New York, Virginia or
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<PAGE>
West Virginia, that is authorized under such laws to exercise corporate trust
powers and is subject to supervision or examination by federal or state
authority and that has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $100,000,000. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
-----------------------------------
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be
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<PAGE>
approved by its Board of Directors to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, the Company may, if deemed necessary
or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
the issuance or sale of shares of Common Stock following the Distribution Date.
Section 23. Redemption and Termination.
--------------------------
(a)(i) The Company may, at its option, at any time prior to the earliest of
(A) the close of business on the tenth day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred prior to the Record Date,
the close of business on the tenth day following the Record Date), (B) the
occurrence of a Triggering Event, or (C) the Final Expiration Date, redeem all
but not less than all the then outstanding Rights at a redemption price of $.01
per Right appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price") and the Company may, at its
option, pay the Redemption Price either in shares of Common Stock (based on the
current market price (as determined pursuant to Section 11(d)(i) hereof) per
share of the Common Stock at the time of redemption) or cash;
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<PAGE>
provided, however, that immediately upon the date that an Acquiring Person
- --------
becomes an Acquiring Person and thereafter, the Rights may be redeemed only if
(A) there are at least two Disinterested Directors then in office and (B) the
Board of Directors of the Company, with the concurrence of a majority of the
Disinterested Directors then in office, determines that such redemption is, in
their judgment, in the best interests of the Company and its stockholders.
(ii) In addition, if there are at least two Disinterested Directors then in
office, the Board of Directors may redeem all but not less than all of the then
outstanding Rights at the Redemption Price with the concurrence of a majority of
such Disinterested Directors following the occurrence of a Stock Acquisition
Date and following the expiration of the right of redemption hereunder but prior
to any Triggering Event, if either (A) (1) a Person who is an Acquiring Person
shall have transferred or otherwise disposed of a number of shares of Common
Stock in one transaction or a series of transactions, not directly or indirectly
involving the Company or any of its Subsidiaries, such that such Person is
thereafter a Beneficial Owner of less than 10% of the outstanding shares of
Common Stock and (2) there are no other Persons, immediately following the
occurrence of the event described in clause (1), who are Acquiring Persons or
(B) in connection with the type of transaction specified in Sections
11(a)(ii)(A) or 13(a) in which
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<PAGE>
all holders of Common Stock are treated alike and not involving an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or any other Person
in which such Acquiring Person, Affiliate or Associate has any interest, or any
other Person acting directly or indirectly on behalf of or in association with
any such Acquiring Person, Affiliate or Associate. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Triggering Event until such time as the
Company's right of redemption hereunder is not exercisable.
(b) Immediately upon the action of the Board of Directors of the
Company authorizing the redemption of the Rights pursuant to subsection (a) of
this Section 23 and without any further action and without any notice, the right
to exercise the Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the action of the Board of Directors authorizing the redemption
of the Rights, the Company shall give notice of such redemption to the Rights
Agent and to the holders of such Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock. Any notice that is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the
74
<PAGE>
notice. Each such notice of redemption shall state the method by which the
payment of the Redemption Price will be effected.
Section 24. Exchange.
--------
(a) The Company may, at its option, at any time after any Person
becomes an Acquiring Person exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any Person or entity
organized, appointed or established by the Company or by any Subsidiary of the
Company pursuant to the terms of, or holding shares of Common Stock of the
Company for, any such employee benefit plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
shares of Common Stock then outstanding.
75
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(b) Immediately upon the action of the Board of Directors of the
Company authorizing the exchange of the Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of Rights held by such holder multiplied by the Exchange Ratio.
Promptly after the action of the Board of Directors authorizing the exchange of
the Rights, the Company shall give notice of such exchange to the Rights Agent
and to the holders of such Rights by mailing such notice to all such holders at
each holder's last address as it appears upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer
agent for the Common Stock. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
shares of Common Stock for Rights will be effected.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or Equivalent Shares) for Common Stock
at the initial rate of one one-thousandth of a share of Preferred Stock (or
Equivalent Share) for each share of Common Stock, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred
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<PAGE>
Stock pursuant to the terms thereof, so that the fraction of a share of
Preferred Stock delivered in lieu of each share of Common Stock shall have the
same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock authorized but unissued to permit the exchange in full
of such Rights in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
or Preferred Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates that evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, there shall be
paid to the registered holders of the Rights Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this subsection (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the Exchange Date.
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(f) In the event the Board of Directors of the Company authorizes any
exchange pursuant to Section 24(a), to the extent permitted by applicable law,
any Rights that are or were beneficially owned by any Acquiring Person or by any
Affiliate or Associate of any Acquiring Person on or after such Acquiring
Person's Stock Acquisition Date shall be null and void without any further
action immediately upon such authorization, and thereafter may not be exercised
by any Person (including any subsequent transferee) for Units of Preferred Stock
or other securities or assets pursuant to any provision hereof and shall no
longer confer any rights upon any Person.
Section 25. Notice of Certain Events.
------------------------
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular quarterly cash dividend of the Company in
compliance with Sections 31-1-99 and 31-1-100 of the West Virginia Corporation
Act), or (ii) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or shares
of stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any
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consolidation or merger into or with any other Person (other than a Subsidiary
of the Company in a transaction that complies with Section 11(n) hereof), or to
effect a statutory share exchange with any Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(n) hereof), or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(n) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the holders
of the shares of Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 20 days prior to the record date for
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determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Preferred Stock whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer, if appropriate, not only to Preferred Stock, but also to
Common Stock or other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
-------
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Commercial BancShares, Incorporated
415 Market Street.
Parkersburg, West Virginia 26101
Attention: Secretary
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<PAGE>
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Fifth Third Bank
Corporate Trust Department
#1090 D2
38 Fountain Square Plaza
Cincinnati, Ohio 45202
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. At any time prior to the earlier
--------------------------
of the Distribution Date or the occurrence of a Triggering Event and subject to
the penultimate and last sentences of this Section 27, the Company may, and the
Rights Agent shall if the Company so directs, supplement or amend any provision
of this Rights Agreement (including, without limitation, the date on which the
Distribution Date shall occur, the time during which the Rights may be redeemed
pursuant to Section 23 of this Rights Agreement or any provision of the
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Articles of Serial Designation for the Preferred Stock) without the approval of
any holder of the Rights. From and after the earlier of the Distribution Date
or the occurrence of a Triggering Event and subject to applicable law, the
Company may, and the Rights Agent shall if the Company so directs, amend this
Rights Agreement without the approval of any holders of Right Certificates (i)
to cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision of this Rights
Agreement or (ii) to make any other provisions in regard to matters or questions
arising hereunder which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person). Upon the delivery of a certificate from an appropriate officer of the
Company which states that a proposed supplement or amendment to this Rights
Agreement is in compliance with the provisions of this Section 27, the Rights
Agent shall execute such supplement or amendment. Notwithstanding anything
contained in this Rights Agreement to the contrary, (x) at any time when there
shall be an Acquiring Person, this Rights Agreement may be supplemented or
amended only if (A) there are at least two Disinterested Directors then in
office and (B) the Board of Directors of the Company, with the concurrence of a
majority of the Disinterested Directors then in office, determines that such
supplement or
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amendment is in their judgment in the best interests of the Company and the
holders of its Rights (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person) and (y) no supplement or amendment to this
Rights Agreement shall be made which reduces the Redemption Price or provides
for an earlier Final Expiration Date.
Section 28. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
----------------------------------------------------------
For all purposes of this Agreement, any calculation of the number of shares
of Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (and, where
specifically provided for herein, the Disinterested Directors) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board, or the Company (or, where
specifically provided for herein, the Disinterested Directors), or as may be
necessary or advisable in
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the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board (or, where
specifically provided for herein, by the Disinterested Directors) in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights Certificates and all other parties, and (y) not subject
the Board or the Disinterested Directors to any liability to the holders of the
Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
--------------------------
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
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<PAGE>
Section 31. Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
- --------
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement, each Right and each Rights
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of West Virginia and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such
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<PAGE>
counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
COMMERCIAL BANCSHARES, INCORPORATED
By /s/ William E. Mildren, Jr.
---------------------------
William E. Mildren, Jr.
Chairman, President and Chief
Executive Officer
FIFTH THIRD BANK
By /s/ Dana Hushak
----------------
Dana Hushak
Vice President
86
<PAGE>
EXHIBIT A TO EXHIBIT 4.1
ARTICLES OF SERIAL DESIGNATION
OF
COMMERCIAL BANCSHARES, INCORPORATED
1. The name of the corporation is COMMERCIAL BANCSHARES, INCORPORATED.
2. On August 14, 1996, pursuant to Section 31-1-79 of the West
Virginia Corporation Act and the authority conferred upon the Board of Directors
by the Articles of Incorporation, the Board of Directors duly adopted the
following resolutions creating a series of 20,000 shares of Preferred Stock
designated as Junior Participating Cumulative Preferred Stock, Series A:
RESOLVED, that it is hereby declared to be in the best interests of
the Corporation that the Articles of Incorporation of the Corporation be
amended to create a new series of Preferred Stock to consist of 20,000
shares and to be designated as Junior Participating Cumulative Preferred
Stock, Series A, and to determine the preferences, limitations and relative
rights of the Junior Participating Cumulative Preferred Stock, Series A, by
adding to Article such Articles of Incorporation, a new section entitled
"Junior Participating Cumulative Preferred Stock, Series A", to read in the
form attached hereto as Appendix I.
----------
RESOLVED, that the amendment to the Articles of Incorporation attached
as Appendix I is hereby adopted and that the officers are authorized and
----------
directed to prepare and to file with the Secretary of State of West
Virginia Articles of Serial Designation to give effect thereto.
3. That Appendix I hereto constitutes the amendment referred to in the
----------
foregoing resolutions.
4. That such amendment to the Articles of Incorporation of the
Corporation was adopted by the Board of Directors on August 14, 1996.
Shareholder action was not required.
5. These Articles of Serial Designation were prepared by Hunton &
Williams, Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond, Virginia
23219-9074.
/s/ William E. Mildren, Jr.
Dated: August 14, 1996 By:_____________________________
William E. Mildren, Jr.
Chairman, President and
Chief Executive Officer
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<PAGE>
/s/ Larry G. Johnson
By:__________________________
Larry G. Johnson
Secretary-Treasurer
APPENDIX I
Junior Participating Cumulative Preferred Stock, Series A. The
---------------------------------------------------------
Corporation has designated 20,000 shares of the authorized but unissued shares
of the Corporation's Preferred Stock, par value $100, as Junior Participating
Cumulative Preferred Stock, Series A (hereinafter referred to as "Series A
Preferred Stock"). The terms of the Series A Preferred Stock, in the respect in
which the shares of such series may vary from shares of any and all other series
of Preferred Stock, are as follows:
(a) Dividends and Distributions.
---------------------------
(1) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Preferred Stock with respect
to dividends, the holders of shares of Series A Preferred Stock,
in preference to the holders of Common Stock and of any other
junior stock, shall be entitled to receive, when, and if declared
by the Board of Directors out of funds legally available
therefor, dividends payable quarterly on March 31, June 30,
September 30 and December 31 (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of
a share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the
greater of (a) $100 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock. In the event the Corporation
shall at any time after August 14, 1996 (the "Rights Dividend
Declaration Date"), (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into
a
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<PAGE>
smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(2) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (1)
above immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of
Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during
the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend at
the rate of $100 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(3) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares of Series A Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred
Stock entitled to
-3-
<PAGE>
receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date
fixed for the payment thereof.
(b) Voting Rights. The holders of shares of Series A Preferred
-------------
Stock shall have the following voting rights:
(1) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote
of the shareholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number
of shares, then in each such case the number of votes per share
to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to
such event.
(2) Except as otherwise provided herein, in the Articles of
Incorporation or under applicable law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one voting group on all matters
submitted to a vote of stockholders of the Corporation.
(3) (i) If at any time dividends on any shares of Series A
Preferred Stock shall be in arrears in an amount equal to
six quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (a "default
period") that shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all
shares of Series A Preferred Stock then outstanding shall
have been declared and paid or set apart for payment.
During each default period, all holders of the outstanding
shares of Series A Preferred Stock together with any other
series of Preferred Stock then entitled
-4-
<PAGE>
to such a vote under the terms of the Articles of
Incorporation, voting as a separate voting group, shall be
entitled to elect two (2) members of the Board of Directors
of the Corporation.
(ii) During any default period, such voting right of
the holders of Preferred Stock may be exercised initially at
a special meeting called pursuant to subparagraph (iii) of
this Subsection (b)(3) or at any annual meeting of
stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor
the right of the holders of any other series of Preferred
Stock, if any, to increase, in certain cases, the authorized
number of Directors shall be exercised unless the holders of
ten percent (10%) in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Preferred Stock of
such voting right. At any meeting at which the holders of
Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the
right, voting as a separate voting group, to elect Directors
to fill such vacancies, if any, in the Board of Directors as
may then exist up to two (2) Directors, or if such right is
exercised at an annual meeting, to elect two (2) Directors.
If the number which may be so elected at any special meeting
does not amount to the required number, the holders of the
Preferred Stock shall have the right to make such increase
in the number of Directors as shall be necessary to permit
the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during
the continuance of such period, the number of Directors
shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or
pari passu with the Series A Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect Directors, the Board of Directors
-5-
<PAGE>
may order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total
number of shares of Preferred Stock outstanding,
irrespective of any and all series, may request, the calling
of a special meeting of the holders of Preferred Stock,
which meeting shall thereupon be called by the President, a
Vice-President or the Secretary of the Corporation. Notice
of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this
paragraph (b)(3)(iii) shall be given to each holder of
record of Preferred Stock by mailing a copy of such notice
to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time
not earlier than 10 days and not later than 60 days after
such order or request. In the event such meeting is not
called within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder
or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this
paragraph (b)(3)(iii), no such special meeting shall be
called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if
applicable, shall continue to be entitled to elect the whole
number of Directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) Directors
voting as a separate voting group, after the exercise of
which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until
the expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in paragraph
(b)(3)(ii) be filled by vote of a majority of the remaining
Directors theretofore elected by the voting group which
elected the Director whose office shall have become vacant.
References in this paragraph (b)(3)(iv) to Directors elected
by a particular voting group shall include
-6-
<PAGE>
Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock, as
a separate voting group, to elect Directors shall cease, (y)
the term of any Directors elected by the holders of
Preferred Stock, as a separate voting group, shall
terminate, and (z) the number of Directors shall be such
number as may be provided for in, or pursuant to, the
Articles of Incorporation or bylaws irrespective of any
increase made pursuant to the provisions of paragraph
5(b)(3)(ii) (such number being subject, however, to change
thereafter in any manner provided by law or in the Articles
of Incorporation or bylaws). Any vacancies in the Board of
Directors affected by the provisions of clauses (y) and (z)
in the preceding sentence may be filled by a majority of the
remaining Directors, even though less than a quorum.
(4) Except as set forth herein or as otherwise provided in
the Articles of Incorporation, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any
corporate action.
(c) Certain Restrictions.
--------------------
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided
in Subsection (a) are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall
have been paid in full, the Corporation shall not:
(i) declare or pay or set apart for payment any
dividends (other than dividends payable in shares of any
class or classes of stock of the Corporation ranking junior
to the Series A Preferred Stock) or make any other
distributions on, any class of stock of the Corporation
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock
-7-
<PAGE>
and shall not redeem, purchase or otherwise acquire,
directly or indirectly, whether voluntarily, for a sinking
fund, or otherwise any shares of any class of stock of the
Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Preferred Stock, provided that, notwithstanding the
foregoing, the Corporation may at any time redeem, purchase
or otherwise acquire shares of stock of any such junior
class in exchange for, or out of the net cash proceeds from
the concurrent sale of, other shares of stock of any such
junior class;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and
all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, provided that
the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock;
(iv) purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of
stock ranking on a parity with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will
-8-
<PAGE>
result in fair and equitable treatment among the respective
series or classes.
(2) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (1) of Subsection (c), purchase or
otherwise acquire such shares at such time and in such manner.
(d) Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
(e) Liquidation, Dissolution or Winding Up.
--------------------------------------
(1) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, no distribution
shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall
have received $1,000 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions
shall be made to the holders of shares of Series A Preferred
Stock unless, prior thereto, the holders of shares of Common
Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the
Series A Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in subparagraph 3 below to reflect such
events as stock splits, stock dividends and recapitalizations
with respect to the Common Stock) (such number in clause (ii)
being hereinafter referred to as the "Adjustment Number").
Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of
all
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<PAGE>
outstanding shares of Series A Preferred Stock and Common Stock,
respectively, holders of Series A Preferred Stock and holders of
shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such
Series A Preferred Stock and Common Stock, on a per share basis,
respectively.
(2) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all
other series of Preferred Stock, if any, then such remaining
assets shall be distributed ratably to the holders of all such
shares in proportion to their respective liquidation preferences.
In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(3) In the event the Corporation shall at any time after the
Rights Dividend Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by
a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(f) Consolidation, Merger, Share Exchange, etc. In case the
-------------------------------------------
Corporation shall enter into any consolidation, merger, share
exchange, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the
shares of Series A Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 1,000 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each
share of Common Stock
-10-
<PAGE>
is changed or exchanged. In the event the Corporation shall at any
time after the Rights Dividend Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the amount set forth in the preceding sentence with respect
to the exchange or change of shares of Series A Preferred Stock shall
be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(g) Redemption. The outstanding shares of Series A Preferred
----------
Stock may be redeemed at the option of the Board of Directors as a
whole, but not in part, at any time, or from time to time, at a cash
price per share equal to (i) 100% of the product of the Adjustment
Number times the Average Market Value (as such term is hereinafter
defined) of the Common Stock, plus (ii) all dividends which on the
redemption date have accrued on the shares to be redeemed and have not
been paid or declared and a sum sufficient for the payment thereof set
apart, without interest. The "Average Market Value" is the average of
the closing sale prices of a share of the Common Stock during the 30-
day period immediately preceding the date before the redemption date
on the Composite Tape for New York Stock Exchange Listed Stocks, or,
if such stock is not quoted on the Composite Tape, on the New York
Stock Exchange, or, if such stock is not listed on such exchange, on
the principal United States securities exchange registered under the
Securities Exchange Act of 1934, as amended, on which such stock is
listed, or, if such stock is not listed on any such exchange, the
average of the closing bid quotations with respect to a share of
Common Stock during such 30-day period on the National Association of
Securities Dealers, Inc. Automated Quotation System or any system then
in use, or if no such quotations are available, the fair market value
of a share of the Common Stock as determined by the Board of Directors
in good faith.
(h) Ranking. The Series A Preferred Stock shall rank junior to
-------
all other series of Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall
provide otherwise.
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<PAGE>
(i) Amendment. Except as permitted by the West Virginia
---------
Corporation Act, the Articles of Incorporation or the Bylaws, the
Articles of Incorporation shall not be further amended in any manner
that would adversely affect the preferences, rights or powers of the
Series A Preferred Stock.
(j) Fractional Shares. Series A Preferred Stock may be issued in
-----------------
fractions of one one-thousandth of a share (and integral multiples
thereof) which shall entitle the holder, in proportion to such
holders' fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Preferred Stock.
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<PAGE>
EXHIBIT B TO EXHIBIT 4.1
[Form of Rights Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER AUGUST 13, 2006, OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. THIS
RIGHTS CERTIFICATE AND THE RIGHTS EVIDENCED BY THIS RIGHTS CERTIFICATE MAY NOT
BE TRANSFERRED, DIRECTLY OR INDIRECTLY, (A) TO ANY PERSON WHO IS, OR AS A RESULT
OF SUCH TRANSFER WOULD BE, THE BENEFICIAL OWNER OF 10% OR MORE OF THE RIGHTS, OR
(B) TO ANY AFFILIATE OR ASSOCIATE OF ANY SUCH PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUCH PURPORTED TRANSFER SHALL BE WITHOUT
EFFECT. ANY RIGHT THAT HAS BEEN THE SUBJECT OF ANY SUCH PURPORTED OR ATTEMPTED
TRANSFER SHALL BE DEEMED TO BE BENEFICIALLY HELD BY THE PERSON WHO ATTEMPTED TO
MAKE SUCH PURPORTED OR ATTEMPTED TRANSFER AND SHALL CONTINUE TO BE EXERCISABLE
BY SUCH PERSON OR A PERMITTED TRANSFEREE.
Rights Certificate
This certifies that ________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of August 14, 1996 (the "Rights
Agreement"), between Commercial Bancshares, Incorporated, a West Virginia
corporation (the "Company"), and [ ], a
[ ] bank (the "Rights Agent"), to purchase from the Company at any
time prior to 5:00 P.M. (Parkersburg, West Virginia time) on August 13, 2006, at
the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one fully paid, nonassessable share Common Stock
-1-
<PAGE>
of the Company, at a purchase price of $116 per share (the "Purchase Price"),
upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. (All capitalized
terms not defined herein shall have the meaning set forth in the Rights
Agreement.) The Purchase Price shall be paid in cash. The number of Rights
evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of August 14, 1996,
based on the Common Stock as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Common Stock or other securities that may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are subject
to modification and adjustment upon the happening of certain events, including
Triggering Events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
-2-
<PAGE>
Under no circumstances may this Rights Certificate or any of the Rights
represented by this Certificate be transferred, directly or indirectly, (i) to
any Person who is, or as a result of such transfer would be, the beneficial
owner of 10% or more of the Rights, or (ii) to any Affiliate or Associate of any
such Person. Any attempt to transfer Rights to such Person will be without
effect. Any Right that has been the subject of any such purported transfer
shall be deemed to be held beneficially by the Person who attempted to make such
transfer and, thereafter, shall continue to be exercisable by such Person, or in
the case of a transfer not prohibited by the Agreement, such Person's
transferee, for shares of Common Stock, or other securities or assets. Under
certain circumstances specified in Sections 11(a)(ii), 13 and 24 of the Rights
Agreement, Rights that are or were owned by an Acquiring Person or an Affiliate
or Associate of an Acquiring Person may become null and void and no longer
exercisable by any Person (including any subsequent transferee). Copies of the
Rights Agreement are on file at the above-mentioned office of the Rights Agent
and are also available upon written request to the Rights Agent or the Secretary
of the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase
-3-
<PAGE>
a like aggregate number of shares of Common Stock as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company that may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription
-4-
<PAGE>
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of ___________ __, ____
ATTEST: COMMERCIAL BANCSHARES, INCORPORATED
______________________ By: _________________________
Secretary Name: __________________
Title: _________________
Countersigned:
______________________
By____________________
Authorized Signature
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<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
- ------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and transfers
unto _____________________________________________
_________________________________________________________________
(Please print name and address of transferee)
_________________________________________________________________
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
_________________________ Attorney, to transfer the within Rights Certificate on
the books of the within-named Company, with full power of substitution.
Dated: ____________________, ____
__________________________
Signature
Signature Guaranteed:
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<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: ____________, ____ _________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
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<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: COMMERCIAL BANCSHARES, INCORPORATED
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of Common
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
Please insert social security or other identifying number
______________________________________________________________
(Please print name and address)
______________________________________________________________
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<PAGE>
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
______________________________________________________________
(Please print name and address)
______________________________________________________________
Date: _______________, ____
________________________________
Signature
Signature Guaranteed:
-9-
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are [ ] are not being exercised by or on behalf of a
Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is,
was or became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person.
Dated: ______________, ____ __________________________
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the
face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
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<PAGE>
EXHIBIT C TO EXHIBIT 4.1
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
----------------------------
On August 14, 1996, the Board of Directors of Commercial Bancshares,
Incorporated, a West Virginia corporation (the "Company"), declared a dividend
distribution of one Right for each outstanding share of common stock (the
"Common Stock"), of the Company to shareholders of record at the close of
business on August 30, 1996 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company 1/1000th of a share (a "Unit) of
a new series of preferred stock designated "Junior Participating Cumulative
Preferred Stock, Series A" ("Series A"). Shareholders will receive one Right
per share of Common Stock held of record at the close of business on the Record
Date. The exercise price of each Right will be $116, subject to adjustment (the
"Purchase Price").
Rights will also attach to shares of Common Stock issued after the
Record Date but prior to the Distribution Date unless the Board of Directors
determines otherwise at the time of issuance. The description and terms of the
Rights are set forth in a Rights Agreement (the "Agreement"), dated as of August
14, 1996 between the Company and Fifth Third Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate certificates
evidencing the Rights (the "Rights Certificates") will be distributed. The
Rights will separate from the Common Stock and a distribution of the Rights
Certificates will occur (the "Distribution Date") upon the earlier of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 10% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), or (ii) 10 business days following
the commencement of a tender offer or exchange offer that would result in a
person or group beneficially owning 10% or more of such outstanding shares of
Common Stock. Until the Distribution Date, (i) the rights will be evidenced by
the Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after the
Record Date will contain a notation incorporating the Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date
-1-
<PAGE>
and will expire at the close of business on August 13, 2006 (the "Final
Expiration Date"), unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date, and thereafter such separate Rights Certificates alone
will represent the Rights.
Rights may not be transferred, directly or indirectly, (i) to any
person who is, or as a result of such transfer would be, the beneficial owner of
10% or more of the Rights, or (ii) to any Affiliate or Associate of any such
Person. Any purported or attempted transfer of a Right in violation of this
provision shall be without effect and any Right that has been the subject of any
such purported or attempted transfer shall be deemed to be held beneficially by
the Person who attempted to make such purported or attempted transfer.
While each Right will initially provide for the acquisition of one
Unit of Series A at the Purchase Price, the Agreement provides that if (i) an
Acquiring Person purchases 20% or more of the outstanding Common Stock, or (ii)
at any time following the Distribution Date, the Company is the surviving
corporation in a merger with an Acquiring Person and its Common Stock is not
changed or exchanged, or (iii) an Acquiring Person effects a statutory share
exchange with the Company after which the Company is not a subsidiary of any
Acquiring Person, each holder of a Right (except as set forth below) will
thereafter have the right to receive, upon exercise and payment of the Purchase
Price, a Unit of Series A (or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to twice the amount of the
Purchase Price.
In the event that, at any time following the first to occur of the
Stock Acquisition Date or the Distribution Date, (i) the Company is acquired in
a merger, statutory share exchange, or other business combination in which the
Company is not the surviving corporation (other than a transaction described in
the preceding paragraph), or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except as set forth below)
shall thereafter have the right to receive, upon exercise and payment of the
Purchase Price, common stock of the acquiring company having a value equal to
twice the Purchase Price. The events set forth in this paragraph and in the
preceding paragraph are referred to as the "Triggering Events."
At any time after any person becomes an Acquiring Person, the Company
may exchange all or part of the Rights (except as set forth below) for shares of
Common Stock (an "Exchange") at an
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<PAGE>
exchange ratio of one share per Right, as appropriately adjusted to reflect any
stock split transaction, except that the Company may not effect such Exchange at
any time after any Person (with certain exceptions), together with all
Affiliates and Associates of such person, becomes the Beneficial Owner of 50% or
more of the shares of Common Stock then outstanding.
Upon the occurrence of a Triggering Event that entitles Rights holders
to purchase securities or assets of the Company, Rights that are or were owned
by the Acquiring Person that is a party to such Triggering Event or any
Affiliate or Associate of an Acquiring Person on or after such Acquiring
Person's Stock Acquisition Date, to the extent permitted by applicable law,
shall be null and void and shall not thereafter be exercised by any Person
(including subsequent transferees). Upon the occurrence of a Triggering Event
that entitles Rights holders to purchase common stock of a third party, or upon
the authorization of an Exchange, Rights that are or were owned by any Acquiring
Person or any Affiliate or Associate of any Acquiring Person on or after such
Acquiring Person's Stock Acquisition Date, to the extent permitted by applicable
law, shall be null and void and shall not thereafter be exercised by any person
(including subsequent transferees).
The Purchase Price payable, and the number of shares of Common Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustments from time to time to prevent dilution.
At any time before the earlier of (1) 10 days following the Stock
Acquisition Date, (2) the occurrence of a Triggering Event, or (3) the Final
Expiration Date, the Company may redeem the Rights in whole, but not in part, at
a price of $.01 per Right (the "Redemption Price"). Under certain circumstances
set forth in the Agreement, the decision to redeem shall require the concurrence
of a majority of the Disinterested Directors, as defined below. After the
redemption period has expired, the Company's right of redemption may be
reinstated if (i) an Acquiring Person reduces his beneficial ownership to less
than 10% of the outstanding shares of Common Stock in a transaction or series of
transactions not involving the Company, or (ii) there is a merger or other
business combination involving the Company in which all holders of Common Stock
are treated alike and which does not involve an Acquiring Person. Immediately
upon the action of the Board of Directors of the Company ordering redemption of
the Rights, with, where required, the concurrence of the Disinterested
Directors, the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
-3-
<PAGE>
The term "Disinterested Directors" means any member of the Board of
Directors of the Company who is not an officer or employee of the Company or any
of its subsidiaries and who was a member of the Board of Directors of the
Company prior to the time that any Person became an Acquiring Person, and any
successor to a Disinterested Director who is not an officer or employee of the
Company or any of its subsidiaries if such successor is recommended or elected
to succeed by a majority of the Disinterested Directors then on the Board of
Directors of the Company, but the term "Disinterested Directors" does not
include an Acquiring Person, or any Affiliate or Associate of any Acquiring
Person, or a nominee or representative of the foregoing entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
At any time prior to the earlier of the Distribution Date or the
occurrence of a Triggering Event and subject to the conditions described below,
the Company may amend any of the provisions of the Agreement. From and after
the earlier of the Distribution Date or the occurrence of a Triggering Event,
the Company may amend the Agreement to cure any ambiguity and to make changes
that do not adversely affect the holders of Rights (excluding the interests of
any Acquiring Person). Notwithstanding the foregoing, the Agreement may not be
amended to reduce the Redemption Price or provide for an earlier Final
Expiration Date, and at any time when there is an Acquiring Person, the
Agreement may be amended only if the Board of Directors of the Company, with the
concurrence of a majority of the Disinterested Directors then in office,
determines that such amendment is in the best interests of the Company and the
holders of its rights (excluding the interests of any Acquiring Person).
The Rights may have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that acquires more than 10% of
the outstanding shares of Common Stock of the Company if a Triggering Event
thereafter occurs without the Rights having been redeemed or in the event of an
Exchange. However, the Rights should not interfere with any merger or other
business combination approved by the Board of Directors and the shareholders
because the Rights are redeemable under certain circumstances.
-4-
<PAGE>
A copy of the Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K dated August
14, 1996. A copy of the Agreement is available free of charge from the Rights
Agent. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Agreement, which is
incorporated herein by reference.
The address of the Rights Agent is:
Fifth Third Bank
Corporate Trust Department
#1090 D2
38 Fountain Square Plaza
Cincinnati, Ohio 45202.
-5-
<PAGE>
EXHIBIT 28.1
[Commercial BancShares, Inc. Logo]
Commercial BancShares, Inc.
415 Market St., PO Box 1427
Parkersburg, WV 26102-1427
Fax: 304-424-3144
Contact: Larry G Johnson
Chief Financial Officer
304-424-3131
NEWS RELEASE
COMMERCIAL BANCSHARES, INCORPORATED
ADOPTS SHAREHOLER RIGHTS PLAN
FOR IMMEDIATE RELEASE
Parkersburg, WV--August 19, 1996--The Board of Directors of Commercial
BancShares, Incorporated, (AMEX: CWV) at its meeting on August 14, 1996, adopted
a shareholder rights plan designed to protect Commercial shareholders from
abusive takeover tactics and from attempts to acquire control of Commercial at
an inadequate price.
"Our shareholder rights plan is not being adopted in response to any
specific threat to acquire control of the company, nor is the company aware of
any such effort," said William E. Mildren, Jr., Chief Executive Officer. "The
plan is being adopted to enhance the ability of the board to protect
shareholders' interests. Well over 1,000 companies, including many bank holding
companies, have adopted similar rights plans."
"The purpose of a rights plan is not to guarantee that the company
will not be acquired, but simply to persuade any large acquiror of our stock to
deal with the board," Mr. Mildren continued. "The board believes that it is in
the best position to advance the interests of all shareholders and to pursue and
evaluate alternatives." The plan does not preclude Commercial's board of
directors from considering an offer to acquire all or part of Commercial if it
believes the offer to be in the best interests of Commercial's shareholders.
The plan provides for the issuance of a right to purchase one share of
a new series of preferred stock for each outstanding share of common stock. The
rights will not be currently exercisable or transferable, and no separate
certificates evidencing rights will be distributed unless a triggering event
occurs. The rights will attach to shares of common stock outstanding on August
30, 1996, and will expire on August 30, 2006.
The rights will be exercisable only if a person, group or other entity
acquires or announces a tender offer for 10% or more of Commercial's common
stock. At the discretion of the board of directors, Commercial will be entitled
to redeem the rights at
<PAGE>
any time before announcement that a 10% position has been acquired, and for 10
days after the announcement, unless such period has been extended by the board
of directors.
If the rights have not been redeemed and any person, group or entity
purchases 20% or more of Commercial's common stock, each right will entitle the
holder, except the acquiring person, group, or entity, upon payment of the
exercise price, to acquire common stock having a value equal to twice the
right's exercise price. Also, if Commercial were acquired in a merger or other
business combination by such persons, group or entity, or if 50% of its earning
power or assets were sold in one transaction or series of transactions, each
right would entitle the holder, except the acquiring person, group or entity, to
purchase securities of the surviving company having a market value equal to
twice the right's exercise price. This is the feature of the plan that is
expected to deter hostile takeover attempts.
Details of the plan are contained in a letter that will be mailed to
all Commercial shareholders on September 13.
# # #
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