_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-A/A No. 1
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Sovereign Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2453088
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
1130 Berkshire Boulevard, Reading, Pennsylvania 19610
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None Not Applicable
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
(Title of Class)
_________________________________________________________________
_________________________________________________________________
<PAGE>
Item 1 of the registrant's Registration Statement on
Form 8-A dated August 7, 1989 (the "Registration Statement") is
hereby amended and restated to read in its entirety as follows:
Item 1. Description of Registrant's Securities to be
Registered.
On September 19, 1989, the Board of Directors of
Sovereign Bancorp, Inc. (the "Company") declared a dividend
distribution of one Right for each outstanding share of the
Company's common stock, par value $1.00 per share (the "Common
Stock"), to shareholders of record at the close of business on
October 2, 1989. Each Right entitles the registered holder to
purchase from the Company one-hundredth of a share of Series A
Junior Participating Preferred Stock, no par value (the
"Preferred Stock"). On September 27, 1995, the Board of
Directors of the Company approved certain amendments to the
Rights Agreement which (i) extend the terms of the Rights
Agreement to September 27, 2004, and (ii) increase the Purchase
Price from $15.00 to $40.00 per share; and (iii) modify the
definition of Acquiring Person, as hereinafter defined, and the
triggering event for the exercise of Rights to include any person
who is the beneficial owner of 9.9% or more of the shares of
Common Stock or voting securities of the Company and delete the
limited carve-out for persons who had filed Schedule 13Ds under
the Securities Exchange Act of 1934, as amended, indicating
beneficial ownership of 5% or more of the Common Stock prior to
the adoption of the Plan. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights
Agreement"), dated as of September 19, 1989, between the Company
and Harris Trust Company of New York, as Rights Agent, and an
Amendment to Rights Agreement, dated as of September 27, 1995
(the "Amendment"), between the Company and Chemical Bank, as
successor to Harris Trust Company of New York. The following
describes the Rights Agreement, as amended.
Initially, the Rights will be evidenced by Common Stock
certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights
will separate from the Common Stock and a Distribution Date will
occur upon the earlier of (i) 10 business days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, 9.9% or more of the outstanding shares of
Common Stock or voting securities representing 9.9% or more of
the total voting power of the Company (the "Stock Acquisition
Date"), (ii) 10 business days (or such later date as the Board of
Directors shall determine) following the commencement of a tender
offer or exchange offer that would result in a person or group
acquiring 9.9% or more of such outstanding shares of Common Stock
or total voting power, or (iii) 10 business days following the
determination by the Board of Directors, after reasonable inquiry
and investigation, including consultation with such persons as
such directors shall deem appropriate, that, with respect to any
person who has, alone or together with his affiliates or
associates, acquired 4.9% or more of such outstanding shares of
Common Stock or total voting power of the Company (without regard
for this purpose to shares owned continuously for the eighteen
consecutive months prior to such determination), such beneficial
ownership by such person is intended to cause the Company to
repurchase the voting securities beneficially owned by such
person or to cause pressure on the Company to take action or
enter into a transaction or series of transactions intended to
provide such person (and not stockholders generally) with short-
term financial gain under circumstances where the Board
determines that the best long-term interests of the Company and
its stockholders would not be served by taking such action or
entering into such transaction or transactions at that time (any
such person being referred to herein and in the Rights Agreement
as an "Adverse Person").
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates,
(ii) new Common Stock certificates issued after August 7, 1989,
will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any
certificate for Common Stock outstanding will also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on September 27,
2004, unless earlier redeemed as described below. Pursuant to
the Rights Agreement, the Company reserves the right to require
prior to the occurrence of a Triggering Event (as defined below)
that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock will be
issued.
As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date
and, thereafter, the separate Rights Certificates alone will
represent the Rights. Except as otherwise provided in the Rights
Agreement or determined by the Board of Directors, only shares of
Common Stock issued prior to the Distribution Date will be issued
with Rights.
In the event that (i) a person becomes an Acquiring
Person (except pursuant to an offer for all outstanding shares of
the Company's voting securities that at least a majority of the
Continuing Directors determines to be fair to and otherwise in
the best interests of the Company and its stockholders), (ii) an
Acquiring Person engages in one or more "self-dealing"
transactions as defined in the Rights Agreement, (iii) the
Company is the surviving corporation in a merger with an
Acquiring Person, (iv) during such time that there exists an
Acquiring Person, a recapitalization or reverse stock split
occurs which results in such Acquiring Person's proportionate
ownership interest being increased by more than 1%, or (v) any
person is determined to be an Adverse Person (any of the
foregoing, a "Flip-in Event"), each holder of a Right will
thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property, or other
securities of the Company) having a value (based on the lowest
closing price of the Common Stock during the twelve-month period
preceding the Flip-in Event) equal to two times the exercise
price of the Right. Notwithstanding the foregoing, following the
occurrence of a Flip-in Event, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or an Adverse Person
(or by certain related parties) will be null and void. Rights
are not exercisable following the occurrence of a Flip-in Event,
however, until such time as the Rights are no longer redeemable
by the Company as set forth below.
For example, at an exercise price of $40.00 per Right,
each Right not owned by an Acquiring Person or an Adverse Person
(or by certain related parties) following a Flip-in Event would
entitle its holder to purchase $80.00 worth of Common Stock based
on the lowest closing price of the Common Stock during the
twelve-month period preceding the Flip-in Event (or other
consideration, as noted above) for $40.00. Assuming that the
lowest closing price of the Common Stock during such period was
$20.00, the holder of each valid Right would be entitled to
purchase four shares of Common Stock for $40.00.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation (other than a merger which follows
an offer for all outstanding voting securities of the Company,
which at least a majority of the Continuing Directors determines
to be fair to and otherwise in the best interests of the Company
and its stockholders, and the merger price is not less than, and
the form of consideration is the same as, that paid in the tender
or exchange offer) or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two
times the exercise price of the Right. The events set forth in
this paragraph and in the second preceding paragraph are referred
to as "Triggering Events."
The Purchase Price payable and the amount of Preferred
Stock or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination, or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of
the Preferred Stock, or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at
least 1% of the Purchase Price. No fractional shares of
Preferred Stock will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of
exercise.
At any time until ten business days following the Stock
Acquisition Date, the Company may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (payable in cash,
Common Stock, or other consideration deemed appropriate as
determined by the Board of Directors). At any time prior to the
date the Rights would otherwise become nonredeemable, a majority
of the Continuing Directors may extend the period for redemption.
The Company's right of redemption may be reinstated if an
Acquiring Person reduces such Person's beneficial or total voting
power ownership to 10% or less of the outstanding shares of
Common Stock or total voting power in a transaction or series of
transactions not involving the Company and there is then no other
Acquiring Person. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to
receive the $.001 redemption price. Notwithstanding the
foregoing, the Board of Directors may not redeem the Rights
following a determination that any person is an Adverse Person.
The term "Continuing Directors" means any member of the
Board of Directors of the Company who was a member of the Board
prior to the date of the Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person, an Adverse Person, or an
affiliate or associate of an Acquiring Person or Adverse Person,
or any representative of the foregoing entities.
At any time after the occurrence of a Flip-in Event,
the Board of Directors may exchange the Rights (other than Rights
owned by an Acquiring Person or an Adverse Person or an affiliate
or an associate of any such person, which have become void), in
whole or in part, at an exchange ratio of one share of Common
Stock, and/or other equity securities deemed to have the
equivalent value, per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for Common Stock (or
other consideration) of the Company or for common stock of the
acquiring company as set forth above, or are exchanged as
provided in the preceding paragraph.
Other than those provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person or Adverse Person or an
affiliate or associate of any such person), or to shorten or
lengthen any time period under the Rights Agreement; however, no
amendment to adjust the time period governing redemption shall be
made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated August 7, 1989. A copy
of the Amendment is filed as Exhibit 2.2 hereto. Copies of the
Rights Agreement and the Amendment are available free of charge
from the Rights Agent. This summary description of the Rights
does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement and the Amendment, which are
incorporated herein by reference.
Item 2 of the Registration Statement is hereby amended and
restated in its entirety as follows:
Item 2. Exhibits.
Exhibit Number Description
1 Form of Rights Certificate (included at
Exhibit B to the Rights Agreement dated as of
September 19, 1989 between Sovereign Bancorp,
Inc. and Harris Trust Company of New York, as
Rights Agent ("Rights Agreement") -- see
Exhibit 2.1 hereof. Pursuant to the Rights
Agreement, Rights will not be distributed
until after the Distribution Date (as defined
in the Rights Agreement). Incorporated by
reference to Exhibit 1 of the Registration
Statement.
2.1 Rights Agreement. Incorporated by reference
to Exhibit 2.2 of the Registration
Statement.
2.2 Amendment to Rights Agreement, dated as of
September 27, 1995, between Sovereign
Bancorp, Inc. and Chemical Bank, as successor
to Harris Trust Company of New York, as
Rights Agent.
<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, thereto duly authorized.
Date: January 8, 1996 SOVEREIGN BANCORP, INC.
By /s/Jay S. Sidhu
Jay S. Sidhu,
President and
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
2.2 Amendment to Rights
Agreement, dated as of
September 27, 1995,
between Sovereign Bancorp,
Inc. and Chemical Bank, as
successor to Harris Trust
Company of New York, as
Rights Agent.
AMENDMENT TO RIGHTS AGREEMENT
Amendment, dated as of September 27, 1995, to the
Rights Agreement, dated as of September 19, 1989 (the "Rights
Agreement"), between SOVEREIGN BANCORP, INC., a Pennsylvania
business corporation (the "Company") and CHEMICAL BANK, as
successor to Harris Trust Company of New York, as Rights Agent
(the "Rights Agent").
WITNESSETH
WHEREAS, the existing Rights Agreement between the
Company and the Rights Agent expires by its terms on July 25,
1994, which Rights Agreement is attached as Exhibit "A" to this
Amendment;
WHEREAS, no Distribution Date (as defined in the Rights
Agreement) has occurred;
WHEREAS, the Board of Directors deems it advisable and
in the best interests of the Company to extend the expiration
date of the Rights Agreement to September 27, 2004, and to make
certain other changes in the Rights Agreement as set forth
herein; and
WHEREAS, the Board of Directors of the Company has
adopted, in accordance with Section 27 of the Rights Agreement, a
resolution approving this Amendment and directing the appropriate
officers of the Company to take all appropriate steps to execute
and put into effect this Amendment and an appropriate officer of
the Company has provided a certificate to the Rights Agent as
provided for in such Section 27.
NOW, THEREFORE, in consideration of the premises and
covenants set forth in the Rights Agreement and this Amendment,
the parties hereby agree as follows:
1. Acquiring Person. Section 1(a) of the Rights
Agreement is hereby amended and restated to read in its entirety
as follows:
"(a) "Acquiring Person" shall mean any Person
who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial
Owner of (i) 9.9% or more of the shares of Common Stock
or (ii) Voting Securities that in the aggregate
represent 9.9% or more of the Total Voting Power, but
shall not include the Company, any Subsidiary of the
Company, any employee stock option plan or other
employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity
organized, appointed, or established by the Company for
or pursuant to the terms of any such plan."
2. Issue of Rights Certificates. Sections 3(a) and
3(c) of the Rights Agreement shall be amended and restated to
read in their entirety as follows:
"Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the close
of business on the tenth Business Day after the Stock
Acquisition Date, (ii) the close of business on the
tenth Business Day (or such later date as may be
determined by the Board of Directors) after the date
that a tender offer or exchange offer by any Person
(other than the Company, any Subsidiary of the Company,
any employee stock option plan or other employee
benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed,
or established by the Company for or pursuant to the
terms of any such plan) is first published or sent or
given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act,
if, upon consummation thereof, such Person would be the
Beneficial Owner of (x) 9.9% or more of the shares of
Common Stock then outstanding or (y) Voting Securities
representing 9.9% or more of the Total Voting Power, or
(iii) the close of business on the tenth Business Day
after the Board of Directors determines, pursuant to
the criteria set forth in Section 11(a)(ii)(B) hereof,
that a Person is an Adverse Person (the earliest of
(i), (ii), and (iii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this
Section 3) by the certificates for the Common Stock
registered in the names of the holders of such Common
Stock (which certificates for Common Stock shall be
deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of
the underlying shares of Common Stock (including a
transfer to the Company). As soon as practicable after
the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or
more rights certificates, in substantially the form of
Exhibit B hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to
Section 11(p) hereof, at the time of distribution of
the Rights Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such
Rights Certificates. . .
(c) Rights shall be issued in respect
of all shares of Common Stock which are issued (whether
originally issued or from the Company's treasury) after
the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear
the following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as set forth
in the Rights Agreement between Sovereign Bancorp,
Inc. (the "Company") Chemical Bank, as successor
to Harris Trust Company of New York (the "Rights
Agent") dated as of September 19, 1989 and amended
September 27, 1995 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by
reference and a copy of which is on file at the
principal offices of the Company. Under certain
circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. The Company or the
Rights Agent will mail to the holder of this
certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge
promptly after receipt of a written request
therefor. Under certain circumstances set forth
in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring
Person, an Adverse Person, or any Affiliate or
Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by
or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates containing the
foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by
such certificates shall be evidenced by such
certificates alone and registered holders of Common
Stock shall also be the registered holders of the
associated Rights, and the transfer of any such
certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by
such certificates.
3. Extension of Final Expiration Date. Sections 7(a)
and 7(b) of the Rights Agreement are hereby amended and restated
to read in their entirety as follows:
"(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as
otherwise provided herein including, without
limitation, the restrictions on exercisability set
forth in Section 9(c), Section 11(a)(iii), and Section
23(a) hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office
or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one-
hundredths of a share (or other securities, cash, or
other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to
the earliest of (i) the close of business on
September 27, 2004 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided
in Section 23 hereof (the earlier of (i) and (ii) being
herein referred to as the "Expiration Date"), or
(iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The Purchase Price for each one-
hundredth of a share of Preferred Stock pursuant to the
exercise of a Right shall be $40.00, and shall be
subject to adjustment from time to time as provided in
Sections 11 and 13(a) hereof and shall be payable in
accordance with paragraph (c) below."
4. Notices. Section 26 is amended and restated to
read in its entirety as follows:
"Section 26. Notices. Notices or demands authorized
by this Agreement to be given or made by the Rights Agent or
by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Lawrence M. Thompson, Jr.
Corporate Secretary
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made by
the Company or by the holder of any Rights Certificate to or
on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as
follows:
Chemical Bank
c/o CMSSLLC
85 Challenger Road
Overpeck Center
Ridgefield Park, New Jersey
Attention: Kathy Kennelly
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently
given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as
shown on the registry books of the Company."
5. Modification. Section 27 of the Rights Agreement
is hereby amended to change the word "penultimate" appearing
therein to "last."
6. Rights Agreement. On or after the date hereof,
each reference in the Rights Agreement (including the Exhibits
thereto) to "This Agreement," "hereunder," "herein" or words of
like import shall mean and be a reference to the Rights Agreement
as amended hereby and all Exhibits thereto shall be deemed to be
amended to reflect the amendments made hereby.
7. Effective Date. This Amendment shall be effective
as of the date of its execution and, except as set forth herein,
the Rights Agreement shall remain in full force and effect and
shall be otherwise unaffected hereby.
8. Assumption. The Rights Agent hereby assumes the
obligations of the Rights Agent under the Rights Agreement, dated
as of September 19, 1989, as amended hereby.
9. Capitalized Terms. Capitalized terms which are
used but not defined herein shall have the meaning ascribed to
such terms in the Rights Agreement.
10. Enforceability. If any term, provision, covenant,
or restriction of this Amendment 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 Amendment shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
11. Governing Law. This Amendment shall be deemed to
be a contract made under the laws of the Commonwealth of
Pennsylvania and for all purposes shall be governed by and
construed in accordance with the laws of the Commonwealth
applicable to contracts made and to be performed entirely within
the Commonwealth.
12. Counterparts. This Amendment 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed, all as of the day and year first
above written.
SOVEREIGN BANCORP, INC.
By/s/Jay S. Sidhu
Attest:/s/Lawrence M. Thompson, Jr.
CHEMICAL BANK
By/s/Eric Leason, V.P.
Attest:/s/Florence Curley
<PAGE>
EXHIBIT "A"
_________________________________________________________________
SOVEREIGN BANCORP, INC.
AND
HARRIS TRUST COMPANY OF NEW YORK
Rights Agent
____________________
RIGHTS AGREEMENT
Dated as of September 19, 1989
_________________________________________________________________
<PAGE>
Table of Contents
Section Page
1. Certain Definitions.................................. 1
2. Appointment of Rights Agent.......................... 8
3. Issue of Rights Certificates......................... 8
4. Form of Rights Certificates.......................... 11
5. Countersignature and Registration.................... 13
6. Transfer, Split Up, Combination, or Exchange of
Rights Certificates; Mutilated, Destroyed, Lost,
or Stolen Rights Certificates........................ 14
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights............................ 15
8. Cancellation and Destruction of Rights Certificates.. 19
9. Reservation and Availability of Capital Stock........ 20
10. Preferred Stock Record Date.......................... 22
11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights........................... 23
12. Certificate of Adjusted Purchase Price or Number
of Shares............................................ 40
13. Consolidation, Merger, or Sale or Transfer of
Assets or Earning Power.............................. 41
14. Fractional Rights and Fractional Shares.............. 45
15. Rights of Action..................................... 47
16. Agreement of Rights Holders.......................... 47
17. Rights Certificate Holder Not Deemed a Stockholder... 48
18. Concerning the Rights Agent.......................... 49
19. Merger or Consolidation or Change of Name of
Rights Agent......................................... 50
20. Duties of Rights Agent............................... 51
21. Change of Rights Agent............................... 54
22. Issuance of New Rights Certificates.................. 55
23. Redemption and Termination........................... 56
24. Exchange............................................. 58
25. Notice of Certain Events............................. 60
26. Notices.............................................. 61
27. Supplements and Amendments........................... 62
28. Successors........................................... 63
29. Determinations and Actions by the Board of
Directors; No Waiver................................. 63
30. Benefits of this Agreement........................... 64
31. Severability......................................... 64
32. Governing Law........................................ 65
33. Counterparts......................................... 65
34. Descriptive Headings................................. 65
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 19, 1989 (the
"Agreement"), between SOVEREIGN BANCORP, INC., a Pennsylvania
business corporation (the "Company"), and HARRIS TRUST COMPANY OF
NEW YORK, a New York corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on September 19, 1989 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of common stock, par value
$1.00 per share, of the Company (the "Common Stock") outstanding
at the close of business on October 2, 1989 (the "Record Date"),
and has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of
Section 11(p) hereof) for each share of Common Stock issued
between the Record Date (whether originally issued or delivered
from the Company's treasury) and the Distribution Date, each
Right initially representing the right to purchase one one-
hundredth of a share of Series A Junior Participating Preferred
Stock of the Company having the rights, powers, and preferences
herein set forth, upon the terms and subject to the conditions
hereinafter set forth (the "Rights");
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who
or which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of (i) 19.9% or more (or
29.9% or more in the case of any natural Person, but not any of
such natural Person's transferees, including heirs, devisees and
legatees, who has filed a Schedule 13D under the Exchange Act
indicating beneficial ownership of 5% or more of the Common Stock
on the date hereof) of the shares of Common Stock or (ii) Voting
Securities that in the aggregate represent 19.9% or more (or
29.9% or more in the case of any natural Person, but not any of
such natural Person's transferees, including heirs, devisees and
legatees, who has filed a Schedule 13D under the Exchange Act
indicating beneficial ownership of 5% or more of the Common Stock
on the date hereof) of the Total Voting Power, but shall not
include the Company, any Subsidiary of the Company, any employee
stock option plan or other employee benefit plan of the Company
or of any Subsidiary of the Company, or any Person or entity
organized, appointed, or established by the Company for or
pursuant to the terms of any such plan.
(b) "Adverse Person" shall mean any Person
declared to be an Adverse Person by the Board of Directors upon a
determination that the criteria set forth in Section 11(a)(ii)(B)
apply to such Person.
(c) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in
effect on September 19, 1989.
(d) A Person shall be deemed the "Beneficial
owner" of, and shall be deemed to "beneficially own," any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly,
has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to
any agreement, arrangement, or understanding (whether or not
in writing) or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender offer or
exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) securities
issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) securities issuable
upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof (the "Original Rights") or pursuant to
Section 11(i) hereof in connection with an adjustment made
with respect to any Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly,
has the right to vote (without regard to any regulatory
restrictions or restrictions included in the Company's
Articles of Incorporation) or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement, or
understanding, whether or not in writing; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this
subparagraph (ii) as a result of an agreement, arrangement,
or understanding to vote such security if such agreement,
arrangement, or understanding (A) arises solely from a
revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance
with, the applicable provisions of the General Rules and
Regulations under the Exchange Act and (B) is not also then
reportable by such Person 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 (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement, or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (d)), or disposing of
any Voting Securities; provided, however, that nothing in
this paragraph (c) shall cause a person engaged in business
as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired
through such person's participation in good faith in a firm
commitment underwriting until the expiration of forty days
after the date of such acquisition.
(e) "Business Day" shall mean any day other than
a Saturday, Sunday, or a day on which banking institutions in the
Commonwealth of Pennsylvania are authorized or obligated by law
or executive order to close.
(f) "Close of business" on any given date shall
mean 5:00 P.M., New York time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M.,
New York time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the common stock,
par value $1.00 per share, of the Company, except that "Common
Stock" when used with reference to any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of
such Person.
(h) "Common stock equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(i) "Continuing Director" shall mean (i) any
member of the Board of Directors of the Company, while such
Person is a member of the Board, who is not an Acquiring Person,
an Adverse Person (or a Person with respect to whom the
Continuing Directors are considering making an Adverse Person
determination pursuant to Section 11(a)(ii)(B) hereof), or an
Affiliate or Associate of any such Person, or a representative of
any such Person, Affiliate, or Associate, and who was a member of
the Board prior to the date of this Agreement, or (ii) any Person
who subsequently becomes a member of the Board, while such Person
is a member of the Board, who is not an Acquiring Person, an
Adverse Person (or a Person with respect to whom the Continuing
Directors are considering making an Adverse Person
determination), or an Affiliate or Associate of any such Person,
or a representative of any such Person, Affiliate or Associate,
if such Person's nomination for election or election to the Board
is recommended or approved by a majority of the Continuing
Directors.
(j) "Current market price" shall have the meaning
set forth in Section 11(d)(i) hereof.
(k) "Current Value" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(l) "Distribution Date" shall have the meaning
set forth in Section 3(a) hereof.
(m) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(n) "Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(o) "Final Expiration Date" shall have the
meaning set forth in Section 7(a) hereof.
(p) "Person" shall mean any individual, firm,
corporation, partnership, or other entity.
(q) "Preferred Stock" shall mean shares of
Series A Junior Participating Preferred Stock, without par value,
of the Company, and, to the extent that there are not a
sufficient number of shares of Series A Junior Participating
Preferred Stock authorized to permit the full exercise of the
Rights, any other series of preferred stock, without par value,
of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior
Participating Preferred Stock.
(r) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(s) "Purchase Price" shall have the meaning set
forth in Section 4(a) hereof.
(t) "Record Date" shall have the meaning set
forth in the WHEREAS clause in the recital to this Agreement.
(u) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.
(v) "Rights" shall have the meaning set forth in
the WHEREAS clause in the recital to this Agreement.
(w) "Rights Certificates" shall have the meaning
set forth in Section 3(a) hereof.
(x) "Rights Dividend Declaration Date" shall have
the meaning set forth in the WHEREAS clause in the recital to
this Agreement.
(y) "Section 11(a)(ii) Event" shall mean any
event described in clauses (A) or (B) of Section 11(a)(ii)
hereof.
(z) "Section 11(a)(ii) Trigger Date" shall have
the meaning set forth in Section 11(a)(iii) hereof.
(aa) "Section 13 Event" shall mean any event
described in clauses (x), (y), or (z) of Section 13(a) hereof.
(ab) "Securities Act" shall mean the Securities
Act of 1933, as amended.
(ac) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ad) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed
pursuant to Section 13(d) under the Exchange Act) by the Company
or an Acquiring Person that an Acquiring Person has become such.
(ae) "Subsidiary" shall mean, with reference to
any Person, any corporation of which an amount of voting
securities sufficient to elect at least a majority of the
directors of such corporation is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by such
Person.
(af) "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(ag) "Total Voting Power" on any given date shall
mean the total number of votes eligible to be cast in a general
election of directors of the Company.
(ah) "Trading Day" shall have the meaning set
forth in Section 11(d)(i) hereof.
(ai) "Triggering Event" shall mean any
Section 11(a)(ii) Event or Section 13 Event.
(aj) "Voting Securities" shall mean any class or
classes of capital stock of the Company entitled to vote
generally in the election of directors.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such Co-Rights Agents
as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the close of
business on the tenth Business Day after the Stock Acquisition
Date, (ii) the close of business on the tenth Business Day (or
such later date as may be determined by the Board of Directors)
after the date that a tender offer or exchange offer by any
Person (other than the Company, any Subsidiary of the Company,
any employee stock option plan or other employee benefit plan of
the Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed, or established by the Company for or
pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if, upon
consummation thereof, such Person would be the Beneficial Owner
of (x) 19.9% or more (or 29.9% or more in the case of any natural
Person, but not any of such natural Person's transferees,
including heirs, devisees and legatees, who has filed a
Schedule 13D under the Exchange Act indicating beneficial
ownership of 5% or more of the Common Stock on the date hereof)
of the shares of Common Stock then outstanding or (y) Voting
Securities representing 19.9% or more (or 29.9% or more in the
case of any natural Person, but not any of such natural Person's
transferees, including heirs, devisees and legatees, who has
filed a Schedule 13D under the Exchange Act indicating beneficial
ownership of 5% or more of the Common Stock on the date hereof)
of the Total Voting Power, or (iii) the close of business on the
tenth Business Day after the Board of Directors determines,
pursuant to the criteria set forth in Section 11(a)(ii)(B)
hereof, that a Person is an Adverse Person (the earliest of (i),
(ii), and (iii) being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the
holders of such Common Stock (which certificates for Common Stock
shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder shown on the
records of the Company, one or more rights certificates, in
substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11(p) hereof, at
the time of distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) As promptly as practicable following the
Record Date, the Company will send a copy of a Summary of Rights,
in substantially the form attached hereto as Exhibit C (the
"Summary of Rights"), by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the close of
business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for
shares of Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights will be evidenced by such
certificates for shares of Common Stock and the registered
holders of shares of Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock in respect of
which Rights have been issued shall also constitute the transfer
of the Rights associated with such shares of Common Stock.
(c) Rights shall be issued in respect of all
shares of Common Stock which are issued (whether originally
issued or from the Company's treasury) after the Record Date but
prior to the earlier of the Distribution Date or the Expiration
Date. Certificates representing such shares of Common Stock
shall also be deemed to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the Rights
Agreement between Sovereign Bancorp, Inc. (the "Company")
and Harris Trust Company of New York (the "Rights Agent")
dated as of September 19, 1989 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in
the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by
this certificate. The Company or the Rights Agent will mail
to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without
charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is,
was or becomes an Acquiring Person, an Adverse Person, or
any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by
or on behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or
(ii) the Expiration Date, the Rights associated with the Common
Stock represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set
forth on Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries, or
endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject
to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the
Record Date and on their face shall entitle the holders thereof
to purchase such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein at the price set
forth therein (such exercise price per one one-hundredth of a
share, the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to
Section 3(a) or Section 22 hereof that represents Rights
beneficially owned by: (i) an Acquiring Person or an Adverse
Person or any Associate or Affiliate of an Acquiring Person or an
Adverse Person, (ii) a transferee of an Acquiring Person or an
Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee after such Acquiring Person or Adverse
Person becomes such, or (iii) a transferee of an Acquiring Person
or an Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person or Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to
holders of equity interests in such Acquiring Person or Adverse
Person or to any Person with whom such Acquiring Person or
Adverse Person has any continuing agreement, arrangement, or
understanding regarding the transferred Rights or (B) a transfer
that the Board of Directors of the Company has determined is part
of a plan, arrangement, or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement, or adjustment of any
other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was or became
an [Acquiring Person] [Adverse Person] or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby have become null and void in the
circumstances and with the effect specified in Section 7(e)
of such Agreement.
Section 5. Countersignature and Registration.
(behalf of the Company by its Chairman of the Board, Chief
Executive Officer, President, or any Vice Chairman or Executive
Vice President either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned
manually by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the person who
signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although
at the date of the execution of this Rights Agreement any such
person was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal office or
offices designated as the appropriate place for surrender of
Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates
and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination, or
Exchange of Rights Certificates; Mutilated, Destroyed, Lost, or
Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b),
Section 7(e), Section 14, and Section 24 hereof, at any time
after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Rights
Certificate may be transferred, split up, combined, or exchanged
for another Rights Certificate entitling the registered holder to
purchase a like number of one one-hundredths of a share of
Preferred Stock (or, following a Triggering Event, Common Stock,
other securities, cash, or other assets, as the case may be) as
the Rights Certificate surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine, or
exchange any Rights Certificate shall make such request in
writing delivered to the Rights Agent, and shall surrender the
Rights Certificate to be transferred, split up, combined, or
exchanged at the principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e), and
Section 14 hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate as so requested. The Company may
require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination, or exchange of Rights
Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction, or mutilation of a Rights Certificate, and,
in case of loss, theft, or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation
of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner
in lieu of the Rights Certificate so lost, stolen, destroyed, or
mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability
set forth in Section 9(c), Section 11(a)(iii), and Section 23(a)
hereof) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price
with respect to the total number of one one-hundredths of a share
(or other securities, cash, or other assets, as the case may be)
as to which such surrendered Rights are then exercisable, at or
prior to the earliest of (i) the close of business on
September 18, 1999 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof
(the earlier of (i) and (ii) being herein referred to as the
"Expiration Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one one-hundredth
of a share of Preferred Stock pursuant to the exercise of a Right
shall initially be $80.00, and shall be subject to adjustment
from time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to
purchase and the certificate on the reverse side thereof duly
executed, accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-hundredth of a share
of Preferred Stock (or other shares, securities, cash, or other
assets, as the case may be) to be purchased as set forth below
and an amount equal to any applicable transfer tax, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly
(i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number
of one one-hundredths of a share of Preferred Stock to be
purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares
of Preferred Stock issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-
hundredths of a share of Preferred Stock as are to be purchased
(in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu
of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order
of the registered holder of such Rights Certificate. The payment
of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) shall be made in cash or by certified
bank check or bank draft payable to the order of the Company. In
the event that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash, and/or
distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other
securities, cash, and/or other property are available for
distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require prior to the occurrence of
a Triggering Event that, upon any exercise of Rights, a number of
Rights be exercised so that only whole shares of Preferred Stock
would be issued.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person, an Adverse Person, or an Associate or Affiliate
of an Acquiring Person or an Adverse Person, (ii) a direct or
indirect transferee of an Acquiring Person or an Adverse Person
(or of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person or Adverse Person becomes such, or
(iii) a direct or indirect transferee of an Acquiring Person or
an Adverse Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person or Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person to
holders of equity interests in such Acquiring Person or Adverse
Person or to any Person with whom the Acquiring Person or Adverse
Person has any continuing agreement, arrangement, or
understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable
efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect
to an Acquiring Person or an Adverse Person or any of their
respective Affiliates, Associates, or transferees hereunder.
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise, transfer, split up, combination, or exchange
shall, if surrendered to the Company or any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Rights Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy
such cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital
Stock.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock (and, following the occurrence
of a Triggering Event, out of its authorized and unissued shares
of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) that, as provided in
this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) issuable and deliverable upon the
exercise of the Rights may be quoted on any automated quotation
system of the National Association of Securities Dealers, Inc. or
listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be
so quoted or listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to
(i) file, as soon as practicable following the first occurrence
of a Section 11(a)(ii) Event, or, if applicable, as soon as
practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii)
hereof, a registration statement on an appropriate form under the
Securities Act, with respect to the securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the
date of the expiration of the Rights. The Company will also take
such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement
and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is
no longer in effect. In addition, if the Company shall determine
that a registration statement is required following the
Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration
statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not
be exercisable in any jurisdiction if the requisite qualification
in such jurisdiction shall not have been obtained, the exercise
thereof shall not be permitted under applicable law, or a
registration statement shall not have been declared effective.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all one
one-hundredths of a share of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that
it will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Rights Certificates and of any
certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Rights Certificates to
a Person other than, or the issuance or delivery of a number of
one one-hundredths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for a number of one one-
hundredths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that
of the registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each person
in whose name any certificate for a number of one one-hundredths
of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder
of record of such fractional shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Preferred
Stock (or Common Stock and/or other securities, as the case may
be) transfer books of the Company are closed, such Person shall
be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred
Stock (or Common Stock and/or other securities, as the case may
be) transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a stockholder
of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to vote,
to receive dividends, or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided
herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any
time after the date of this Agreement (A) declare a dividend
on the Preferred Stock payable in shares of Preferred Stock,
(B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination, or
reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be,
issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall
be entitled to receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books
of the Company were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification. If
an event occurs that would require an adjustment under both
this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 of this
Agreement, in the event:
(A) any Person shall at any time after
the Rights Dividend Declaration Date become an
Acquiring Person, unless the event causing such Person
to become an Acquiring Person (I) is a transaction set
forth in Section 13(a) hereof, or (II) is an
acquisition of shares of Common Stock and/or Voting
Securities pursuant to a tender offer or an exchange
offer for all outstanding shares of Common Stock and
other Voting Securities, if any, at a price and on
terms determined by at least a majority of the
Continuing Directors who are not representatives,
nominees, Affiliates or Associates of an Acquiring
Person, after receiving advice from one or more
investment banking firms, to be (x) at a price which is
fair to stockholders (taking into account all factors
which the Board of Directors deems relevant including,
without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and
(y) otherwise in the best interests of the Company and
its stockholders; or
(B) the Board of Directors of the
Company shall declare any Person to be an Adverse
Person, upon a determination that such Person, alone or
together with its Affiliates and Associates, has, at
any time after the Rights Dividend Declaration Date,
become the beneficial owner of Voting Securities
representing at least 4.9% of the Total Voting Power
(without regard to shares beneficially owned and
covered by a Schedule 13D on file on the date of this
Agreement) and a determination, after reasonable
inquiry and investigation, including consultation with
such persons as the Board of Directors shall deem
appropriate, that such beneficial ownership by such
Person is intended to cause the Company to repurchase
the Voting Securities beneficially owned by such Person
or to cause pressure on the Company to take action or
enter into a transaction or series of transactions
intended to provide such Person (and not stockholders
generally) with short-term financial gain under
circumstances where the Board of Directors determines
that the best long-term interests of the Company and
its stockholders would not be served by taking such
action or entering into such transaction or series of
transactions at that time; or
(C) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at any
time after the date of this Agreement, directly or
indirectly, (1) shall merge into the Company or
otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of
such merger or combination and the Voting Securities of
the Company shall remain outstanding and unchanged,
(2) shall, in one transaction or a series of
transactions, other than in connection with the
exercise of the Rights or the exercise or conversion of
securities exercisable or convertible into capital
stock of the Company or any of its Subsidiaries,
transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for
shares of Voting Securities, for shares of other equity
securities of the Company, or for securities
exercisable for or convertible into shares of equity
securities of the Company (Common Stock or otherwise)
or otherwise obtain from the Company, with or without
consideration, any additional shares of such equity
securities or securities exercisable for or convertible
into shares of such equity securities (other than
pursuant to a pro rata distribution to all holders of
Common Stock), (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer, or otherwise
acquire or dispose of, in one transaction or a series
of transactions, to, from, with, or of (as the case may
be) the Company or any of its Subsidiaries, assets on
terms and conditions less favorable to the Company than
the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, other
than pursuant to a transaction set forth in
Section 13(a) hereof, (4) shall receive any
compensation from the Company or any of the Company's
Subsidiaries other than compensation for services as a
director or for full-time employment as a regular
employee at rates in accordance with the Company's (or
its Subsidiaries') past practices, or (5) shall receive
the benefit, directly or indirectly (except
proportionately as a stockholder and except if
resulting from a requirement of law or governmental
regulation), of any loans, advances, guarantees,
pledges, or other financial assistance or any tax
credits or other tax advantage provided by the Company
or any of its Subsidiaries; or
(D) during such time as there is an
Acquiring Person, there shall be any reclassification
of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its
Subsidiaries, other than a transaction or transactions
to which the provisions of Section 13(a) apply (whether
or not with or into or otherwise involving an Acquiring
Person) which has the effect, directly or indirectly,
of increasing by more than 1% the proportionate share
of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries
which is directly or indirectly beneficially owned by
any Acquiring Person or any Associate or Affiliate of
any Acquiring Person;
then, promptly following the first occurrence of a
Section 11(a)(ii) Event, proper provision shall be made so
that each holder of a Right (except as provided below and in
Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in
lieu of a number of one one-hundredths of a share of
Preferred Stock, such number of shares of Common Stock of
the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, and
(y) dividing that product (which, following such first
occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this
Agreement) by 50% of the lowest closing price (as determined
pursuant to the second sentence of Section 11(d)(i) hereof)
per share of Common Stock on any Trading Day (as defined in
Section 11(d)(i) hereof) occurring within the twelve-month
period immediately preceding the date of such first
occurrence (such number of shares, the "Adjustment Shares").
(iii) In the event that (a) the number of
shares of Common Stock which are authorized by the Company's
Articles of Incorporation but not outstanding or reserved
for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of
the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), or (b) the quotient
(the "Quotient") obtained by dividing the Purchase Price by
the number of Adjustment Shares issuable upon exercise of a
Right is less than the then par value per share of the
Common Stock, the Company shall, to the extent permitted by
applicable law and regulation and subject to such
limitations as are necessary to prevent a default under any
agreement to which the Company is a party: (A) determine the
excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over
(2) the Purchase Price (such excess, the "Spread"), and
(B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities
of the Company (including, without limitation, shares, or
units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value
as shares of Common Stock (such shares of preferred stock,
"common stock equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a
nationally recognized investment banking firm selected by
the Board of Directors of the Company; provided, however, if
the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being referred to herein
as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the
Board of Directors of the Company shall determine in good
faith that it is likely that (a) sufficient additional
shares of Common Stock could be authorized for issuance upon
exercise in full of the Rights or (b) a reduction in the par
value per share of Common Stock to an amount that is equal
to or less than the Quotient could be authorized, the 30 day
period set forth above may be extended to the extent
necessary, but not more than 90 days after the
Section 11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization of such
additional shares or for the reduction of such par value, as
the case may be (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the
first and/or second sentences of this Section 11(a)(iii),
the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability
of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional
shares or reduction in par value and/or to decide the
appropriate form of distribution to be made pursuant to such
first sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value
of the Common Stock shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of
the Common Stock on the Section 11(a)(ii) Trigger Date and
the value of any "common stock equivalent" shall be deemed
to have the same value as the Common Stock on such date.
(b) In case the Company shall fix a record date
for the issuance of rights, options, or warrants to all holders
of Preferred Stock entitling them to subscribe for or purchase
(for a period expiring within 45 calendar days after such record
date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred Stock
("equivalent preferred stock")) or securities convertible into
Preferred Stock or equivalent preferred stock at a price per
share of Preferred Stock or per share of equivalent preferred
stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent preferred stock)
less than the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares
of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or equivalent
preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered)
would purchase at such current market price, and the denominator
of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional
shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by
delivery of consideration part or all of which may be in a form
other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock
owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed, and in the event that such rights or warrants are not
so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date
for a distribution to all holders of Preferred Stock (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly
cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date, less
the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent) of the
portion of the cash, assets, or evidences of indebtedness so to
be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of
which shall be such current market price (as determined pursuant
to Section 11(d) hereof) per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record
date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase
Price which would have been in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation
hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the "current market price" per
share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common
Stock for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii)
hereof, the "current market price" per share of Common Stock
on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the
10 consecutive Trading Days immediately following such date;
provided, however, that in the event that the current market
price per share of the Common Stock is determined during a
period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such
Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision,
combination, or reclassification of such Common Stock, and
the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or
reclassification shall not have occurred prior to the
commencement of the requisite 30 Trading Day or 10 Trading
Day period, as set forth above, then, and in each such case,
the "current market price" shall be properly adjusted to
take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction
reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if
the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common
Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") or such other system then in use, or, if
on any such date the shares of Common Stock are not quoted
by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. The
term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock
are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is
not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share
as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the "current market price" per share of Preferred
Stock shall be determined in the same manner as set forth
above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If
the current market price per share of Preferred Stock cannot
be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in
a manner described in clause (i) of this Section 11(d), the
"current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for such events as
stock splits, stock dividends, and recapitalizations with
respect to the Common Stock occurring after the date of this
Agreement) multiplied by the current market price per share
of the Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded,
"current market price" per share of the Preferred Stock
shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with
the Rights Agent and shall he conclusive for all purposes.
For all purposes of this Agreement, the "current market
price" of one one-hundredth of a share of Preferred Stock
shall be equal to the "current market price" of one share of
Preferred Stock divided by 100.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share of Common Stock or other share
or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later
than the earlier of (i) 3 years from the date of the transaction
which mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any
shares of capital stock other than Preferred Stock, thereafter
the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Sections 11(a), (b), (c), (e), (g),
(h), (i), (j), (k), and (m), and the provisions of Sections 7, 9,
10, 13, and 14 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a share of Preferred
Stock purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to
the nearest one-millionth) obtained by (i) multiplying (x) the
number of one one-hundredths of a share covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price
in effect immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of one one-
hundredths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the
number of one one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights
(calculated to the nearest one-ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be
issued, executed, and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the number of one one-hundredths of a share
of Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredths of a share which were
expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated
value, if any, of the number of one one-hundredths of a share of
Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of one
one-hundredths of a share of Preferred Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record
date the number of one one-hundredths of a share of Preferred
Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the number of one
one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that in their good faith judgment the Board of Directors
of the Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at
less than the current market price, (iii) issuance wholly for
cash of shares of Preferred Stock or securities which by their
terms are convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends, or (v) issuance of rights,
options, or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.
(n) The Company covenants and agrees that it
shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or a series
of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o)
hereof), if (x) at the time of or immediately after such
consolidation, merger, or sale there are any rights, warrants,
or, other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with, or immediately after such consolidation,
merger, or sale, the stockholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(o) The Company covenants and agrees that, after
the Distribution Date, it will not, except as permitted by
Section 27 hereof, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or
(iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with
each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number
of Rights associated with each share of Common Stock immediately
prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of
such event.
(q) The failure by the Board of Directors to
declare a Person to be an Adverse Person following such Person
becoming the Beneficial Owner of Voting Securities representing
4.9% or more of the Total Voting Power shall not imply that such
Person is not an Adverse Person or limit the Board of Directors'
right at any time in the future to declare such Person to be an
Adverse Person.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Section 11 and Section 13 hereof, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of
such certificate, and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained.
Section of Assets or Earning Power.
(a) In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of
Voting Securities shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other
than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof);
then, and in each such case (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of validly
authorized and issued, fully paid, nonassessable, and freely
tradeable shares of Common Stock of the Principal Party (as such
term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal, or other adverse claims,
as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of one one-hundredths
of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such
one one-hundredths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such
first occurrence), and dividing that product (which, following
the first occurrence of a Section 13 Event, shall be referred to
as the "Purchase Price" for each Right and for all purposes of
this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the
Common Stock of such Principal Party on the date of consummation
of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof
shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall
take such steps (including, but not limited to, the reservation
of a sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to its shares of Common Stock thereafter deliverable
upon the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following the
first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean (i) in the case
of any transaction described in clause (x) or (y) of the first
sentence of Section 23(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are
converted in such merger or consolidation and if no securities
are so issued, the Person that is the other party to such merger
or consolidation and (ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a),
the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any such
case, (1) if the Common Stock of such Person is not at such time
and has not been continuously over the preceding 12 month period
registered under Section 12 of the Exchange Act, and such Person
is a direct or indirect Subsidiary of another Person the Common
Stock of which is and has been so registered, "Principal Party"
shall refer to such other Person; and (2) in case such Person is
a Subsidiary, directly or indirectly, of more than one Person,
the Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, sale, or transfer unless the Principal
Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration
statement under the Securities Act, with respect to the
Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts
to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
In the event that a Section 13 Event shall occur at any time
after the occurrence of a Section 11(a)(ii) Event, the Rights
which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to
the contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a) if
(i) such transaction is consummated with a Person or Persons (or
a wholly-owned subsidiary of any such Person or Persons) who
acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock at a
price and on terms determined to be in accordance with
Section 11(a)(ii)(A) hereof, (ii) the price per share of Common
Stock offered in such transaction is not less than the price per
share of Common Stock paid to all holders of shares of Common
Stock whose shares were purchased pursuant to such tender offer
or exchange offer, and (iii) the form of consideration being
offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractional Rights, except prior to the Distribution Date as
provided in Section 11(p) hereof, or to distribute Rights
Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right.
For purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to Securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue
fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-hundredth of a share of
Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock). In lieu of fractional
shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock, the Company may pay
to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one one-
hundredth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth of a
share of Preferred Stock shall be one one-hundredth of the
closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering
Event, the Company shall not be required to issue fractional
shares of Common Stock upon exercise of the Rights or to
distribute certificates that evidence fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company
may pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of
one share of Common Stock. For purposes of this Section 14(c),
the current market value of one share of Common Stock shall be
the closing price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of
the Rights expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except
as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered
holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock);
and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall
be entitled to specific performance of the obligations hereunder
and injunctive relief against actual or threatened violations of
the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every holder
of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
Common Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office or offices of
the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under
this Agreement by reason of any preliminary or permanent
injunction or other order, decree, or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory, or
administrative agency or commission, or any statute, rule,
regulation, or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company
must use its best efforts to have any such order, decree, or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends, or be deemed for any
purpose the holder of the number of one one-hundredths of a share
of Preferred Stock or any other securities of the Company which
may at any time be issuable upon the exercise of the Rights
represented thereby, nor shall anything contained herein or in
any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without 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 Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it
to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent.
or any successor Rights Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any
of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name
of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the
opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person or Adverse Person and the
determination of "current market price") be proved or established
by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of
the Board, the President, any Vice Chairman or Executive Vice
President, the Chief Financial Officer, 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 Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder
only for its own gross negligence, bad faith, or willful
misconduct.
(d) The Rights Agent shall not be liable for or
by reason of any of the statements of fact or recitals contained
in this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution and
delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of
the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any shares of Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when
so issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge, and deliver or cause to be performed,
executed, acknowledged, and delivered all such further and other
acts, instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance
of its duties hereunder from the Chairman of the Board, the
President, any Vice Chairman or Executive Vice President, the
Chief Financial Officer, or the Secretary of the Company, and to
apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with
instructions of any such officer.
(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 Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect, or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect, or misconduct; provided, however,
reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights if there shall
be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been
completed or indicates an affirmative response to clause 1 and/or
2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon 30 days' notice in writing
mailed to the Company, and to each transfer agent of the Common
Stock and Preferred Stock, by registered or certified mail, and
to the holders, if any, of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 10 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Stock and Preferred Stock,
by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of 10 days after giving notice of such removal, or
within a period of 30 days after it has been notified in writing
of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), as the case may be,
then any registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any
state of the United States so long as such corporation is
authorized under such laws to exercise 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 or
the performance of which is guaranteed by a corporation with a
combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties, and responsibilities as if it had
been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of, the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number, kind, or class of
shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date
and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, granted or awarded on or prior
to the Distribution Date, or upon the exercise, conversion, or
exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would
be issued, and (ii) no such Rights Certificate shall be issued
if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at
its option, at any time prior to the earlier of (i) the close of
business on the tenth Business Day following notice to the Board
of Directors of the occurrence of the Stock Acquisition Date (or
such later date as may be determined by a majority of the
Continuing Directors; provided, however, that such date shall not
be extended at such time as the Rights are not then redeemable),
or (ii) the Final Expiration Date, redeem all but not less than
all the then outstanding Rights at a redemption price of $.001
per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend, or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); provided,
however, that if, following the occurrence of the Stock
Acquisition Date and following the expiration of the right of
redemption hereunder but prior to any Triggering Event, (i) a
Person who is an Acquiring Person shall have transferred or
otherwise disposed of a number of shares of Common Stock in one
transaction or series of transactions, not directly or indirectly
involving the Company or any of its Subsidiaries, such that such
Person is thereafter a Beneficial Owner of 10% or less of the
outstanding shares of Common Stock or Voting Securities
representing 10% or less of Total Voting Power, and (ii) there
are no other Persons, immediately following the occurrence of the
event described in clause (i), who are Acquiring Persons, then
the right of redemption shall be reinstated and thereafter be
subject to the provisions of this Section 23. Notwithstanding
the foregoing, the Board of Directors may not redeem any Rights
following a determination pursuant to Section 11(a)(ii)(B) that
any Person is an Adverse Person. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section 11(a)(ii)
Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the
"current market price", as defined in Section 11(d)(i) hereof, of
the Common Stock at the time of redemption), or any other form of
consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights,
and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. The Company shall
promptly give public notice of such redemption and notice to the
Rights Agent; provided, however, the failure to give, or any
defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of
Directors ordering the redemption of the Rights, the Company
shall mail a notice to all holders of the then outstanding Rights
at each holder's last address as it appears upon the registry
books of the Rights Agent or, prior to the Distribution Date, on
the registry books of the transfer agent for the Common Stock.
Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at
its option, at any time and from time to time after the first
occurrence of a Section 11(a)(ii) Event, exchange all or part of
the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for shares of Common Stock or common
stock equivalents (as defined in Section 11(a)(iii) hereof), or
any combination thereof, at an exchange ratio of one share of
Common Stock, or such number of common stock equivalents or units
representing fractions thereof as would be deemed to have the
same value as one share of Common Stock, per Right, appropriately
adjusted to reflect any stock split, stock dividend, or similar
transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of
Common Stock and/or common stock equivalents equal to the number
of such Rights held by such holder multiplied by the Exchange
Ratio. 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 of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by
which the exchange of the shares of Common Stock and/or common
stock equivalents for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 7(e) hereof) held by each
holder of Rights.
(c) In the event that the number of shares of
Common Stock which are authorized by the Company's Articles of
Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not
sufficient to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company may, at its option,
take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue
fractional shares of Common Stock or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of
such fractional shares of Common Stock, the Company shall pay to
the registered holders of Rights 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 value of a whole
share of Common Stock. For purposes of this Section 24, the
value of a whole share of Common Stock shall be the closing price
(as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24, and the value of
any common stock equivalent shall be deemed to have the same
value as the Common Stock on such date.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any
time after the Distribution Date, (i) to pay any dividend payable
in stock of any class to the holders of Preferred Stock or to
make any other distribution to the holders of Preferred Stock
(other than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of
stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than
a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related
transactions of more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution, or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i)
or (ii) above at least 20 days prior to the record date for
determining holders of the shares of Preferred Stock for purposes
of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall
occur, then, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights
under Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Preferred Stock shall be deemed thereafter
to refer to Common Stock and/or, if appropriate, other
securities.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Sovereign Bancorp, Inc.
1130 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Lawrence M. Thompson, Jr.
Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
Harris Trust Company of New York
77 Water Street, 9th Floor
New York, NY 10005
Attention: Mr. Wilbert Myles,
Asst. Vice President
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of
any Rights Certificate (or, if prior to the Distribution Date, to
the holder of certificates representing shares of Common Stock)
shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this
Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this
Section 27, the Company and, the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent
with any other provisions herein, or (iii) to change or
supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights
Certificates. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or
amendment.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors; No Waiver. For all purposes of this Agreement, any
calculation of the number of shares of Voting Securities
outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares
of Voting Securities of which any Person is the Beneficial Owner,
shall be made in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect on the date hereof. The Board of
Directors of the Company (with, where specifically provided for
herein, the concurrence of the Continuing Directors) shall have
the exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to the
Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors) or to the Company, or as
may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including (i) a determination
as to the identity of the Affiliates and Associates of any
person, (ii) a determination as to the extent of the Beneficial
Ownership of any Person, and (iii) a determination to redeem or
not redeem the Rights or to amend the Agreement). All such
actions, calculations, interpretations, and determinations
(including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board
(with, where specifically provided for herein, the concurrence of
the Continuing Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) not subject
the Board (or the Continuing Directors) to any liability to the
holders of the Rights. Nothing contained herein shall be deemed
to waive or abrogate the provisions of any statute, regulation or
other provision of law applicable to the Company.
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent, and the registered holders of
the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock) any legal or equitable
right, remedy, or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent, and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
Section 31. Severability. If any term, provision,
covenant, or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants,
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid,
void, or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until
the close of business on the tenth day following the date of such
determination by the Board of Directors. Without limiting the
foregoing, if any provision requiring that a determination be
made by less than the entire Board is held by a court of
competent jurisdiction or other authority to be invalid, void, or
unenforceable, such determination shall then be made by the
entire Board.
Section 32. Governing Law. This Agreement, each Right
and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the Commonwealth of
Pennsylvania and for all purposes shall be governed by and
construed in accordance with the laws of the Commonwealth
applicable to contracts made and to be performed entirely within
the Commonwealth.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
SOVEREIGN BANCORP, INC.
By_________________________________
Paul B. Wieand, President
Attest:____________________________
Lawrence M. Thompson, Jr.,
Secretary
HARRIS TRUST COMPANY OF NEW YORK
By_________________________________
(Vice) President
Attest:____________________________
(Assistant) Secretary
<PAGE>
Exhibit A
TERMS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
SOVEREIGN BANCORP, INC.
RESOLVED that, pursuant to the authority vested in the
Board of Directors of the Corporation by the Articles of
Incorporation, the Board of Directors does hereby provide for the
issue of a series of Preferred Stock, without par value, of the
Corporation, to be designated "Series A Junior Participating
Preferred Stock" (hereinafter referred to as the "Series A
Preferred Stock" or "this Series"), initially consisting of
25,000 shares, and to the extent that the designations, powers,
preferences and relative and other special rights and the
qualifications, limitations and restrictions of the Series A
Preferred Stock are not stated and expressed in the Articles of
Incorporation, does hereby fix and herein state and express such
designations, powers, preferences and relative and other special
rights and the qualifications, limitations and restrictions
thereof, as follows (all terms used herein which are defined in
the Articles of Incorporation shall be deemed to have the
meanings provided therein):
1. Designation and Amount. The designation of the series
of Preferred Stock created by this resolution shall be Series A
Junior Participating Preferred Stock and the number of shares
constituting such Series is Twenty-Five Thousand (25,000). Such
number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any
outstanding securities of the Corporation convertible into shares
of this Series.
2. Dividends.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock
ranking prior and superior to the shares of this Series with
respect to dividends, the holders of shares of this Series
shall be entitled to receive, when and as declared by the
Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on April 1,
July 1, October 1, and January 1 of each year (each such
date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction
of a share of this Series, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $10.00 or
(b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in Common Stock
or a subdivision of the outstanding Common Stock (by
reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or
fraction of a share of this Series. In the event the
Company shall at any time after September 19, 1989 (the
"Rights Declaration Date") declare any dividend on the
Common Stock payable in Common Stock, subdivide the
outstanding Common Stock, or combine the outstanding Common
Stock into a smaller number of shares, then in each such
case the amount to which holders of shares of this Series
were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which
is the number of Common Stock outstanding immediately after
such event and the denominator of which is the number of
Common Stock that were outstanding immediately prior to such
event.
(B) The Company shall declare a dividend or
distribution on the Series A Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares
a dividend or distribution on the Common Stock (other than a
dividend payable in Common Stock); provided that, in the
event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10.00 per share on
Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares of this Series, unless the date of
issue of such shares is prior to the record date for the
first Quarterly Dividend Payment Date in which case
dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of
this Series entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of this Series in an amount
less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of this
Series entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no
more than days prior to the date fixed for the payment
thereof.
3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred
Stock shall entitle the holder thereof to 100 votes on all
matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend
in Common Stock) into a greater or lesser number of Common
Stock, then in each such case the number of votes per share
to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of
which is the number of Common Stock outstanding immediately
after such event and the denominator of which is the number
of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein, in any other
resolutions creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A
Preferred Stock and the holders of Common Stock and any
other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise
provided by law, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking
any corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A 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 A Preferred Stock
outstanding shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding
up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock,
or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend
rates and other relative rights and preferences of the
respective series and classes, shall determine in good
faith will 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.
5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and cancelled promptly after
the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred
Stock subject to the conditions and restrictions on issuance set
forth herein, in the Articles of Incorporation, or in any other
resolutions creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up. Upon
any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $100.00 per share, plus an
amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per
share to holders of Common Stock, or (B) to the holders of shares
of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series
A Preferred Stock and all 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. In
the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
Common Stock (by reclassification or otherwise than by payment of
a dividend in Common Stock) into a greater or lesser number of
Common Stock, then in each such case the aggregate amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (A)
of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
Common Stock outstanding immediately after such event and the
denominator of which is the number of Common Stock that were
outstanding immediately prior to such event.
7. Consolidation, Merger, Etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the Common Shares are exchanged for or
changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred
Stock shall at the same time be similarly exchanged or changed
into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of
stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each Common
Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock
payable in Common Stock, or effect a subdivision or combination
or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of a dividend in
Common Stock) into a greater or lesser number of Common Stock,
then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of
Common Stock outstanding immediately after such event and the
denominator of which is the number of Common Stock that were
outstanding immediately prior to such event.
8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of
assets, junior to all series of any other class of the
Corporation's Preferred Stock.
10. Amendment. The Articles of Incorporation of the
Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock,
voting together as a single class.
<PAGE>
Exhibit B
[Form of Rights Certificate)
Certificate No. R- ____________ Rights
NOT EXERCISABLE AFTER ____________, 19__, OR EARLIER IF REDEEMED
OR EXCHANGED 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. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
OR ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
(ACQUIRING) (ADVERSE) PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
(ACQUIRING) (ADVERSE) PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID UNDER THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]
Rights Certificate
SOVEREIGN 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 September 19, 1989 (the "Rights
Agreement"), between Sovereign Bancorp, Inc., a Pennsylvania
corporation (the "Company"), and Harris Trust Company of New
York, a New York corporation (the "Rights Agent ), to purchase
from the Company at any time prior to 5:00 P.M. (New York City
time) on September 18, 1999, at the office or offices of the
Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-hundredth of a fully paid, nonassessable
share of Series A Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of $80.00
per one one-hundredth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of
October 2, 1989, based on the Preferred Stock as constituted at
such date. The Company reserves the right to require prior to
the occurrence of a Triggering Event (as defined in the Rights
Agreement) that a number of Rights be exercised so that only
whole shares of Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as
defined in the Rights Agreement), if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring
Person, an Adverse Person, or an Affiliate or Associate of any
such Person (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person, Adverse Person,
Associate, or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a person who,
after such transfer, became an Acquiring Person, an Adverse
Person, or an Affiliate or Associate of any such Person, such
Rights shall become null and void and no holder hereof shall have
any right with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price
and the number and kind of shares of Preferred Stock or other
securities which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification
and adjustment upon the happening of certain events, including a
Triggering Event.
This Rights Certificate is subject to all of the terms,
provisions, and conditions of the Rights Agreement, which terms,
provisions, and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties, and immunities
hereunder of the Rights Agent, the Company, and the holders of
the Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned
office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices
of the Rights Agent designated for such purpose, may be exchanged
for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase
a like aggregate number of one one-hundredths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may (unless the Board of
Directors shall have made a determination pursuant to
Section 11(a)(ii)(B) of the Rights Agreement that a Person is an
Adverse Person) be redeemed by the Company at its option at a
redemption price of $.001 per Right at any time prior to the
earlier of the close of business on (a) the tenth business day
following notice to the Board of Directors of the occurrence of
the Stock Acquisition Date (as such time period may be extended
pursuant to the Rights Agreement), and (b) the Final Expiration
Date.
No fractional shares of Preferred Stock will be issued
upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one one-hundredth
of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of shares of Preferred Stock 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 shareholder of the Company or any right to
vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, to receive notice of
meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned
by the Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal.
Dated as of ____________, 19__
SOVEREIGN BANCORP, INC.
By________________________________
Title:
Attest:___________________________
Secretary
Countersigned:
___________________________
By_________________________
Authorized Signature
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ______________________________________ hereby
sells, assigns and transfers unto __________________________
________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ____________________ Attorney, to transfer the within
Rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated:___________________, 19__
___________________________________
Signature
Signature Guaranteed: _____________________________
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
<PAGE>
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person, an Adverse Person, or an Affiliate or
Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person, an Adverse Person, or an
Affiliate or Associate of any such Person.
Dated: ____________, 19__ _________________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: SOVEREIGN BANCORP, INC.:
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock issuable upon the exercise
of the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________
(Please print name and address)
________________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
_________________________________________________________________
Dated: ________________, 19__
__________________________________
Signature
Signature Guaranteed: __________________________
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
<PAGE>
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are [ ] are not being exercised by or on behalf of a Person
who is or was an Acquiring Person, an Adverse Person or an
Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became
an Acquiring Person, an Adverse Person or an Affiliate or
Associate of any such Person.
Dated: _____________, 19__ ______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On September 19, 1989, the Board of Directors of
Sovereign Bancorp, Inc. (the "Company") declared a dividend
distribution of one Right for each outstanding share of the
Company's Common Stock, par value $1.00 per share (the "Common
Stock"), to shareholders of record at the close of business on
October 2, 1989. Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series
A Junior Participating Preferred Stock, without par value (the
"Preferred Stock"), at a Purchase Price of $80.00, subject to
adjustment. The description and terms of the Rights are set
forth in a Rights Agreement (the "Rights Agreement") between the
Company and Harris Trust Company of New York, as Rights Agent.
Initially, the Rights will be evidenced by Common Stock
certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. The Rights
will separate from the Common Stock and a Distribution Date will
occur upon the earlier of (i) 10 business days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, 19.9% or more (or 29.9% or more in the case of
any natural person, but not any of such natural person's
transferees, including heirs, devisees and legatees, who has
filed a Schedule 13D under the Exchange Act indicating beneficial
ownership of 5% or more of the Common Stock on September 19,
1989) of the outstanding shares of Common Stock or voting
securities representing 19.9% or more (or 29.9% or more in the
case of any natural person, but not any of such natural person's
transferees, including heirs, devisees and legatees, who has
filed a Schedule 13D under the Exchange Act indicating beneficial
ownership of 5% or more of the Common Stock on September 19,
1989) of the total voting power of the Company (the "Stock
Acquisition Date"), (ii) 10 business days (or such later date as
the Board of Directors shall determine) following the
commencement of a tender offer or exchange offer that would
result in a person or group acquiring 19.9% (or 29.9% or more in
the case of any natural person, but not any of such natural
person's transferees, including heirs, devisees and legatees, who
has filed a Schedule 13D under the Exchange Act indicating
beneficial ownership of 5% or more of the Common Stock on
September 19, 1989) or more of such outstanding shares of Common
Stock or total voting power, or (iii) 10 business days following
the determination by the Board of Directors, after reasonable
inquiry and investigation, including consultation with such
persons as such directors shall deem appropriate, that, with
respect to any person who has, alone or together with his
affiliates or associates, acquired 4.9% or more of such
outstanding shares of Common Stock or total voting power of the
Company (without regard to any shares beneficially owned and
covered by a Schedule 13D on file on September 19, 1989), such
beneficial ownership by such person is intended to cause the
Company to repurchase the voting securities beneficially owned by
such person or to cause pressure on the Company to take action or
enter into a transaction or series of transactions intended to
provide such person with short-term financial gain under
circumstances where the Board determines that the best long-term
interests of the Company and its shareholders would not be served
by taking such action or entering into such transaction or
transactions at that time (any such person being referred to
herein and in the Rights Agreement as an "Adverse Person").
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates,
(ii) new Common Stock certificates issued after October 2, 1989,
will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any
certificate for Common Stock outstanding will also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on September 18,
1999, unless earlier redeemed as described below. Pursuant to
the Rights Agreement, the Company reserves the right to require
prior to the occurrence of a Triggering Event (as defined below)
that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock will be
issued.
As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date
and, thereafter, the separate Rights Certificates alone will
represent the Rights. Except as otherwise provided in the Rights
Agreement or determined by the Board of Directors, only shares of
Common Stock issued prior to the Distribution Date will be issued
with Rights.
In the event that (i) a person becomes an Acquiring
Person (except pursuant to an offer for all outstanding shares of
the Company's voting securities which at least a majority of the
Continuing Directors determines to be fair to and otherwise in
the best interests of the Company and its shareholders), (ii) an
Acquiring Person engages in one or more "self-dealing"
transactions as defined in the Rights Agreement, (iii) the
Company is the surviving corporation in a merger with an
Acquiring Person, (iv) during such time that there exists an
Acquiring Person, a recapitalization or reverse stock split
occurs which results in such Acquiring Person's proportionate
ownership interest being increased by more than 1%, or (v) any
person is determined to be an Adverse Person (any of the
foregoing, a "Flip-in Event"), each holder of a Right will
thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property, or other
securities of the Company) having a value (based on the lowest
closing price of the Common Stock during the twelve-month period
preceding the Flip-in Event) equal to two times the exercise
price of the Right. Notwithstanding the foregoing, following the
occurrence of a Flip-in Event, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or an Adverse Person
(or by certain related parties) will be null and void. Rights
are not exercisable following the occurrence of a Flip-in Event,
however, until such time as the Rights are no longer redeemable
by the Company as set forth below.
For example, at an exercise price of $80.00 per Right,
each Right not owned by an Acquiring Person or an Adverse Person
(or by certain related parties) following a Flip-in Event would
entitle its holder to purchase $160.00 worth of Common Stock
based on the lowest closing price of the Common Stock during the
twelve-month period preceding the Flip-in Event (or other
consideration, as noted above) for $80.00. Assuming that the
lowest closing price of the Common Stock during such period was
$40.00, the holder of each valid Right would be entitled to
purchase four shares of Common Stock for $80.00.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation (other than a merger which follows
an offer for all outstanding voting securities of the Company,
which at least a majority of the Continuing Directors determines
to be fair to and otherwise in the best interests of the Company
and its shareholders, and the merger price is not less than, and
the form of consideration is the same as, that paid in the tender
or exchange offer) or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two
times the exercise price of the Right. The events set forth in
this paragraph and in the second preceding paragraph are referred
to as "Triggering Events."
The Purchase Price payable and the amount of Preferred
Stock or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination, or reclassification of, the Preferred
Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of
the Preferred Stock, or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at
least 1% of the Purchase Price. No fractional shares of
Preferred Stock will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of
exercise.
At any time until ten business days following notice to
the Board of Directors of the occurrence of the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in
part, at a price of $.001 per Right (payable in cash, Common
Stock other consideration deemed appropriate as determined by the
Board of Directors). At any time prior to the date the Rights
would otherwise become nonredeemable, a majority of the
Continuing Directors may extend the period for redemption. The
Company's right of redemption may be reinstated if an Acquiring
Person reduces such Person's beneficial ownership to 10% or less
of the outstanding shares of Common Stock or total voting power
in a transaction or series of transactions not involving the
Company and there is then no other Acquiring Person. Immediately
upon the action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.001 redemption price.
Notwithstanding the foregoing, the Board of Directors may not
redeem the Rights following a determination that any person is an
Adverse Person.
The term "Continuing Directors" means any member of the
Board of Directors of the Company who was a member of the Board
prior to the date of the Rights Agreement, and any person who is
subsequently elected to the Board if such person is recommended
or approved by a majority of the Continuing Directors, but shall
not include an Acquiring Person, an Adverse Person, or an
affiliate or associate of an Acquiring Person or Adverse Person,
or any representative of the foregoing entities.
At any time after the occurrence of a Flip-in Event,
the Board of Directors may exchange the Rights (other than Rights
owned by an Acquiring Person or an Adverse person or an affiliate
or an associate of any such person, which have become void), in
whole or in part, at an exchange ratio of one share of Common
Stock, and/or other equity securities deemed to have the
equivalent value, per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for Common Stock (or
other consideration) of the Company or for common stock of the
acquiring company as set forth above, or are exchanged as
provided in the preceding paragraph.
Other than those provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person or Adverse Person or an
affiliate or associate of any such person), or to shorten or
lengthen any time period under the Rights Agreement; however, no
amendment to adjust the time period governing redemption shall be
made at such time as the Rights are not redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated October 2, 1989. A copy
of the Rights Agreement is available free of charge from the
Rights Agent. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein
by reference.
