<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 02549
----------------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
First Essex Bancorp, Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 04-2943217
- -------------------------------------------------------------------------------
(State of Incorporation or Organization) (IRS Employer Identification Number)
71 Main Street, Andover, Massachusetts 01810
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of securities registration of a class of securities
pursuant to Section 12(b) of the pursuant to Section 12(g) of the
Exchange Act and is effective Exchange Act and is effective
pursuant to General Instruction pursuant to General Instruction
A.(c), please check the following A.(d), please check the following
box. / / box. /X/
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each Exchange on Which
to be so registered Each Class is to be Registered
------------------- ------------------------------
None. None.
Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase Series B
Junior Participating Cumulative Preferred Stock
- -------------------------------------------------------------------------------
(Title of Class)
<PAGE>
Item 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On September 22, 1999, the Board of Directors of First Essex Bancorp,
Inc. (the "Company") declared a dividend of one Right for each outstanding share
of Common Stock, par value $.10 per share, of the Company (the "Common Shares").
The Rights will be issued to the holders of record of Common Shares outstanding
on October 12, 1999, and with respect to Common Shares issued thereafter until
the Distribution Date (as defined below) and, in certain circumstances, with
respect to Common Shares issued after the Distribution Date. Each Right, when it
becomes exercisable as described below, will entitle the registered holder to
purchase from the Company one one-hundredth (1/100th) of a share of Series B
Junior Participating Cumulative Preferred Stock, par value $.10 per share, of
the Company (the "Preferred Shares") at a price of $70.00 (the "Purchase
Price"). The description and terms of the Rights are set forth in a Rights
Agreement dated as of October 12, 1999 (the "Rights Agreement") between the
Company and BankBoston N.A., as Rights Agent (the "Rights Agent").
Until the earlier of (i) such time as the Company learns that a person
or group (including any affiliate or associate of such person or group)
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares (such person or group being called an
"Acquiring Person") or (ii) such date, if any, as may be designated by the Board
of Directors of the Company following the commencement of, or first public
disclosure of an intent to commence, a tender or exchange offer for outstanding
Common Shares which could result in the offeror becoming the beneficial owner of
15% or more of the outstanding Common Shares (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced by the
certificates for Common Shares registered in the names of the holders thereof
(which certificates for Common Shares shall also be deemed to be Right
Certificates, as defined below) and not by separate Right Certificates.
Therefore, until the Distribution Date, the Rights will be transferred with and
only with the Common Shares.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Shares
originally issued after the Distribution Date), and such separate Right
Certificates alone will thereafter evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire on October 12, 2009 (the "Expiration Date"), unless earlier redeemed by
the Company as described below.
To preserve the actual or potential economic value of the Rights, the
number of Preferred Shares or other securities issuable upon exercise of a
Right, the Purchase Price and Redemption Price and the number of Rights
associated with each outstanding Common Share are all subject to adjustment by
the Board of Directors as provided in the Rights Agreement in the event of any
change in the Common Shares or Preferred Shares, whether by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
-2-
<PAGE>
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Shares or Preferred Shares, as the case
may be (other than distribution of the Rights or regular quarterly cash
dividends) or otherwise.
The Preferred Shares are authorized to be issued in fractions which are
an integral multiple of one one-hundredth (1/100th) of a Preferred Share. The
Company may, but is not required to, issue fractions of shares upon the exercise
of Rights, and, in lieu of fractional shares, the Company may issue certificates
or utilize a depository arrangement as provided by the terms of the Preferred
Shares and, in the case of fractions other than one one-hundredth (1/100th) of a
Preferred Share or integral multiples thereof, may make a cash payment based on
the market price of such shares.
Upon a person or a group becoming an Acquiring Person, the Rights will
entitle each holder of a Right to purchase, for the Purchase Price, that number
of one one-hundredths (1/100ths) of a Preferred Share equivalent to the number
of Common Shares which at the time of the transaction would have a market value
of twice the Purchase Price.
In the event the Company is acquired in a merger or other business
combination or 50% or more of its assets or assets representing 50% or more of
its earning power are sold, leased, exchanged or otherwise transferred (in one
or more transactions) to a publicly traded corporation, each Right will entitle
its holder to purchase, for the Purchase Price, that number of common shares of
such corporation which at the time of the transaction would have a market value
of twice the Purchase Price. In the event the Company is acquired in a merger or
other business combination or 50% or more of its assets or assets representing
50% or more of the earning power of the Company are sold, leased, exchanged or
otherwise transferred (in one or more transactions) to an entity that is not a
publicly traded corporation, each Right will entitle its holder to purchase, for
the Purchase Price, at such holder's option, (i) that number of shares of such
entity (or, at such holder's option, of the surviving corporation in such
acquisition, which could be the Company) which at the time of the transaction
would have a book value of twice the Purchase Price or (ii) if such entity has
an affiliate which has publicly traded common shares, that number of common
shares of such affiliate which at the time of the transaction would have a
market value of twice the Purchase Price.
Any Rights that are at any time beneficially owned by an Acquiring
Person (or any affiliate or associate of an Acquiring Person) shall be null and
void and nontransferable, and any holder of any such Right (including any
purported transferee or subsequent holder) shall not have any right to exercise
or transfer any such right.
At any time after a person or a group becomes an Acquiring Person, the
Board of Directors of the Company may exchange all or part of the then
outstanding Rights (other than Rights that have become null and void and
nontransferable as described above) for consideration per Right consisting of
one-half of the securities that otherwise would have been issuable to the holder
of each Right upon exercise thereof. The Board of Directors of the Company may
also issue, in substitution for Preferred Shares, Common Shares having an
equivalent market value to the Preferred Shares if, at such time, the Company
has a sufficient number of Common Shares
-3-
<PAGE>
issued but not outstanding or authorized but unissued.
At any time prior to the earlier of (i) such time as a person becomes
an Acquiring Person and (ii) the Expiration Date, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price (in cash or
Common Shares or other securities of the Company deemed by the Board of
Directors to be at least equivalent in value) of $.001 per Right (the
"Redemption Price").
Immediately upon the action of the Board of Directors of the Company
electing to redeem the Rights, the Company shall make an announcement thereof,
and, upon such election, the right to exercise the Rights will terminate and the
only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights therefrom as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
At any time prior to the Distribution Date, the Company may, without
the approval of any holder of the Rights, supplement or amend any provision of
the Rights Agreement (including the date on which the Distribution Date shall
occur, the time during which the Rights may be redeemed or the terms of the
preferred Shares), except that no supplement or amendment shall be made which
reduces the Redemption Price or provides for an earlier Expiration Date.
The Rights Agreement specifying the terms of the Rights, the
Certificate of Designation of the Preferred Shares specifying the terms of the
Preferred Shares (Exhibit A to the Rights Agreement) and the form of Right
Certificate (Exhibit B to the Rights Agreement) are filed herewith as exhibits.
The foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement (and exhibits
thereto), which is incorporated herein by reference.
Item 2. EXHIBITS.
1. Rights Agreement dated as of October 12, 1999 between First
Essex Bancorp, Inc. and BankBoston, N.A., as Rights Agent
(Exhibit 1).
2. Form of Certificate of the Voting Powers, Designations,
Preferences and Relative, Participating, Optional and other
Special Rights and Qualifications, Limitations or Restrictions
of Series B Junior Participating Cumulative Preferred Stock of
First Essex Bancorp, Inc. (which is attached as Exhibit A to
the Rights Agreement filed as Exhibit 1 hereto).
3. Form of Right Certificate (which is attached as Exhibit B to
the Rights Agreement filed as Exhibit 1 hereto).
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
FIRST ESSEX BANCORP, INC.
Dated: October 12, 1999 By:/s/ William F. Burke
--------------------
William F. Burke
Chief Financial Officer
-5-
<PAGE>
EXHIBIT 1
RIGHTS AGREEMENT
Dated as of October 12, 1999
between
FIRST ESSEX BANCORP, INC.
and
BANKBOSTON, N.A.
as Rights Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
SECTION 1. CERTAIN DEFINITIONS. ................................................................... 2
SECTION 2. APPOINTMENT OF RIGHTS AGENT. ........................................................... 8
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES. ................................................ 8
SECTION 4. FORM OF RIGHT CERTIFICATES. ............................................................ 9
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION. ........................................... 9
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES;
UNCERTIFICATED RIGHTS. .............................................................................. 10
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS. ......................................... 11
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. .................................... 12
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES. ....................................... 13
SECTION 10. PREFERRED SHARES RECORD DATE. ......................................................... 14
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON; EXCHANGE OF RIGHTS FOR SHARES;
BUSINESS COMBINATIONS................................................................................ 14
SECTION 12. CERTAIN ADJUSTMENTS. .................................................................. 19
SECTION 13. CERTIFICATE OF ADJUSTMENT. ............................................................ 20
SECTION 14. ADDITIONAL COVENANTS. ................................................................. 20
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. .............................................. 20
SECTION 16. RIGHTS OF ACTION. ..................................................................... 21
SECTION 17. TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT CERTIFICATES. .............................. 21
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. .................................... 22
SECTION 19. CONCERNING THE RIGHTS AGENT. .......................................................... 22
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF RIGHTS AGENT. .................................... 23
SECTION 21. DUTIES OF RIGHTS AGENT. ............................................................... 23
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
SECTION 22. CHANGE OF RIGHTS AGENT. ............................................................... 25
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES. ................................. 26
SECTION 24. REDEMPTION AND TERMINATION. ........................................................... 26
SECTION 25. NOTICES. .............................................................................. 27
SECTION 26. SUPPLEMENTS AND AMENDMENTS. ........................................................... 28
SECTION 27. SUCCESSORS. ........................................................................... 28
SECTION 28. BENEFITS OF RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. 28
SECTION 29. SEVERABILITY. ......................................................................... 29
SECTION 30. GOVERNING LAW. ........................................................................ 29
SECTION 31. COUNTERPARTS; EFFECTIVENESS. .......................................................... 29
SECTION 32. DESCRIPTIVE HEADINGS. ................................................................. 29
</TABLE>
EXHIBITS
A Certificate of Designation
B Form of Right Certificate
<PAGE>
This RIGHTS AGREEMENT, dated as of October 12, 1999, is made between
First Essex Bancorp, Inc., a Delaware corporation (the "Company"), and
BankBoston, N.A., a national banking association, as Rights Agent (the "Rights
Agent").
WHEREAS, the Board of Directors of the Company desires to provide
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that shareholders of the
Company receive fair and equal treatment in the event of any proposed takeover
of the Company; and
WHEREAS, in October, 1989 the Board of Directors of the Company
authorized the Shareholder Rights Agreement dated as of October 12, 1989 between
the Company and The First National Bank of Boston, as Rights Agent (the "1989
Rights Agreement"), declared a dividend distribution of one Right (as such term
is defined in the 1989 Rights Agreement) for each outstanding share of Common
Stock, par value $0.10 per share, of the Company (the "Common Stock")
outstanding as of the close of business on October 12, 1989 (the "1989 Record
Date"), and authorized the issuance of one Right for each share of Common Stock
of the Company issued between the 1989 Record Date and the earlier of the
Distribution Date or the Expiration Date (as such terms are defined in the 1989
Rights Agreement), each Right initially representing the right to purchase one
one-hundredth of a share of Series A Junior Participating Cumulative Preferred
Stock of the Company upon the terms and subject to the conditions set forth in
the 1989 Rights Agreement; and
WHEREAS, the Board of Directors of the Company has determined it
desirable and in the best interests of the Company and its shareholders for the
Company to extend the benefits afforded by the 1989 Rights Agreement and to
implement such extension by executing this Rights Agreement; and
WHEREAS, the Board of Directors of the Company has authorized and
declared a distribution of one Right (as hereinafter defined) for each share of
Common Stock outstanding at the Close of Business (as hereinafter defined) on
October 12, 1999 (the "Record Date"), and has authorized the issuance of one
Right (as such number may hereafter be adjusted pursuant to the provisions of
this Rights Agreement) with respect to each share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date or the Expiration Date (as such terms are hereinafter
defined); PROVIDED, HOWEVER, that Rights may be issued with respect to shares of
Common Stock that shall become outstanding after the Distribution Date and prior
to the earlier of the Redemption Date or the Expiration Date in accordance with
the provisions of Section 23. Each Right shall initially represent the right to
purchase one one-hundredth (1/100th) of a share of Series B Junior Participating
Cumulative Preferred Stock, par value $.10 per share, of the Company (the
"Preferred Shares"), having the powers, rights and preferences set forth in the
Certificate of Designation attached as EXHIBIT A; and
WHEREAS, the Board of Directors desires that this Rights Agreement be
effective as of the close of business of October 12, 1999 which is the final
expiration date of the 1989 Rights Agreement; and
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
<PAGE>
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Rights Agreement,
the following terms have the meanings indicated:
"ACQUIRING PERSON" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of Common Shares then outstanding that equals or exceeds such
Person's Ownership Threshold, but shall not include (A) the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any of
its Subsidiaries, or any Person holding Common Shares for or pursuant to the
terms of any such employee benefit plan, (B) any such Person who or which has
become such a Beneficial Owner solely because (i) of a change in the aggregate
number of Common Shares outstanding since the last date on which such Person
acquired Beneficial Ownership of any Common Shares or (ii) it acquired such
Beneficial Ownership in the good faith belief that such acquisition would not
cause such Beneficial Ownership to exceed such Person's Ownership Threshold and
such Person relied in good faith in computing the percentage of its Beneficial
Ownership on publicly filed reports or documents of the Company which are
inaccurate or out-of-date, or (C) any such Person for so long as such Person
qualifies under Rule 13d-1(b)(1) of the General Rules and Regulations under the
Exchange Act (or any successor rule or regulation thereto) to report its
Beneficial Ownership of Common Shares on Schedule 13G (or any successor schedule
thereto) and otherwise satisfies the criteria of Rule 13d-1(b)(1) of the General
Rules and Regulations under the Exchange Act (or any successor rule or
regulation thereto). Notwithstanding clause (B) of the immediately preceding
sentence of this definition, if any Person that is not an Acquiring Person due
to such clause (B) does not reduce its percentage of Beneficial Ownership of
Common Shares to an amount less than such Person's Ownership Threshold by the
Close of Business on the fifth Business Day after notice from the Company (the
date of notice being the first day) that such Person's Beneficial Ownership of
Common Shares so exceeds such Person's Ownership Threshold, such Person shall,
at the end of such five Business Day period, become an Acquiring Person (and
such clause (B) shall no longer apply to such Person). For purposes of this
definition, the determination whether any Person acted in "good faith" shall be
conclusively determined by the Board of Directors of the Company.
Notwithstanding clause (C) of the third preceding sentence of this definition,
if any Person that is not an Acquiring Person due to such clause (C) both (i)
ceases to qualify under Rule 13d-1(b)(1) of the General Rules and Regulations
under the Exchange Act (or any successor rule or regulation thereto) to report
its Beneficial Ownership of Common Shares on Schedule 13G (or any successor
schedules thereto) or otherwise ceases to satisfy the criteria of Rule
13d-1(b)(1) of the General Rules and Regulations under the Exchange Act (or any
successor rule or regulation thereto) (including, without limitation, by reason
of Rule 13d-1(e) or (g) or any successor rules or regulations thereto) and (ii)
does not reduce its percentage of Beneficial Ownership of Common Shares to an
amount less than such Person's Ownership Threshold by the Close of Business on
the date that such Person is obligated to file a statement on Schedule 13D or an
amendment to its Schedule 13G, as applicable (or, in either case, any successor
schedule thereto), such Person shall, at the Close of Business on such date,
become an Acquiring Person (and such clause (C) shall no longer apply to such
Person).
"AFFILIATE" and "ASSOCIATE", when used with reference to any Person,
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations
-2-
<PAGE>
under the Exchange Act, as in effect on the date of this Rights Agreement.
A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be deemed
to "BENEFICIALLY OWN", and shall be deemed to have "BENEFICIAL OWNERSHIP" of,
any securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to "beneficially own" within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act, as
in effect on the date of this Rights Agreement;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (written or oral), or upon
the exercise of conversion rights, exchange rights, rights (other than
the Rights), warrants or options, or otherwise; PROVIDED, HOWEVER, that
a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, or to have Beneficial Ownership of, securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange thereunder,
or (B) the right to vote pursuant to any agreement, arrangement or
understanding (written or oral); PROVIDED, HOWEVER, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any
security if (1) the agreement, arrangement or understanding (written or
oral) to vote such security arises solely from a revocable proxy or
consent given to such Person pursuant to a definitive proxy statement
filed with the Securities and Exchange Commission and otherwise in
accordance with, the applicable rules and regulations under the
Exchange Act and (2) the beneficial ownership of such security is also
then not reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (written or oral) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in clause
(ii)(B) of this definition) or disposing of any securities of the
Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own", any securities acquired in
a bona fide firm commitment underwriting pursuant to an underwriting agreement
with the Company.
"BOOK VALUE", when used with reference to Common Shares issued by any
Person, shall mean the amount of equity of such Person applicable to each Common
Share, determined (i) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (ii) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (iii) after giving
effect to (A) the exercise of all rights, options and warrants to purchase such
Common Shares (other than the Rights), and the conversion of all
-3-
<PAGE>
securities convertible into such Common Shares, at an exercise or conversion
price, per Common Share, which is less than such Book Value before giving effect
to such exercise or conversion (whether or not exercisability or convertibility
is conditioned upon occurrence of a future event), (B) all dividends and other
distributions on the capital stock of such Person declared prior to the date as
of which such Book Value is to be determined and to be paid or made after such
date, and (C) any other agreement, arrangement or understanding (written or
oral), or transaction or other action prior to the date as of which such Book
Value is to be determined which would have the effect of thereafter reducing
such Book Value.
"BUSINESS COMBINATION" shall have the meaning set forth in Section
11(c)(I).
"BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in Boston, Massachusetts
or the city in which the principal office of the Rights Agent is located, are
authorized or obligated by law or executive order to close.
"CERTIFICATE OF DESIGNATION" shall mean the Certificate of Designation
of Series B Junior Participating Cumulative Preferred Stock setting forth the
powers, preferences, rights, qualifications, limitations and restrictions of
Series B Junior Participating Cumulative Preferred Stock of the Company, a copy
of which is attached hereto as EXHIBIT A.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., Boston,
Massachusetts time, on such date; PROVIDED, HOWEVER, that, if such date is not a
Business Day, "Close of Business" shall mean 5:00 p.m., Boston, Massachusetts
time, on the next succeeding Business Day.
"COMMON SHARES", when used with reference to the Company prior to a
Business Combination, shall mean the shares of Common Stock or any other shares
of capital stock of the Company into which the Common Stock shall be
reclassified or changed. "Common Shares", when used with reference to any Person
(other than the Company prior to a Business Combination), shall mean shares of
capital stock of such Person (if such Person is a corporation) of any class or
series, or units of equity interests in such Person (if such Person is not a
corporation) of any class or series, the terms of which do not limit (as a
maximum amount and not merely in proportional terms) the amount of dividends or
income payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; PROVIDED, HOWEVER, that, if at any
time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Common Shares" of such Person shall include
all such classes and series substantially in the proportion of the total number
of shares or other units of each such class or series outstanding at such time.
"COMMON STOCK" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
"COMPANY" shall have the meaning set forth in the heading of this
Rights Agreement;
-4-
<PAGE>
PROVIDED, HOWEVER, that if there is a Business Combination, "Company" shall have
the meaning set forth in Section 11(c)(III).
The term "CONTROL" with respect to any Person shall mean the power to
direct the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"DISTRIBUTION DATE" shall have the meaning set forth in Section 3(b).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as in
effect on the date in question, unless otherwise specifically provided.
"EXCHANGE CONSIDERATION" shall have the meaning set forth in Section
11(b)(I).
"EXPIRATION DATE" shall have the meaning set forth in Section 7(a).
"FORMULA NUMBER" shall have the meaning set forth in Section 2 of the
Certificate of Designation.
"MAJOR PART", when used with reference to the assets of the Company and
its Subsidiaries as of any date, shall mean assets (i) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (ii) accounting for 50% or more of the total value (net of
depreciation and amortization) of all the assets of the Company and its
Subsidiaries (taken as a whole) as would be shown on a consolidated or combined
balance sheet of the Company and its Subsidiaries as of the date in question,
prepared in accordance with generally accepted accounting principles then in
effect, or (iii) accounting for 50% or more of the total amount of earnings
before interest, taxes, depreciation and amortization or revenues of the Company
and its Subsidiaries (taken as a whole) as would be shown on, or derived from, a
consolidated or combined statement of income of the Company and its Subsidiaries
for the period of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in accordance
with generally accepted accounting principles then in effect.
"MARKET VALUE", when used with reference to any class of Common Shares
on any date, shall be deemed to be the average of the daily closing prices, per
share, of any such class for the period which is the shorter of (1) 30
consecutive Trading Days immediately prior to the date in question or (2) the
number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public announcement of a Business Combination with
an Acquiring Person or Affiliate or Associate of an Acquiring Person requiring a
determination of the Market Value and ending on the Trading Day immediately
prior to the record date of such Business Combination; PROVIDED, HOWEVER, that,
in the event that the Market Value of such class of Common Shares is to be
determined in whole or in part during a period following the announcement by the
issuer of such class of Common Shares of any action of the type described
-5-
<PAGE>
in Section 12(a) that would require an adjustment thereunder, then, and in each
such case, the Market Value of such class shall be appropriately adjusted to
reflect the effect of such action on the market price of such class. The closing
price for each Trading Day shall be the closing price quoted on the composite
tape for securities listed on the New York Stock Exchange, or, if such
securities are not quoted on such composite tape or if such securities are not
listed on such exchange, on the principal United States securities exchange
registered under the Exchange Act (or any recognized foreign stock exchange) on
which such securities are listed, or, if such securities are not listed on any
such 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 with respect to a
share of such securities as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or if no such quotations are available, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
such securities selected by the Board of Directors of the Company. If on any
such Trading Day no market maker is making a market in such securities for any
reason, the closing price of such securities on such Trading Day shall be deemed
to be the fair value of such securities as determined in good faith by the Board
of Directors of the Company (whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent,
the holders of Rights and all other Persons); PROVIDED, HOWEVER, that for the
purpose of determining the closing price of the Preferred Shares for any Trading
Day on which there is no such market maker for the Preferred Shares the closing
price on such Trading Day shall be deemed to be the Formula Number times the
closing price of the Common Stock of the Company on such Trading Day.
"OWNERSHIP THRESHOLD" shall mean, with respect to any Person,
Beneficial Ownership of the GREATER of (A) 15% of the Common Shares at any time
outstanding or (B) the percentage of the outstanding Common Shares Beneficially
Owned by such Person on the date of this Rights Agreement, plus in the case of
this clause (B) 1% of the Common Shares outstanding on such date.
"PERSON" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
"PREFERRED SHARES" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement. Any reference in this Rights Agreement to
Preferred Shares shall be deemed to include any authorized fraction of a
Preferred Share, unless the context otherwise requires.
"PRINCIPAL PARTY" shall mean the Surviving Person in a Business
Combination; PROVIDED, HOWEVER, that, if such Surviving Person is a direct or
indirect Subsidiary of any other Person, "Principal Party" shall mean the Person
which is the ultimate parent of such Surviving Person and which is not itself a
Subsidiary of another Person. In the event ultimate control of such Surviving
Person is shared by two or more Persons, "Principal Party" shall mean that
Person that is immediately controlled by such two or more Persons.
"PURCHASE PRICE" with respect to each Right shall mean $70.00, as such
amount may from time to time be adjusted as provided herein, and shall be
payable in lawful money of the United States of America. All references herein
to the Purchase Price shall mean the Purchase
-6-
<PAGE>
Price as in effect at the time in question.
"RECORD DATE" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
"REDEMPTION DATE" shall have the meaning set forth in Section 24(a).
"REDEMPTION PRICE" with respect to each Right shall mean $.001, as such
amount may from time to time be adjusted in accordance with Section 12. All
references herein to the Redemption Price shall mean the Redemption Price as in
effect at the time in question.
"REGISTERED COMMON SHARES" shall mean Common Shares which are, as of
the date of consummation of a Business Combination, and have continuously been
for the 12 months immediately preceding such date, registered under Section 12
of the Exchange Act.
"RIGHT CERTIFICATE" shall mean a certificate evidencing a Right in
substantially the form attached as EXHIBIT B.
"RIGHTS" shall mean the rights to purchase Preferred Shares (or other
securities) as provided in this Rights Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as in effect on
the date in question, unless otherwise specifically provided.
"SUBSIDIARY" shall mean a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one or more
other Subsidiaries of such other Person or by such other Person and one or more
other Subsidiaries of such other Person.
"SURVIVING PERSON" shall mean (1) the Person which is the continuing or
surviving Person in a consolidation or merger specified in Section 11(c)(I)(i)
or 11(c)(I)(ii) or (2) the Person to which the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in a transaction specified in Section 11(c)(I)(iii); PROVIDED,
HOWEVER, that, if the Major Part of the assets of the Company and its
Subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of
in one or more related transactions specified in Section 11(c)(I)(iii) to more
than one Person, the "Surviving Person" in such case shall mean the Person that
acquired assets of the Company and/or its Subsidiaries with the greatest fair
market value in such transaction or transactions.
"TRADING DAY" when used with reference to the Market Value of a
security, shall mean a day on which the principal national securities exchange
(or principal recognized foreign stock exchange, as the case may be) on which
such securities are listed or admitted to trading is open for the transaction of
business or, if such securities in question are not listed or admitted to
-7-
<PAGE>
trading on any national securities exchange (or recognized foreign stock
exchange, as the case may be), a Business Day.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint one or more co-Rights Agents as it may
deem necessary or desirable, upon ten (10) days' prior written notice to the
Rights Agent. The Rights Agent shall have no duty to supervise, and shall in no
event be liable for, the acts or omissions of any such co-Rights Agent (the term
"Rights Agent" being used herein to refer, collectively, to the Rights Agent
together with any such co-Rights Agents). In the event the Company appoints one
or more co-Rights Agents, the respective duties of the Rights Agent and any
co-Rights Agents shall be as the Company shall determine.
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES.
(a) One Right shall be associated with each Common Share outstanding on
the Record Date, each additional Common Share that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date or the Expiration Date and each additional Common Share with
which Rights are issued after the Distribution Date but prior to the earlier of
the Redemption Date or the Expiration Date as provided in Section 23, in each
case subject to the provisions of Section 12.
(b) Until the earlier of (i) such time as the Company learns that a
Person has become an Acquiring Person or (ii) the Close of Business on such
date, if any, as may be designated by the Board of Directors of the Company
following the commencement of, or first public disclosure of an intent to
commence, 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 of
its Subsidiaries, or any Person holding Common Shares for or pursuant to the
terms of any such employee benefit plan) for outstanding Common Shares, if upon
consummation of such tender or exchange offer such Person's Beneficial Ownership
of Common Shares then outstanding could equal or exceed such Person's Ownership
Threshold (the Close of Business on the earlier of such dates being the
"Distribution Date"), (x) the Rights will be evidenced by the certificates for
Common Shares registered in the names of the holders thereof and not by separate
Right Certificates and (y) the Rights, including the right to receive Right
Certificates, will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Distribution Date, the Rights
Agent will send, by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate evidencing the Rights to
which such holder is entitled. As of and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(c) With respect to any certificate for Common Shares, until the
earliest of the Distribution Date, the Redemption Date or the Expiration Date,
the Rights associated with the Common Shares represented by any such certificate
shall be evidenced by such certificate alone, the registered holders of the
Common Shares shall also be the registered holders of the associated
-8-
<PAGE>
Rights and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(d) Certificates issued for Common Shares after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Shares), but prior to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date, may have printed on, written on or otherwise affixed to
them the following legend:
This certificate also evidences and entitles the holder hereof
to certain Rights as set forth in a Rights Agreement dated as
of October 12, 1999, as it may be amended from time to time
(the "Rights Agreement"), between First Essex Bancorp, Inc.
(the "Company") and BankBoston, N.A., as Rights Agent (the
"Rights Agent"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such
Rights 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 without charge after receipt of a written request
therefor. Rights beneficially owned by Acquiring Persons or
their Affiliates or Associates (as such terms are defined in
the Rights Agreement) and by any subsequent holder of such
Rights are null and void and nontransferable.
Notwithstanding this paragraph (d), the omission of a legend shall not affect
the enforceability of any part of this Rights Agreement or the rights of any
holder of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
form of election to purchase and form of assignment to be printed on the reverse
side thereof) shall be in substantially the form set forth as EXHIBIT B 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 Rights 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 Sections 7, 11 and 23, the Right Certificates, whenever issued,
shall be dated as of the Distribution Date, and on their face shall entitle the
holders thereof to purchase such number of Preferred Shares as shall be set
forth therein for the Purchase Price set forth therein, subject to adjustment
from time to time as herein provided.
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the Company
by the Chief Executive Officer, the President, the Chief Financial Officer, the
Treasurer or a Vice President (whether preceded by any additional title) of the
Company, either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be
-9-
<PAGE>
attested by the Secretary, an Assistant Secretary or a Vice President (whether
preceded by any additional title, provided that such Vice President shall not
have also executed the Right Certificates) of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid or obligatory for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such an officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless 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 Right Certificates had not ceased to be such an
officer of the Company; and any Right Certificate may be signed on behalf of the
Company by any person who, at the actual date of execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of execution of this Rights Agreement any such
person was not such an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office in Boston, Massachusetts, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced by each of the Right Certificates, the certificate
number of each of the Right Certificates and the date of each of the Right
Certificates.
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES;
UNCERTIFICATED RIGHTS.
(a) Subject to the provisions of Sections 7(e) and 15, at any time
after the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Expiration Date, any Right Certificate or
Right Certificates may be transferred, split-up, combined or exchanged for
another Right Certificate or Right Certificates representing, in the aggregate,
the same number of Rights as the Right Certificate or Right Certificates
surrendered then represented. Any registered holder desiring to transfer,
split-up, combine or exchange any Right Certificate shall make such request in
writing delivered to the Rights Agent and shall surrender the Right Certificate
or Right Certificates to be transferred, split-up, combined or exchanged at the
office of the Rights Agent; PROVIDED, HOWEVER, that neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any Right Certificate surrendered for transfer until the registered
holder shall have completed and signed the certification contained in the form
of assignment on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Sections
7(e) and 15, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split-up,
combination or exchange of Right 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 valid Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and,
-10-
<PAGE>
at the Company's request, 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 Right Certificate if mutilated, the Company will
make a new Right Certificate of like tenor and deliver such new Right
Certificate to the Rights Agent for countersignature and delivery to the
registered owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
(c) Notwithstanding any other provision hereof, the Company and the
Rights Agent may amend this Rights Agreement to provide for uncertificated
Rights in addition to or in place of Rights evidenced by Right Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) and except as otherwise provided herein
(including Section 11), each Right shall entitle the registered holder thereof,
upon exercise thereof as provided herein, to purchase for the Purchase Price, at
any time after the Distribution Date and at or prior to the earlier of (i) the
Close of Business on the 10th anniversary of the date of this Rights Agreement
(the Close of Business on such date being the "Expiration Date") or (ii) the
Redemption Date, one one-hundredth (1/100th) of a Preferred Share, subject to
adjustment from time to time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent in Boston,
Massachusetts, together with payment of the Purchase Price for each
one-hundredth (1/100th) of a Preferred Share as to which the Rights are
exercised, at or prior to the earlier of (i) the Expiration Date or (ii) the
Redemption Date.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares to be purchased together
with an amount equal to any applicable transfer tax, in lawful money of the
United States of America, in cash or by certified check or money order payable
to the order of the Company, the Rights Agent shall thereupon (i) either (A)
promptly requisition from any transfer agent of the Preferred Shares (or make
available, if the Rights Agent is the transfer agent) certificates for the
number of Preferred Shares 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 Preferred Shares with a depositary
agent under a depositary arrangement, promptly requisition from the depositary
agent depositary receipts representing the number of one-hundredths (1/100ths)
of a Preferred Share to be purchased (in which case certificates for the
Preferred Shares to be 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 all such requests, (ii) when appropriate,
promptly requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 15, (iii) promptly
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 Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when
-11-
<PAGE>
appropriate, after receipt promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 15.
(e) Notwithstanding anything in this Rights Agreement to the contrary,
any Rights that are at any time beneficially owned by an Acquiring Person or any
Affiliate or Associate of an Acquiring Person shall be null and void and
nontransferable, and any holder of any such Right (including any purported
transferee or subsequent holder) shall not have any right to exercise or
transfer any such Right.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates 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 Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; PROVIDED, HOWEVER, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision herein
to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification under the blue sky or securities laws of such
jurisdiction shall not have been obtained or the exercise of the Rights shall
not be permitted under applicable law.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered or presented for the purpose of exercise,
transfer, split-up, combination or exchange shall, and any Right Certificate
representing Rights that have become null and void and nontransferable pursuant
to Section 7(e) surrendered or presented for any purpose shall, if surrendered
or presented to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in canceled form, or, if surrendered or presented to
the Rights Agent, shall be canceled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by this Rights Agreement.
The Company shall deliver to the Rights Agent for
-12-
<PAGE>
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Right Certificate purchased or acquired by the Company. The Rights Agent
shall deliver all canceled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares or any
authorized and issued Preferred Shares held in its treasury, free from
preemptive rights or any right of first refusal, a number of Preferred Shares
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares
issued but not outstanding or authorized but unissued to permit the exercise or
exchange of Rights in accordance with Section 11, the Company covenants and
agrees that it will take all such action as may be necessary to authorize
additional Preferred Shares for issuance upon the exercise or exchange of Rights
pursuant to Section 11; PROVIDED, HOWEVER, that if the Company is unable to
cause the authorization of additional Preferred Shares, then the Company shall,
or in lieu of seeking any such authorization, the Company may, to the extent
necessary and permitted by applicable law and any agreements or instruments in
effect prior to the Distribution Date to which it is a party, (A) upon surrender
of a Right, pay cash equal to the Purchase Price in lieu of issuing Preferred
Shares and requiring payment therefor, (B) upon due exercise of a Right and
payment of the Purchase Price for each Preferred Share as to which such Right is
exercised, issue equity securities having a value equal to the value of the
Preferred Shares which otherwise would have been issuable pursuant to Section
11, which value shall be determined by a nationally recognized investment
banking firm selected by the Board of Directors of the Company, or (C) upon due
exercise of a Right and payment of the Purchase Price for each Preferred Share
as to which such Right is exercised, distribute a combination of Preferred
Shares, cash and/or other equity and/or debt securities having an aggregate
value equal to the value of the Preferred Shares which otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company. To the extent that any legal or contractual restrictions (pursuant to
agreements or instruments in effect prior to the Distribution Date to which it
is party) prevent the Company from paying the full amount payable in accordance
with the foregoing sentence, the Company shall pay to holders of the Rights as
to which such payments are being made all amounts which are not then restricted
on a PRO RATA basis as such payments become permissible under such legal or
contractual restrictions until such payments have been paid in full.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon exercise
or exchange of Rights shall, at the time of delivery of the certificates for
such Preferred Shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are
-13-
<PAGE>
to be listed on any national securities exchange, the Company covenants and
agrees to use its best efforts to cause, from and after such time as the Rights
become exercisable or exchangeable, all Preferred Shares reserved for such
issuance to be listed on such securities exchange upon official notice of
issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all Federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of Right Certificates or of
any Preferred Shares or other securities upon the exercise or exchange of the
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or in respect of the issuance or delivery
of certificates for the Preferred Shares or other securities, as the case may
be, in a name other than that of, the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or exchange or to issue or deliver
any certificates for Preferred Shares or other securities, as the case may be,
upon the exercise or exchange of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right 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 SHARES RECORD DATE. Each Person in whose name any
certificate for Preferred Shares or other securities is issued upon the exercise
or exchange of Rights shall for all purposes be deemed to have become the holder
of record of the Preferred Shares or other securities, as the case may be,
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
any Purchase Price (and any applicable transfer taxes) was made; PROVIDED,
however, that, if the date of such surrender and payment is a date upon which
the transfer books of the Company for the Preferred Shares or other securities,
as the case may be, are closed, such Person shall be deemed to have become the
record holder of such Preferred Shares or other securities, as the case may be,
on, and such certificate shall be dated, the next succeeding Business Day on
which the transfer books of the Company for the Preferred Shares or other
securities, as the case may be, are open.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON;
EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS.
(a) Upon a Person becoming an Acquiring Person, proper provision shall
be made so that each holder of a Right, except as provided in Section 7(e),
shall thereafter have a right to receive, upon exercise thereof for the Purchase
Price in accordance with the terms of this Rights Agreement, such number of
one-hundredths (1/100ths) of a Preferred Share as shall equal the result
obtained by multiplying the Purchase Price by a fraction, the numerator of which
is the number of one-hundredths (1/100ths) of a Preferred Share for which a
Right is then exercisable and the denominator of which is 50% of the Market
Value of the Common Stock on the date on which a Person becomes an Acquiring
Person. As soon as practicable after a Person becomes an Acquiring Person
(provided the Company shall not have elected to make the exchange permitted by
Section 11(b)(I) for all outstanding Rights), the Company covenants and agrees
to use its best efforts to:
-14-
<PAGE>
(I) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights;
(II) cause such registration statement to become effective as soon
as practicable after such filing;
(III) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities
Act) until the Expiration Date; and
(IV) qualify or register the Preferred Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b)
(I) The Board of Directors of the Company may, at its option, at
any time after a Person becomes an Acquiring Person, mandatorily
exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that shall have become null and void
and nontransferable pursuant to the provisions of Section 7(e)) for
consideration per Right consisting of one-half of the securities that
would be issuable at such time upon the exercise of one Right in
accordance with Section 11(a) or, if applicable, Section 9(b) (the
consideration issuable per Right pursuant to this Section 11(b)(I)
being the "Exchange Consideration"). The Board of Directors of the
Company may, at its option, issue, in substitution for Preferred
Shares, shares of Common Stock in an amount per Preferred Share equal
to the Formula Number if there are sufficient shares of Common Stock
issued but not outstanding or authorized but unissued. If the Board of
Directors of the Company elects to exchange all the Rights for Exchange
Consideration pursuant to this Section 11(b)(I) prior to the physical
distribution of the Rights Certificates, the Corporation may distribute
the Exchange Consideration in lieu of distributing Right Certificates,
in which case for purposes of this Rights Agreement holders of Rights
shall be deemed to have simultaneously received and surrendered for
exchange Right Certificates on the date of such distribution.
(II) Any action of the Board of Directors of the Company ordering
the exchange of any Rights pursuant to Section 11(b)(I) shall be
irrevocable and, immediately upon the taking of such action and without
any further action and without any notice, the right to exercise any
such Right pursuant to Section 11(a) shall terminate and the only right
thereafter of a holder of such Right shall be to receive the Exchange
Consideration in exchange for each such Right held by such holder or,
if the Exchange Consideration shall not have been paid or issued, to
exercise any such Right pursuant to Section 11(c)(I). The Company shall
promptly give public notice of any such exchange; PROVIDED, HOWEVER,
that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the
-15-
<PAGE>
method by which the exchange of the Rights for the Exchange
Consideration will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected PRO RATA based on the number of Rights
(other than Rights which shall have become null and void and
nontransferable pursuant to the provisions of Section 7(e)) held by
each holder of Rights.
(c)
(I) In the event that, following a Distribution Date, directly or
indirectly, any transactions specified in the following clause (i),
(ii) or (iii) of this Section 11(c) (each such transaction being a
"Business Combination") shall be consummated:
(i) the Company shall consolidate with, or merge with and
into, any Acquiring Person or any Affiliate or Associate of an
Acquiring Person;
(ii) any Acquiring Person or any Affiliate or Associate of an
Acquiring Person shall merge with and into the Company and, in
connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for capital stock or other
securities of the Company or of any Acquiring Person or
Affiliate or Associate of an Acquiring Person or cash or any
other property; or
(iii) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries
shall sell, lease, exchange or otherwise transfer or dispose
of), in one or more transactions, the Major Part of the assets
of the Company and its Subsidiaries (taken as a whole) to any
Acquiring Person or any Affiliate or Associate of an Acquiring
Person,
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a)):
(A) If the Principal Party in such Business Combination
has Registered Common Shares outstanding, each Right
shall thereafter represent the right to receive,
upon the exercise thereof for the Purchase Price in
accordance with the terms of this Rights Agreement,
such number of Registered Common Shares of such
Principal Party, free and clear of all liens,
encumbrances or other adverse claims, as shall have
an aggregate Market Value equal to the result
obtained by multiplying the Purchase Price by two;
(B) If the Principal Party involved in such Business
Combination does not have Registered Common Shares
outstanding, each Right shall thereafter represent
the right to receive, upon the exercise thereof for
the Purchase Price in accordance with the terms of
this Rights Agreement, at the election of the holder
of such Right at the time
-16-
<PAGE>
of the exercise thereof, any of:
(1) such number of Common Shares of the Surviving Person
in such Business Combination as shall have an
aggregate Book Value immediately after giving effect
to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two;
(2) such number of Common Shares of the Principal Party
in such Business Combination (if the Principal Party
is not also the Surviving Person in such Business
Combination) as shall have an aggregate Book Value
immediately after giving effect to such Business
Combination equal to the result obtained by
multiplying the Purchase Price by two; or
(3) if the Principal Party in such Business Combination
is an Affiliate of one or more Persons which has
Registered Common Shares outstanding, such number of
Registered Common Shares of whichever of such
Affiliates of the Principal Party has Registered
Common Shares with the greatest aggregate Market
Value on the date of consummation of such Business
Combination as shall have an aggregate Market Value
on the date of such Business Combination equal to
the result obtained by multiplying the Purchase
Price by two.
(II) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised,
as set forth in this Section 11(c), shall have sufficient authorized
Common Shares that have not been issued or reserved for issuance (and
which shall, when issued upon exercise thereof in accordance with this
Rights Agreement, be validly issued, fully paid and nonassessable and
free of preemptive rights, rights of first refusal or any other
restrictions or limitations on the transfer or ownership thereof) to
permit the exercise in full of the Rights in accordance with this
Section 11(c) and unless prior thereto:
(i) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights,
shall be effective under the Securities Act; and
(ii) the Company and each such issuer shall have:
(A) executed and delivered to the Rights Agent a
supplemental agreement providing for the assumption
by such issuer of the obligations set forth in this
Section 11(c) (including the obligation of such
issuer to issue Common Shares upon the exercise of
Rights in accordance with the terms set forth in
Sections 11(c)(I) and 11(c)(III)) and further
providing that such issuer, at its own
-17-
<PAGE>
expense, will use its best efforts to:
(1) cause a registration statement under the
Securities Act on an appropriate form, with respect
to the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights, to remain
effective (with a prospectus at all times meeting
the requirements of the Securities Act) until the
Expiration Date;
(2) qualify or register the Rights and the Common
Shares of such issuer purchasable upon exercise of
the Rights under the blue sky or securities laws of
such jurisdictions as may be necessary or
appropriate; and
(3) list the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights on
each national securities exchange on which the
Common Shares were listed prior to the consummation
of the Business Combination or, if the Common Shares
were not listed on a national securities exchange
prior to the consummation of the Business
Combination, on a national securities exchange;
(B) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental
agreement is a valid, binding and enforceable
agreement of such issuer; and
(C) filed with the Rights Agent a certificate of a
nationally recognized firm of independent
accountants setting forth the number of Common
Shares of such issuer which may be purchased upon
the exercise of each Right after the consummation of
such Business Combination.
(III) After consummation of any Business Combination and subject
to the provisions of Section 11(c)(II), (i) each issuer of Common
Shares for which Rights may be exercised as set forth in this Section
11(c) shall be liable for, and shall assume, by virtue of such Business
Combination, all the obligations and duties of the Company pursuant to
this Rights Agreement, (ii) the term "Company" shall thereafter be
deemed to refer to such issuer, (iii) each such issuer shall take such
steps in connection with such consummation as may be necessary to
assure that the provisions hereof (including the provisions of Sections
11(a) and 11(c)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights, and (iv) the number of
Common Shares of each such issuer thereafter receivable upon exercise
of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions of Sections 11 and 12, and the provisions of Section 7, 9
and 10 with respect to the Preferred Shares shall apply, as nearly as
reasonably may be, on like terms to any such Common Shares.
-18-
<PAGE>
SECTION 12. CERTAIN ADJUSTMENTS.
(a) To preserve the actual or potential economic value of the Rights,
if at any time after the date of this Rights Agreement there shall be any change
in the Common Shares or the Preferred Shares, whether by reason of stock
dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Shares or Preferred Shares, as the case
may be (other than distribution of the Rights or regular quarterly cash
dividends) or otherwise, then, in each such event the Board of Directors of the
Company shall make such appropriate adjustments in the number of Preferred
Shares (or the number and kind of other securities) issuable upon exercise of
each Right, the Purchase Price and Redemption Price in effect at such time and
the number of Rights outstanding at such time (including the number of Rights or
fractional Rights associated with each Common Share) such that following such
adjustment such event shall not have had the effect of reducing or limiting the
benefits the holders of the Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Preferred Shares, thereafter the number of such
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12, and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like term, to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(d) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms which were expressed in the
initial Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section 12(a)
requires 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 issuing to the holder of any Right exercised after such record date
the Preferred Shares and/or other securities, if any, issuable upon such
exercise over and above the Preferred Shares and/or other securities, if any,
issuable 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 securities upon the
occurrence of the event requiring such adjustment.
-19-
<PAGE>
SECTION 13. CERTIFICATE OF ADJUSTMENT. Whenever an adjustment is made
as provided in Section 11 or 12, 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 Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
SECTION 14. ADDITIONAL COVENANTS.
(a) Notwithstanding any other provision of this Rights Agreement, no
adjustment to the number of Preferred Shares (or fractions of a share) or other
securities for which a Right is exercisable or the number of Rights outstanding
or associated with each Common Share or any similar or other adjustment shall be
made or be effective if such adjustment would have the effect of reducing or
limiting the benefits the holders of the Rights would have had absent such
adjustment, including, without limitation, the benefits under Sections 11 and
12, unless the terms of this Rights Agreement are amended so as to preserve such
benefits.
(b) The Company covenants and agrees that, after the Distribution Date,
except as permitted by Section 26, it will not take (or permit any Subsidiary of
the Company to take) any action if at the time such action is taken it is
intended or reasonably foreseeable that such action will reduce or otherwise
limit the benefits the holders of the Rights would have had absent such action,
including, without limitation, the benefits under Sections 11 and 12. Any action
taken by the Company during any period after any Person becomes an Acquiring
Person but prior to the Distribution Date shall be null and void unless such
action could be taken under this Section 14(b) from and after the Distribution
Date. The Company shall not consummate any Business Combination if any issuer of
Common Shares for which Rights may be exercised after such Business Combination
in accordance with Section 11(c) shall have taken any action that reduces or
otherwise limits the benefits the holders of the Rights would have had absent
such action, including, without limitation, the benefits under Sections 11 and
12.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company may, but shall not be required to, issue fractions of
Rights or distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, the Company may pay to the registered holders of
the Right 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 15(a), the
current market value of a whole Right shall be the closing price of the Rights
(as determined in a manner similar to that of Common Stock pursuant to the
second and third sentences of the definition of Market Value contained in
Section 1) for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractions of
Preferred Shares upon exercise of the Rights or distribute certificates which
evidence fractional Preferred Shares.
-20-
<PAGE>
In lieu of fractional Preferred Shares, the Company may elect to (i) utilize a
depository arrangement as provided by the terms of the Preferred Shares or (ii)
in the case of a fraction of a Preferred Share (other than one one-hundredth
(1/100th) of a Preferred Share or any integral multiple thereof), pay to the
registered holders of Right 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 Preferred Share, if any are outstanding and publicly traded
(or the Formula Number times the current market value of one share of Common
Stock if the Preferred Shares are not outstanding and publicly traded). If, as a
result of an adjustment made pursuant to Section 12(a), the holder of any Right
thereafter exercised shall become entitled to receive any securities other than
Preferred Shares, the provisions of this Section 15(b) shall apply, as nearly as
reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractions of
shares of Common Stock upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates which evidence fractional shares of Common Stock. In
lieu of such fractional shares of Common Stock, the Company may pay to the
registered holders of the Right 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 one share of Common
Stock as of the date on which a Person became an Acquiring Person.
(d) The holder of Rights by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as provided in this Section 15.
SECTION 16. RIGHTS OF ACTION.
(a) All rights of action in respect of this Rights Agreement are vested
in the respective registered holders of the Right Certificates (and, prior to
the Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Shares) 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 Right Certificate in the manner provided in such Right
Certificate and in this Rights Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Rights Agreement and shall be entitled to specific performance of
the obligations of any Person under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this Rights
Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
SECTION 17. TRANSFER AND OWNERSHIP OF RIGHTS AND RIGHT CERTIFICATES.
-21-
<PAGE>
(a) Prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares.
(b) After the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the Person in
whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated certificate for
Common Shares made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote or receive
dividends or be deemed, for any purpose, the holder of the Preferred Shares or
of any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company,
including, without limitation, any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders, or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
SECTION 19. 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 other
disbursements incurred in the administration and execution of this Rights
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 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 Rights Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified
-22-
<PAGE>
or acknowledged, by the proper Person or Persons.
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Rights
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; PROVIDED that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 22. In case, at the time such successor Rights Agent shall succeed to
the agency created by this Rights Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and, in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates (or, prior to the Distribution Date, of the Common Shares), 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 advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken, suffered or omitted by it in good faith and in accordance with
such advice or opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, refraining from 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 any one of the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, the
-23-
<PAGE>
Treasurer, a Vice President (whether preceded by any additional title) or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or wilful 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 Rights Agreement or in the
Right Certificates (except as to its countersignature thereof) or be required to
verify the same, 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 Rights 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 Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 12 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 Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares or Common Shares
to be issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares or Common Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chief Executive Officer, the President, the Chief Financial Officer,
the Treasurer, a Vice President (whether preceded by any additional title) or
the Secretary of the Company, 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.
(h) The Rights Agent and any stockholder, 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 the Rights
Agent under this Rights Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
-24-
<PAGE>
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct provided reasonable care was exercised in the selection
and continued employment thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent
harmless against any loss, liability, damage or expense (including reasonable
fees and expenses of legal counsel) which the Rights Agent may incur resulting
from its actions as Rights Agent pursuant to this Rights Agreement; PROVIDED,
HOWEVER, that the Rights Agent shall not be indemnified or held harmless with
respect to any such loss, liability, damage or expense incurred by the Rights
Agent as a result of, or arising out of, its own gross negligence, bad faith or
wilful misconduct. In no case shall the Company be liable with respect to any
action, proceeding, suit or claim against the Rights Agent unless the Rights
Agent shall have notified the Company, by letter or by facsimile confirmed by
letter, of the assertion of any action, proceeding, suit or claim against the
Rights Agent, promptly after the Rights Agent shall have notice of any such
assertion of an action, proceeding, suit or claim or have been served with the
summons or other first legal process giving information as to the nature and
basis of the action, proceeding, suit or claim. The Company shall be entitled to
participate at its own expense in the defense of any such action, proceeding,
suit or claim, and, if the Company so elects, the Company shall assume the
defense of any such action, proceeding, suit or claim. In the event that the
Company assumes such defense, the Company shall not thereafter be liable for the
fees and expenses of any additional counsel retained by the Rights Agent, so
long as the Company shall retain counsel satisfactory to the Rights Agent, in
the exercise of its reasonable judgment, to defend such action, proceeding, suit
or claim. The Rights Agent agrees not to settle any litigation in connection
with any action, proceeding, suit or claim with respect to which it may seek
indemnification from the Company without the prior written consent of the
Company.
SECTION 22. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares and the Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Shares) by first-class mail, postage prepaid.
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 Shares and the
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates (or, prior to the Distribution Date, of the Common Shares) 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 Right Certificate (or, prior to
the Distribution Date, of the Common Shares) (who shall, with such notice,
submit his Right Certificate or, prior to the Distribution Date, the certificate
representing his Common Shares, for inspection by the Company), then the
registered holder of any Right Certificate (or, prior to the Distribution Date,
-25-
<PAGE>
of the Common Shares) 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 any state of the United
States, in good standing, which is authorized under such laws to exercise stock
transfer or corporate trust powers and is subject to supervision or examination
by Federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000; PROVIDED
that the principal transfer agent for the Common Shares shall in any event be
qualified to be the Rights Agent. 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 Shares and the Preferred Shares, and mail a notice thereof in writing
to the registered holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Shares). Failure to give any notice provided
for in this Section 22, 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 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES.
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date, the Company (a) shall, with respect to
Common Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by its Board of Directors,
issue Right Certificates representing the appropriate number of Rights in
connection with such issuance or sale; PROVIDED, HOWEVER, that (i) no such Right
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
Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 24. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) such time as a Person becomes an Acquiring
Person and (ii) the Expiration Date, order the redemption of all, but not fewer
than all, the then outstanding Rights at the Redemption Price (the date of such
redemption being the "Redemption Date"), and the Company, at its option, may pay
the Redemption Price either in cash or Common Shares or other securities of the
-26-
<PAGE>
Company deemed by the Board of Directors of the Company, in the exercise of its
sole discretion, to be at least equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 Business Days after the action of the Board of
Directors of the Company ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then outstanding
Rights by mailing such notice to all such holders at their last addresses as
they appear 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
Shares. Each such notice of redemption will state the method by which payment of
the Redemption Price will be made. The notice, if mailed in the manner herein
provided, shall be conclusively presumed to have been duly given, whether or not
the holder of Rights receives such notice. In any case, failure to give such
notice by mail, or any defect in the notice, to any particular holder of Rights
shall not affect the sufficiency of the notice to other holders of Rights.
SECTION 25. NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) 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:
First Essex Bancorp, Inc.
71 Main Street
Post Office Box 2070
Andover, Massachusetts 01810
Attention of President
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) 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:
BankBoston, N.A.
c/o EquiServe Limited Partnership
150 Royall Street
Canton, MA 02021
Attention: Client Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Common Shares) 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 Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the
-27-
<PAGE>
Common Shares.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. At any time prior to the
Distribution Date and subject to the last sentence of this Section 26, 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 24 or any provision of the
Certificate of Designation) without the approval of any holder of the Rights.
From and after the Distribution Date 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). Any supplement or amendment adopted during any period after any Person
has become an Acquiring Person but prior to the Distribution Date shall be null
and void unless such supplement or amendment could have been adopted under the
prior sentence from and after the Distribution Date. Any supplement or amendment
to this Rights Agreement duly approved by the Company that does not amend
Sections 19, 20, 21 or 22 in a manner adverse to the Rights Agent shall become
effective immediately upon execution by the Company, whether or not also
executed by the Rights Agent. In addition, notwithstanding anything to the
contrary contained in this Rights Agreement, no supplement or amendment to this
Rights Agreement shall be made which (a) reduces the Redemption Price (except as
required by Section 12(a)) or (b) provides for an earlier Expiration Date.
SECTION 27. SUCCESSORS. All the covenants and provisions of this Rights
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 28. BENEFITS OF RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY
THE BOARD OF DIRECTORS, ETC.
(a) Nothing in this Rights Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Shares) any legal or equitable right, remedy or claim under this Rights
Agreement; but this Rights Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, of the Common Shares).
(b) Except as explicitly otherwise provided in this Rights Agreement,
the Board of Directors of the Company shall have the exclusive power and
authority to administer this Rights Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Rights Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Rights Agreement and (ii) make all
determinations deemed necessary or
-28-
<PAGE>
advisable for the administration of this Rights Agreement (including, without
limitation, a determination to redeem or not redeem the Rights or to amend this
Rights Agreement and a determination of whether there is an Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be deemed to be in
derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer, or to recommend that holders of
Common Shares reject any tender offer, or to take any other action (including,
without limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer that the Board of Directors believes
is necessary or appropriate in the exercise of such fiduciary duty.
SECTION 29. SEVERABILITY. If any term, provision, covenant or
restriction of this Rights 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 Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 30. GOVERNING LAW. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the law of such state applicable to contracts to be
made and performed entirely within such state.
SECTION 31. COUNTERPARTS; EFFECTIVENESS. This Rights Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument. This Rights Agreement shall
be effective as of the Close of Business on the date hereof.
SECTION 32. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Rights Agreement.
[SIGNATURE PAGES FOLLOW]
-29-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to be
duly executed as of the day and year first above written.
FIRST ESSEX BANCORP, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
BANKBOSTON, N.A. as Rights Agent
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
-30-
<PAGE>
EXHIBIT A
CERTIFICATE OF THE VOTING POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL AND OTHER SPECIAL
RIGHTS AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS OF SERIES B JUNIOR
PARTICIPATING CUMULATIVE
PREFERRED STOCK OF
FIRST ESSEX BANCORP, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware, First Essex Bancorp, Inc. (the ACorporation@), a corporation organized
and existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors
of the Corporation by the Certification of Incorporation of the Corporation (the
ACertificate of Incorporation@), the Board of Directors of the Corporation
adopted the following resolution creating a series of Preferred Stock designated
as Series B Junior Participating Cumulative Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the
Certificate of Incorporation of the Corporation, a series of Preferred Stock of
the Corporation is hereby created and that the designation and number of shares
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
SECTION 1. DESIGNATION AND NUMBER OF SHARES. The shares of such series
shall be designated as "Series B Junior Participating Cumulative Preferred
Stock" (the "Series B Preferred Stock"), par value $.10 per share. The number of
shares initially constituting the Series B Preferred Stock shall be 200,000;
PROVIDED, HOWEVER, that, if more than a total of 200,000 shares of Series B
Preferred Stock shall be issuable upon the exercise of Rights (the "Rights")
issued pursuant to the Rights Agreement dated as of October 12, 1999, between
the Corporation and BankBoston, N.A., as Rights Agent (the "Rights Agreement"),
the Board of Directors of the Corporation, pursuant to Section 151(g) of the
General Corporation Law of the State of Delaware, shall direct by resolution or
resolutions that a certificate be properly executed, acknowledged, filed and
recorded, in accordance with the provisions of Section 103 thereof, providing
for the total number of shares of Series B Preferred Stock authorized to be
issued to be increased (to the extent that the Certificate of Incorporation then
permits) to the largest number of whole shares (rounded up to the nearest whole
number) issuable upon exercise of such Rights.
SECTION 2. DIVIDENDS OR DISTRIBUTIONS.
(a) Subject to the prior and superior rights of the holders of shares
of any other series of Preferred Stock or other class of capital stock of the
Corporation ranking prior and superior to the
-1-
<PAGE>
shares of Series B Preferred Stock with respect to dividends, the holders of
shares of the Series B Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors, out of the assets of the Corporation
legally available therefor, (1) quarterly dividends payable in cash on the last
day of each fiscal quarter in each year, or such other dates as the Board of
Directors of the Corporation shall approve (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 a
fraction of a share of Series B Preferred Stock, in the amount of $1.00 per
whole share (rounded to the nearest cent) less the amount of all cash dividends
declared on the Series B Preferred Stock pursuant to the following clause (2)
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 B Preferred Stock (the total of which
shall not, in any event, be less than zero) and (2) dividends payable in cash on
the payment date for each cash dividend declared on the Common Stock in an
amount per whole share (rounded to the nearest cent) equal to the Formula Number
(as hereinafter defined) then in effect times the cash dividends then to be paid
on each share of Common Stock. In addition, if the Corporation shall pay any
dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of noncash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each such case, the
Corporation shall simultaneously pay or make on each outstanding whole share of
Series B Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each share
of the Common Stock. As used herein, the "Formula Number" shall be 100;
PROVIDED, HOWEVER, that if at any time after October 12, 1999, the Corporation
shall (i) declare or pay any dividend on the Common Stock payable in shares of
Common Stock or make any distribution on the Common Stock in shares of Common
Stock, (ii) subdivide (by a stock split or otherwise) the outstanding shares of
Common Stock into a larger number of shares of Common Stock or (iii) combine (by
a reverse stock split or otherwise) the outstanding shares of Common Stock into
a smaller number of shares of Common Stock, then in each such event the Formula
Number shall be adjusted to a number determined by multiplying the Formula
Number in effect immediately prior to such event by a fraction, the numerator of
which is the number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which is the number of shares of Common
Stock that are outstanding immediately prior to such event (and rounding the
result to the nearest whole number); and PROVIDED FURTHER, that, if at any time
after October 12, 1999, the Corporation shall issue any shares of its capital
stock in a merger, reclassification, or change of the outstanding shares of
Common Stock, then in each such event the Formula Number shall be appropriately
adjusted to reflect such merger, reclassification or change so that each share
of Series B Preferred Stock continues to be the economic equivalent of a Formula
Number of shares of Common Stock prior to such merger, reclassification or
change.
(b) The Corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in Section 2(a) immediately prior to or at
the same time it declares a dividend or distribution on the Common Stock (other
than a dividend or distribution solely in shares of Common Stock); PROVIDED,
HOWEVER, that, in the event no dividend or distribution (other than a dividend
or distribution in shares of Common Stock) shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Series B Preferred Stock
-2-
<PAGE>
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date. The Board of Directors may fix a record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive a dividend or
distribution declared thereon, which record date shall be the same as the record
date for any corresponding dividend or distribution on the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from and after the Quarterly Dividend Payment
Date next preceding the date of original issue of such shares of Series B
Preferred Stock; PROVIDED, HOWEVER, that dividends on such shares which are
originally issued after the record date for the determination of holders of
shares of Series B Preferred Stock entitled to receive a quarterly dividend and
on or prior to the next succeeding Quarterly Dividend Payment Date shall begin
to accrue and be cumulative from and after such Quarterly Dividend Payment Date.
Notwithstanding the foregoing, dividends on shares of Series B Preferred Stock
which are originally issued prior to the record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive a quarterly
dividend on the first Quarterly Dividend Payment Date shall be calculated as if
cumulative from and after the last day of the fiscal quarter next preceding the
date of original issuance of such shares. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series B 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.
(d) So long as any shares of the Series B Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 2 to be declared on
the Series B Preferred Stock shall have been declared.
(e) The holders of the shares of Series B Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided
herein.
SECTION 3. VOTING RIGHTS. The holders of shares of Series B Preferred
Stock shall have the following voting rights:
(a) Each holder of Series B Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share of
Series B Preferred Stock held of record on each matter on which holders of the
Common Stock or stockholders generally are entitled to vote, multiplied by the
maximum number of votes per share which any holder of the Common Stock or
stockholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
(b) Except as otherwise provided herein or by applicable law, the
holders of shares of Series B Preferred Stock and the holders of shares of
Common Stock and the holders of shares of any other capital stock of the
Corporation shall vote together as one class for the election of directors of
the Corporation and on all other matters submitted to a vote of stockholders of
the Corporation.
-3-
<PAGE>
(c) If, at the time of any annual meeting of stockholders for the
election of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series B Preferred Stock are in
default, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting together with the
holders of Common Stock for the election of other directors of the Corporation,
the holders of record of the Series B Preferred Stock, voting separately as a
class to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of stockholders (and at each subsequent annual meeting of stockholders),
unless all dividends in arrears have been paid or declared and set apart for
payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series B Preferred Stock being entitled to cast
a number of votes per share of Series B Preferred Stock equal to the Formula
Number. Until the default in payments of all dividends which permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of the shares of Series B Preferred Stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any such director
at a special meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If and when such
default shall cease to exist, the holders of the Series B Preferred Stock shall
be divested of the foregoing special voting rights, subject to revesting in the
event of each and every subsequent like default in payments of dividends. Upon
the termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The voting rights granted by this
Section 3(c) shall be in addition to any other voting rights granted to the
holders of the Series B Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by applicable law,
holders of Series B 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 authorizing or taking
any corporate action.
SECTION 4. CERTAIN RESTRICTIONS.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series B Preferred Stock outstanding shall have
been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series B Preferred Stock;
(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 B Preferred Stock, except
dividends paid ratably on the Series B Preferred Stock and all
such parity
-4-
<PAGE>
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 B 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 B Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series B Preferred Stock, or any shares of stock
ranking on a parity with the Series B Preferred Stock, except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective Series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 5. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (x) $100.00 per whole share
or (y) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (2) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series B Preferred
Stock, except distributions made ratably on the Series B Preferred Stock and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 6. CONSOLIDATION, MERGER, ETC.. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the then
outstanding shares of Series B Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share equal to the Formula
Number then in effect times the aggregate amount of stock, securities, cash or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is exchanged or
-5-
<PAGE>
changed. In the event both this Section 6 and Section 2 appear to apply to a
transaction, this Section 6 will control.
SECTION 7. NO REDEMPTION; NO SINKING FUND.
(a) The shares of Series B Preferred Stock shall not be subject to
redemption by the Corporation or at the option of any holder of Series B
Preferred Stock; PROVIDED, HOWEVER, that the Corporation may purchase or
otherwise acquire outstanding shares of Series B Preferred Stock in the open
market or by offer to any holder or holders of shares of Series B Preferred
Stock.
(b) The shares of Series B Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
SECTION 8. RANKING. The Series B Preferred Stock shall rank junior to
all other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series and the qualifications, limitations and restrictions
thereof.
SECTION 9. FRACTIONAL SHARES. The Series B Preferred Stock shall be
issuable upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one one-hundredth (1/100th)
of a share or any integral multiple of such fraction which shall entitle the
holder, in proportion to such holder's fractional shares, to receive dividends,
exercise voting rights, participate in distributions and to have the benefit of
all other rights of holders of Series B Preferred Stock. In lieu of fractional
shares, the Corporation, prior to the first issuance of a share or a fraction of
a share of Series B Preferred Stock, may elect (1) to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one
one-hundredth (1/100th) of a share or any integral multiple thereof or (2) to
issue depository receipts evidencing such authorized fraction of a share of
Series B Preferred Stock pursuant to an appropriate agreement between the
Corporation and a depository selected by the Corporation; PROVIDED that such
agreement shall provide that the holders of such depository receipts shall have
all the rights, privileges and preferences to which they are entitled as holders
of the Series B Preferred Stock.
SECTION 10. REACQUIRED SHARES. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock, without designation as to series until such shares are once
more designated as part of a particular series by the Board of Directors
pursuant to the provisions of Paragraph B of Article FOURTH of the Certificate
of Incorporation.
SECTION 11. AMENDMENT. None of the powers, preferences and relative,
participating, optional and other special rights of the Series B Preferred Stock
as provided herein or in the Certificate of Incorporation shall be amended in
any manner which would alter or change the powers, preferences, rights or
privileges of the holders of Series B Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least a majority of
the
-6-
<PAGE>
outstanding shares of Series B Preferred Stock, voting as a separate class;
PROVIDED, HOWEVER, that no such amendment approved by the holders of at least a
majority of the outstanding shares of Series B Preferred Stock shall be deemed
to apply to the powers, preferences, rights or privileges of any holder of
shares of Series B Preferred Stock originally issued upon exercise of the Rights
after the time of such approval without the approval of such holder.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
duly executed in its corporate name on this ___ day of September, 1999.
FIRST ESSEX BANCORP, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
- -----------------------------
Name:
------------------------
Title:
-----------------------
-7-
<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]-
Rights
--------
NOT EXERCISABLE AFTER OCTOBER 12, 2009, OR EARLIER IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $.001 PER RIGHT, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
Right Certificate
FIRST ESSEX BANCORP, INC.
This certifies that _______________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of
which entitles the owner, thereof, subject to the terms, provisions and
conditions of the Rights Agreement dated as of October 12, 1999 (the "Rights
Agreement"), between First Essex Bancorp, Inc., a Delaware corporation (the
"Company"), and BankBoston, N.A., as Rights Agent (the "Rights Agent"),
unless the Rights evidenced hereby shall have been previously redeemed by the
Company, to purchase from the Company at any time after the Distribution Date
(as defined in the Rights Agreement) and prior to 5:00 p.m., Boston,
Massachusetts time, on the 10th anniversary of the date of the Rights
Agreement (the "Expiration Date"), at the office of the Rights Agent, or its
successors as Rights Agent, in Boston, Massachusetts, one one-hundredth
(1/100th) of a fully paid, nonassessable share of Series B Junior
Participating Cumulative Preferred Stock, par value $.10 per share, of the
Company (the "Preferred Shares"), at a purchase price per one one-hundredth
(1/100th) of a share equal to $70.00 (the "Purchase Price") payable in cash,
upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed.
The Purchase Price and the number and kind of shares which may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of October 12, 1999. As provided in the Rights Agreement,
the Purchase Price and the number and kind of shares which may be purchased upon
the exercise of each Right evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
-1-
<PAGE>
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all 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
reference to the Rights Agreement 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 Right Certificates. Copies
of the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the stock transfer or corporate trust office of the Rights Agent,
may be exchanged for another Right Certificate or Right Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number and kind of shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall entitle such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate may be redeemed by the Company at its option at a
redemption price (in cash or shares of Common Stock or other securities of the
Company deemed by the Board of Directors to be at least equivalent in value) of
$.001 per Right (which amount shall be subject to adjustment as provided in the
Rights Agreement) at any time prior to the earlier of (i) such time as a Person
becomes an Acquiring Person and (ii) the Expiration Date.
The Company may, but shall not be required to, issue fractions of
Preferred Shares or distribute certificates which evidence fractions of
Preferred Shares upon the exercise of any Right or Rights evidenced hereby. In
lieu of issuing fractional shares, the Company may elect to make a cash payment
as provided in the Rights Agreement for fractions of a share other than one
one-hundredth (1/100th) of a share or any integral multiple thereof or to issue
certificates or utilize a depository arrangement as provided in the terms of the
Rights Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company, including, without limitation,
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or other distributions or subscription rights, or otherwise, until the
Right or Rights
-2-
<PAGE>
evidenced by this Right Certificate shall have been exercised as provided in
accordance with the provisions of the Rights Agreement.
This Right 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:
FIRST ESSEX BANCORP, INC.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Attest:
- -----------------------------
Name:
------------------------
Title:
-----------------------
Countersigned:
BankBoston, N.A.
as Rights Agent,
By:
--------------------------
Authorized Signatory
-3-
<PAGE>
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise
------------
Rights represented by this Right Certificate to purchase
the Preferred Shares (or other shares) issuable upon the exercise of
such Rights and requests that certificates for such shares be issued in
the name of:
Please insert social security
or other identifying number
---------------------------------
(Please print name and address)
---------------------------------
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right
-4-
<PAGE>
Certificate for the balance remaining of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number
------------------------------------
(Please print name and address)
------------------------------------
Dated:
-------------------
---------------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature on the foregoing Form of Election to Purchase
must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
-5-
