As filed with the Securities and Exchange Commission on August 5, 1997.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
__________________
COVEST BANCSHARES, INC.
(Exact name of registrant as specified in its Charter)
__________________
Delaware 36-3820609
(State of incorporation or organization) (I.R.S. Employer Identification
No.)
__________________
749 Lee Street
Des Plaines, Illinois 60016
(Address, including zip code, of principal executive offices)
__________________
Securities to be registered pursuant to Section 12(b) of the Act:
None
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights
(Title of Class)
Item 1. Description of Registrant's Securities to be Registered.
On July 28, 1997, the Board of Directors of CoVest Bancshares, Inc,
(the "Company") declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of common stock, par value $.01 per
share, of the Company (the "Common Stock"). The dividend of the Rights is
distributable on August 25, 1997, to the shareholders of record as of
August 11, 1997 (the "Record Date"). Each Right entitles the registered
holder thereof, under certain limited circumstances, to purchase from the
Company one one-thousandth of a share of Series A Junior Participating
Preferred Stock, no par value, of the Company (the "Preferred Stock") at a
price of $65.00 per one one-thousandth of a share of Preferred Stock
(the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement dated as of July 28, 1997,
as the same may be amended from time to time (the "Rights Agreement"),
between the Company and Harris Trust and Savings Bank, as Rights Agent
(the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (with certain
exceptions, an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock or (ii) 10 business
days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a
person or group of 15% or more of the outstanding shares of Common
Stock (the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock
certificate together with a copy of this Summary of Rights.
The Rights Agreement provides that, until the Distribution Date
(or earlier expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date
(or earlier expiration of the Rights), new Common Stock certificates
issued after the Record Date upon transfer or new issuances of Common Stock
will contain a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier expiration of the Rights), the
surrender for transfer of any certificates for shares of Common Stock
outstanding as of the Record Date, even without such notation or a copy of
this Summary of Rights, will also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed
to holders of record of the Common Stock as of the close of business
on the Distribution Date and such separate Right Certificates alone
will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on July 28, 2007 (the "Final Expiration Date"), unless the
Final Expiration Date is advanced or extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described
below. The Purchase Price payable and the number of shares of Preferred
Stock or other securities or property issuable,if the Rights become
exercisable and they are properly exercised, 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) upon the grant to holders of the Preferred Stock of certain
rights or warrants to subscribe for or purchase Preferred Stock
at a price, or securities convertible into Preferred Stock with a
conversion price, less than the then-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
periodic cash dividends or dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights is subject to adjustment in the event
of a stock dividend on the Common Stock payable in shares of Common Stock
or subdivisions, consolidations or combinations of the Common Stock
occurring, in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights will not
be redeemable. Each one one-thousandth of a share of Preferred Stock
will be entitled, when, as and if declared, to a minimum preferential
quarterly dividend payment of $.01 per one one-thousandth of a share but
will be entitled to an aggregate dividend equal to the dividend declared
per share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preferred Stock will be
entitled to a minimum preferential payment of $1.00 per one one-thousandth
of a share (plus any accrued but unpaid dividends) but will be entitled to
an aggregate payment equal to the payment made per share of Common Stock.
Each one one-thousandth of a share of Preferred Stock will have one vote,
voting together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which outstanding shares of
Common Stock are converted or exchanged, each share of Preferred Stock will
be entitled to receive an amount equal to the amount received per share of
Common Stock. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right (if and when it
becomes excerciseable and is properly exercised) should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become
void), will thereafter have the right to receive upon exercise of a
Right that number of shares of Common Stock having a market value of two
times the exercise price of the Right.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power
are sold, proper provisions will be made so that each holder of a Right
(other than Rights beneficially owned by an Acquiring Person
which will have become void) will thereafter have the right to receive
upon the exercise of a Right that number of shares of common stock of
the person with whom the Company has engaged in the foregoing
transaction (or its parent) that at the time of such transaction have a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the earlier of one of the events described in the previous
paragraph or the acquisition by such Acquiring Person of 50% or more of
the outstanding shares of Common Stock, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such
Acquiring Person which will have become void), in whole or in part, for
shares of Common Stock or Preferred Stock (or a series of the Company's
preferred stock having equivalent rights, preferences and privileges),
at an exchange ratio of one share of Common Stock, or a fractional share
of Preferred Stock (or other preferred stock) equivalent in value thereto,
per Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price. No fractional shares of Preferred Stock or Common
Stock will be issued (other than fractions of Preferred Stock which are
integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary
receipts), and in lieu thereof an adjustment in cash will be made based on
the current market price of the Preferred Stock or the Common Stock.
At any time prior to the time an Acquiring Person becomes such, the Board
of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the
Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the
Redemption Price.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights Agreement in any
manner. After the Rights are no longer redeemable, the Company may,
except with respect to the redemption price, amend the Rights Agreement
in any manner that does not adversely affect the interests of
holders of the Rights.
Until a Right becomes exerciseable and is properly exercised or exchanged,
the holder thereof, as the holder of a Right, will have no rights as a
shareholder of the Company, including, without limitation, no right to
vote or to receive dividends.
This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement
attached hereto as Exhibit 1, as the same may be amended from time to time.
Item 2. Exhibits
Exhibit
Number
Description of Exhibit
99.1
Form of Rights Agreement between CoVest Bancshares, Inc. and Harris Trust
and Savings Bank, as Rights Agent, dated as of July 28, 1997
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.
August 5, 1997 COVEST BANCSHARES, INC.
(Registrant)
By: \s\ Larry G. Gillie
Larry G. Gillie
President
COVEST BANCSHARES, INC.
and
HARRIS TRUST AND SAVING BANK, as Rights Agent
RIGHTS AGREEMENT
Dated as of July 28, 1997
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 6
Section 3. Issuance of Right Certificates 6
Section 4. Form of Right Certificates 8
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates 9
Section 7. Exercise of Rights, Purchase Price;
Expiration Date of Rights 9
Section 8. Cancellation and Destruction of Right
Certificates 11
Section 9. Availability of Shares of Preferred Stock 11
Section 10. Preferred Stock Record Date 12
Section 11. Adjustment of Purchase Price, Number of
Shares and Number of Rights 13
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares 21
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power 21
Section 14. Fractional Rights and Fractional Shares 25
Section 15. Rights of Action 26
Section 16. Agreement of Right Holders 26
Section 17. Right Certificate Holder Not Deemed a
Stockholder 27
Section 18. Concerning the Rights Agent 27
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 28
Section 20. Duties of Rights Agent 28
Section 21. Change of Rights Agent 31
Section 22. Issuance of New Right Certificates 32
Section 23. Redemption 32
Section 24. Exchange 33
Section 25. Notice of Certain Events 34
Section 26. Notices 35
Section 27. Supplements and Amendments 35
Section 28. Successors 36
Section 29. Benefits of this Agreement 36
Section 30. Determinations and Actions by the
Board of Directors 36
Section 31. Severability 36
Section 32. Governing Law 37
Section 33. Counterparts 37
Section 34. Descriptive Headings 37
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT, dated as of July 28, 1997 (this
"Agreement"), is between COVEST BANCSHARES, INC., a Delaware corporation
(the "Company"), and HARRIS TRUST AND SAVINGS BANK, an Illinois bank, as
Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared
a dividend of one preferred share purchase right (a "Right") for each share
of Common Stock (as hereinafter defined) of the Company outstanding as of
the Close of Business (as defined below) on August 11, 1997 (the "Record
Date"), with each Right representing the right to purchase one one-
thousandth (subject to adjustment) of a share of Preferred Stock (as
hereinafter defined), upon the terms and subject to the conditions herein
set forth, and has further authorized and directed the issuance of one Right
(subject to adjustment as provided herein) with respect to each share of
Common Stock that shall become outstanding between the Record Date and the
earlier of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined); provided, however, that Rights may be issued with
respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Expiration Date in accordance with
Section 22.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meaning indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner (as such
term is hereinafter defined) of 15% or more of the shares of Common Stock
then outstanding, but shall not include an Exempt Person (as such term is
hereinafter defined); provided, however, that (i) if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be
an "Acquiring Person" became such inadvertently (including, without
limitation, because (A) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person to be an
"Acquiring Person" or (B) such Person was aware of the extent of its
Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and without
any intention of changing or influencing control of the Company, and if such
Person as promptly as practicable divested or divests itself of Beneficial
Ownership of a sufficient number of shares of Common Stock so that such
Person would no longer be an "Acquiring Person," then such Person shall not
be deemed to be or to have become an "Acquiring Person" for any purposes of
this Agreement; (ii) if, as of the date hereof, any Person is the Beneficial
Owner of 15% or more of the shares of Common Stock outstanding, such Person
shall not be or become an "Acquiring Person" unless and until such time as
such Person shall become the Beneficial Owner of additional shares of Common
Stock (other than pursuant to a dividend or distribution paid or made by the
Company on the outstanding Common Stock in shares of Common Stock or
pursuant to a split or subdivision of the outstanding Common Stock), unless,
upon becoming the Beneficial Owner of such additional shares of Common
Stock, such Person is not then the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding; and (iii) no Person shall become an
"Acquiring Person" as the result of an acquisition of shares of Common Stock
by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares of Common Stock beneficially
owned by such Person to 15% or more of the shares of Common Stock then
outstanding, provided, however, that if a Person shall become the Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding by
reason of such share acquisitions by the Company and shall thereafter become
the Beneficial Owner of any additional shares of Common Stock (other than
pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Stock in shares of Common Stock or pursuant to a split or
subdivision of the outstanding Common Stock), then such Person shall be
deemed to be an "Acquiring Person" unless upon becoming the Beneficial Owner
of such additional shares of Common Stock such Person does not beneficially
own 15% or more of the shares of Common Stock then outstanding. For all
purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date hereof.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, shall be
deemed to have "Beneficial Ownership" of and shall be deemed to
"beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates is deemed to beneficially own, directly or indirectly, within
the meaning of Rule l3d-3 of the General Rules and Regulations under the
Exchange Act as in effect on the date hereof;
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a
bona fide public offering of securities), 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, (x) securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase, (y) securities which such Person has a right to acquire upon the
exercise of Rights at any time prior to the time that any Person becomes an
Acquiring Person or (z) securities issuable upon the exercise of Rights from
and after the time that any Person becomes an Acquiring Person if such
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 ("Original Rights") or pursuant to Section 11(i) or
Section 11(n) with respect to an adjustment to Original Rights; or (B) the
right to vote pursuant to any agreement, arrangement or understanding;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, any security by reason of such agreement,
arrangement or understanding if the agreement, arrangement or understanding
to vote such security (1) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person and with respect to which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of
such securities of the Company;
provided, however, that no Person who is an officer, director or employee of
an Exempt Person shall be deemed, solely by reason of such Person's status
or authority as such, to be the "Beneficial Owner" of, to have "Beneficial
Ownership" of or to "beneficially own" any securities that are "beneficially
owned" (as defined in this Section l(c)), including, without limitation, in
a fiduciary capacity, by an Exempt Person or by any other such officer,
director or employee of an Exempt Person.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of Illinois or
the city in which the principal office of the Rights Agent is located are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Chicago, Illinois time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Chicago, Illinois time, on
the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall
mean the Common Stock, presently par value $0.01 per share, of the Company.
"Common Stock" when used with reference to any Person other than the Company
shall mean the common stock (or, in the case of an unincorporated entity,
the equivalent equity interest) with the greatest voting power of such other
Person or, if such other Person is a subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
(g) "Common Stock Equivalents" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(h) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(i) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(j) "Equivalent Preferred Shares" shall have the meaning set
forth in Section 11(b) hereof.
(k) "Exempt Person" shall mean the Company or any Subsidiary (as
such term is hereinafter defined) of the Company, in each case including,
without limitation, in its fiduciary capacity, or any employee benefit plan
of the Company or of any Subsidiary of the Company, or any entity or trustee
holding Common Stock for or pursuant to the terms of any such plan or for
the purpose of funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company.
(l) "Exchange Ratio" shall have the meaning set forth in Section
24 hereof.
(m) "Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(n) "Flip-In Event" shall have the meaning set forth in Section
11(a)(ii) hereof.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(p) "Nasdaq" shall mean The Nasdaq Stock Market.
(q) "New York Stock Exchange" shall mean the New York Stock
Exchange, Inc.
(r) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, bank or other entity, and
shall include any successor (by merger or otherwise) to such entity.
(s) "Preferred Stock" shall mean the Series A Junior
Participating Preferred Stock, $.01 par value per share, of the Company
having the rights and preferences set forth in the Form of Certificate of
Designation attached to this Agreement as Exhibit A.
(t) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(u) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(v) "Redemption Price" shall have the meaning set forth in
Section 23 hereof.
(w) "Right Certificate" shall have the meaning set forth in
Section 3 hereof.
(x) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(y) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(z) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(aa) "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) of the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such,
or such earlier date as a majority of the Board of Directors shall become
aware of the existence of an Acquiring Person.
(bb) "Subsidiary" of any Person shall mean any corporation, bank
or other entity of which securities or other ownership interests having
ordinary voting power sufficient to elect a majority of the board of
directors or other persons performing similar functions are beneficially
owned, directly or indirectly, by such Person, and any corporation, bank or
other entity that is otherwise controlled by such Person.
(cc) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(dd) "Summary of Rights" shall have the meaning set forth in
Section 3 hereof.
(ee) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
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 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. Issuance of Right Certificates.
(a) Until the Close of Business on the earlier of (i) the tenth
day after the Stock Acquisition Date or (ii) the tenth Business Day (or such
later date as may be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or of the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender or exchange offer the consummation of which
would result in any Person (other than an Exempt Person) becoming the
Beneficial Owner of shares of Common Stock aggregating 15% or more of the
Common Stock then outstanding (including any such date which is after the
date of this Agreement and prior to the issuance of the Rights; the earlier
of such dates being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Stock registered in the names of the holders
thereof and not by separate Right Certificates, and (y) the Rights will be
transferable only in connection with the transfer of Common Stock. As soon
as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign and the Company will send or
cause to be sent (and the Rights Agent will, if requested, send at the
expense of the Company) by first-class, insured, postage-prepaid mail, to
each record holder of Common Stock as of the close of business on the
Distribution Date (other than any Acquiring Person or any Associate or
Affiliate of an Acquiring Person), at the address of such holder shown on
the records of the Company, a Right Certificate, in substantially the form
of Exhibit B hereto (a "Right Certificate"), evidencing one Right (subject
to adjustment as provided herein) for each share of Common Stock so held.
As of the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Shares of
Preferred Stock, in substantially the form of Exhibit C hereto (the "Summary
of Rights"), by first-class, postage-prepaid mail, to each record holder of
Common Stock as of the Close of Business on the Record Date (other than any
Acquiring Person or any Associate or Affiliate of any Acquiring Person), at
the address of such holder shown on the records of the Company. With
respect to certificates for Common Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof together with
the Summary of Rights. Until the Distribution Date (or, if earlier, the
Expiration Date), the surrender for transfer of any certificate for Common
Stock outstanding on the Record Date, with or without a copy of the Summary
of Rights, shall also constitute the transfer of the Rights associated with
the Common Stock represented thereby.
(c) Certificates issued for Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights
Agreement between CoVest Bancshares, Inc. (the
"Company") and Harris Trust and Savings Bank, as Rights
Agent, dated as of July 28, 1997 as the same may be
amended from time to time (the "Rights Agreement"), the
terms of which are hereby incorporated herein by
reference and a copy of which is on file at the
principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor.
Under certain circumstances, as set forth in the Rights
Agreement, Rights owned by or transferred to any Person
who is or becomes an Acquiring Person (as defined in the
Rights Agreement) and certain transferees thereof will
become null and void and will no longer be transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases
or otherwise acquires any Common Stock after the Record Date but prior to
the Distribution Date, any Rights associated with such Common Stock shall be
deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Stock which are no longer
outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall
not affect the enforceability of any part of this Agreement or the rights of
any holder of the Rights.
Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase shares and of assignment to be
printed on the reverse thereof) shall be substantially in the form set forth
in Exhibit B hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or interdealer quotation system on which the Rights
may from time to time be listed or quoted, or to conform to usage. Subject
to the provisions of Sections 11, 13 and 22 hereof, the Right Certificates
shall entitle the holders thereof to purchase such number of one one-
thousandths of a share of Preferred Stock as shall be set forth therein at
the price per one one-thousandth of a share of Preferred Stock set forth
therein (the "Purchase Price"), but the number of such one one-thousandths
of a share of Preferred Stock and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the
Company by the President of the Company, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile
thereof and shall be attested by the Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of
the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right 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 Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date
of the execution of this 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 an office or agency designated for such purpose,
books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its
face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 7(e), 11(a)(ii), 13
and 14 hereof, at any time after the Distribution Date and prior to the
Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the registered holder to purchase a like
number of one one-thousandths of a share of Preferred Stock as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office or agency of the Rights Agent designated for such
purpose. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof, at
any time after the Distribution Date and prior to the Expiration Date, upon
receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a
Right Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation
of the Right Certificate if mutilated, the Company will make and deliver a
new Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights.
(a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder
of any Right Certificate may, subject to Section 11(a)(ii) hereof and except
as otherwise provided herein, exercise the Rights evidenced thereby in whole
or in part upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the office or agency 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-thousandths of a share of Preferred Stock (or
other securities, cash or other assets, as the case may be) as to which the
Rights are exercised, at any time which is both after the Distribution Date
and prior to the time (the "Expiration Date") that is the earliest of (i)
the Close of Business on July 28, 2007 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date") or (iii) the time at which such Rights are exchanged
as provided in Section 24 hereof.
(b) The Purchase Price shall be initially $65.00 for each one
one-thousandth of a share of Preferred Stock purchasable upon the exercise
of a Right. The Purchase Price and the number of one one-thousandths of a
share of Preferred Stock or other securities or property to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money
of the United States of America in accordance with paragraph (c) of this
Section 7.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase
Price for the shares of Preferred Stock to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof, in cash or by
certified check, cashier's check or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A) requisition from
any transfer agent of the Preferred Stock certificates for the number of
shares of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
requisition from the depositary agent depositary receipts representing
interests in such number of one one-thousandths of a share of Preferred
Stock as are to be purchased (in which case certificates for the Preferred
Stock represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company hereby directs the depositary
agent to comply with such request, (ii) when appropriate, requisition from
the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder and
(iv) when appropriate, after receipt, promptly deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered
holder of any Right Certificate shall exercise less than all of the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to
the exercisable Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) 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 of Rights upon the occurrence of
any purported transfer or exercise of Rights pursuant to Section 6 hereof or
this Section 7 unless such registered holder shall have (i) completed and
signed the certificate contained in the form of assignment or form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such transfer or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by
it, and no Right 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 Right Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Right Certificates to
the Company, or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Availability of Shares of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any shares of Preferred Stock held in its treasury, the
number of shares of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock issuable upon the
exercise of Rights may be listed or admitted to trading on any national
securities exchange, or quoted on Nasdaq, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable,
all shares reserved for such issuance to be listed or admitted to trading on
such exchange, or quoted on Nasdaq, upon official notice of issuance upon
such exercise.
(c) From and after such time as the Rights become exercisable,
the Company shall use its best efforts, if then necessary to permit the
issuance of shares of Preferred Stock upon the exercise of Rights, to
register and qualify such shares of Preferred Stock under the Securities Act
and any applicable state securities or "Blue Sky" laws (to the extent
exemptions therefrom are not available), cause such registration statement
and qualifications to become effective as soon as possible after such filing
and keep such registration and qualifications effective until the earlier of
the date as of which the Rights are no longer exercisable for such
securities and the Expiration Date. The Company may temporarily suspend,
for a period of time not to exceed 90 days, the exercisability of the Rights
in order to prepare and file a registration statement under the Securities
Act and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained and until a registration statement
under the Securities Act (if required) shall 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 shares of Preferred Stock
delivered upon exercise of Rights shall, at the time of delivery of the
certificates therefor (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable shares.
(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
Right Certificates or of any shares of Preferred Stock 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 Right
Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock in a name other
than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or deliver any certificates or
depositary receipts for Preferred Stock upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by that
holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's reasonable satisfaction that no such tax
is due.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for Preferred Stock is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record
of the shares of Preferred Stock represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase
Price (and any applicable transfer taxes) was made; provided, however, that
if the date of such surrender and payment is a date upon which the Preferred
Stock transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred
Stock transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Stock for which the Rights
shall be exercisable, including, without limitation, the right to vote or to
receive dividends or other distributions, 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 and Number of Rights. The Purchase Price, the number of shares of
Preferred Stock or other securities or property purchasable upon exercise of
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 and pay 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 of Preferred Stock or (D) issue any shares of its capital
stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital stock
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,
the holder would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person (the first occurrence of such event being
referred to hereinafter as the "Flip-In Event"), then (A) the Purchase Price
shall be adjusted to be the Purchase Price in effect immediately prior to
the Flip-In Event multiplied by the number of one one-thousandths of a share
of Preferred Stock for which a Right was exercisable immediately prior to
such Flip-In Event, whether or not such Right was then exercisable, and (B)
each holder of a Right, except as otherwise provided in this Section
11(a)(ii) and Section 11(a)(iii) hereof, shall thereafter have the right to
receive, upon exercise thereof at a price equal to the Purchase Price (as so
adjusted), in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of shares of Common Stock as shall
equal the result obtained by dividing the Purchase Price (as so adjusted) by
50% of the current per share market price of the Common Stock (determined
pursuant to Section 11(d) hereof) on the date of such Flip-In Event;
provided, however, that the Purchase Price (as so adjusted) and the number
of shares of Common Stock so receivable upon exercise of a Right shall,
following the Flip-In Event, be subject to further adjustment as appropriate
in accordance with Section 11(f) hereof. Notwithstanding anything in this
Agreement to the contrary, however, from and after the Flip-In Event, any
Rights that are beneficially owned by (x) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (y) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the Flip-In Event or (z) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee prior to
or concurrently with the Flip-In Event pursuant to either (I) a transfer
from the Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a transfer which the
Board of Directors has determined is part of a plan, arrangement or
understanding which has the purpose or effect of avoiding the provisions of
this paragraph, and subsequent transferees of such Persons, shall be void
without any further action and any holder of such Rights shall thereafter
have no rights whatsoever with respect to such Rights under any provision of
this Agreement. The Company shall use all reasonable efforts to ensure that
the provisions of this Section 11(a)(ii) are complied with, but shall have
no liability to any holder of Right Certificates or other Person as a result
of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. From and
after the Flip-In Event, no Right Certificate shall be issued pursuant to
Section 3 or Section 6 hereof that represents Rights that are or have become
void pursuant to the provisions of this paragraph, and any Right Certificate
delivered to the Rights Agent that represents Rights that are or have become
void pursuant to the provisions of this paragraph shall be canceled. From
and after the occurrence of an event specified in Section 13(a) hereof, any
Rights that theretofore have not been exercised pursuant to this Section
11(a)(ii) shall thereafter be exercisable only in accordance with Section 13
and not pursuant to this Section 11(a)(ii).
(iii) The Company may at its option substitute for a share of
Common Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) a number of shares of Preferred Stock or
fraction thereof such that the current per share market price of one share
of Preferred Stock multiplied by such number or fraction is equal to the
current per share market price of one share of Common Stock. In the event
that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Board of
Directors shall, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party (A) determine the
excess (such excess, the "Spread") of (1) the value of the shares of Common
Stock issuable upon the exercise of a Right in accordance with the foregoing
subparagraph (ii) (the "Current Value") over (2) the Purchase Price (as
adjusted in accordance with the foregoing subparagraph (ii)), and (B) with
respect to each Right (other than Rights which have become void pursuant to
the foregoing subparagraph (ii)), make adequate provision to substitute for
the shares of Common Stock issuable in accordance with the foregoing
subparagraph (ii) upon exercise of the Right and payment of the Purchase
Price (as adjusted in accordance therewith), (1) cash, (2) a reduction in
such Purchase Price, (3) shares of Preferred Stock or other equity
securities of the Company (including, without limitation, shares or
fractions of shares of preferred stock which, by virtue of having dividend,
voting and liquidation rights substantially comparable to those of the
shares of Common Stock, are deemed in good faith by the Board of Directors
to have substantially the same value as the shares of Common Stock (such
shares of Preferred Stock and shares or fractions of shares of preferred
stock are hereinafter referred to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having a value which, when added to the value of the shares of
Common Stock issued upon exercise of such Right, shall have an aggregate
value equal to the Current Value (less the amount of any reduction in such
Purchase Price), where such aggregate value has been determined by the Board
of Directors upon the advice of a nationally recognized investment banking
firm selected in good faith by the Board of Directors; provided, however,
that if the Company shall not make adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the Flip-In
Event (the "Section 11(a) (ii) Trigger Date"), then the Company shall be
obligated to deliver, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of such
Purchase Price, shares of Common Stock (to the extent available), and then,
if necessary, such number or fractions of shares of Preferred Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash
have an aggregate value equal to the Spread. If, upon the occurrence of the
Flip-In Event, the Board of Directors shall determine in good faith that it
is likely that sufficient additional shares of Common Stock could be
authorized for issuance upon exercise in full of the Rights, then, if the
Board of Directors so elects, the thirty (30) day period set forth above may
be extended to the extent necessary, but not more than ninety (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
(such thirty (30) day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the second and/or third sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section
11(a)(ii) hereof and the last sentence of this Section 11(a)(iii) hereof,
that such action shall apply uniformly to all outstanding Rights and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such second 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 shares of
Common Stock shall be the current per share market price (as determined
pursuant to Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date and the
per share or fractional value of any "Common Stock Equivalent" shall be
deemed to equal the current per share market price of the Common Stock. The
Board of Directors of the Company may, but shall not be required to,
establish procedures to allocate the right to receive shares of Common Stock
upon the exercise of the Rights among holders of Rights pursuant to this
Section 11(a)(iii).
(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 (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Stock (or shares having the same
rights, privileges and preferences as the Preferred Stock ("equivalent
preferred shares")) or securities convertible into Preferred Stock or
equivalent preferred shares at a price per share of Preferred Stock or
equivalent preferred shares (or having a conversion price per share, if a
security convertible into shares of Preferred Stock or equivalent preferred
shares) less than the then current per share market price of the Preferred
Stock (determined pursuant to Section 11(d) hereof) 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 and equivalent preferred shares outstanding on such record
date plus the number of shares of Preferred Stock and equivalent preferred
shares which the aggregate offering price of the total number of shares of
Preferred Stock and/or equivalent preferred shares 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 and equivalent
preferred shares outstanding on such record date plus the number of
additional shares of Preferred Stock and/or equivalent preferred shares to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in
good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent. Shares of
Preferred Stock and equivalent preferred shares 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, options 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 the making
of a distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in 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 then current per share market
price of the Preferred Stock (determined pursuant to Section 11(d) hereof)
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
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Preferred Stock,
and the denominator of which shall be such current per share market price
(determined pursuant to Section 11(d) hereof) of the Preferred Stock;
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Company to be issued upon exercise of one Right.
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 again be adjusted to be the Purchase Price which would then be
in effect if such record date had not been fixed.
(d)(i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "current per share market price " of any security
(a "Security " for the purpose of this Section 11(d)(i)) on any date shall
be deemed to be the average of the daily closing prices per share of such
Security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that in the
event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of
(A) a dividend or distribution on such Security payable in shares of such
Security or securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price
per share equivalent of such Security. 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 by the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Security is 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 Security is listed or
admitted to trading or, if the Security is 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 Security is 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 Security selected by the Board of
Directors of the Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Security is listed
or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if the
Preferred Stock is publicly traded, the "current per share market price" of
the Preferred Stock shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Stock is not publicly traded
but the Common Stock is publicly traded, the "current per share market
price" of the Preferred Stock shall be conclusively deemed to be the current
per share market price of the Common Stock as determined pursuant to Section
11(d)(i) multiplied by the then applicable Adjustment Number (as defined in
and determined in accordance with the Certificate of Designation for the
Preferred Stock). If neither the Common Stock nor the Preferred Stock is
publicly traded, "current per share market price" 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.
(e) 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 one
hundred-thousandth of a share of Preferred Stock or one-hundredth of a share
of Common Stock or other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three years from the date of the transaction which requires such adjustment
or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
the Preferred Stock, thereafter the Purchase Price and the number of such
other shares so receivable upon exercise of a Right 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), 11(b), 11(c), 11(e), 11(h), 11(i) and 11(m)
hereof, as applicable, 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-
thousandths 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 11(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-thousandth of a share of Preferred Stock (calculated
to the nearest one hundred-thousandth of a share of Preferred Stock)
obtained by (i) multiplying (x) the number of one one-thousandths of a share
purchasable upon the exercise of a Right immediately prior to such
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 pursuant to Sections 11(b) or 11(c) hereof to adjust
the number of Rights, in substitution for any adjustment in the number of
one one-thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment
of the number of Rights shall be exercisable for the number of one one-
thousandths 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-hundredth) 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. Such record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company may, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right 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 Right Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein and shall be registered in the names of the holders of record of
Right 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-thousandths of a share of Preferred Stock
issuable upon the exercise of a Right, the Right Certificates theretofore
and thereafter issued may continue to express the Purchase Price and the
number of one one-thousandths of a share of Preferred Stock which were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
fraction of Preferred Stock or other shares of capital stock issuable upon
exercise of a Right, 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 shares of Preferred
Stock or other such shares 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 issuing to the holder of any Right exercised after such record date
the Preferred Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the 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 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 adjustments in the Purchase
Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it in its sole discretion shall determine to
be advisable in order that any consolidation or subdivision of the Preferred
Stock, issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, issuance wholly for cash of Preferred Stock
or securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in shares of Preferred
Stock or issuance of rights, options or warrants referred to hereinabove in
Section 11(b), hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such stockholders.
(n) Anything in this Agreement to the contrary notwithstanding,
in the event that at any time after the date of this Rights Agreement and
prior to the Distribution Date, the Company shall (i) declare and pay any
dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of a dividend payable in
Common Stock) into a greater or lesser number of shares of Common Stock,
then, in each such case, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter, 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.
(o) The Company agrees that, after the earlier of the
Distribution Date or the Stock Acquisition Date, it will not, except as
permitted by Sections 23, 24 or 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 eliminate the
benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Stock and the Preferred Stock a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof (if so required under Section 25 hereof).
The Rights Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained and shall not be deemed to have
knowledge of any such adjustment unless and until it shall have received
such certificate, and shall not be obligated or responsible for calculating
any adjustment nor shall it be deemed to have knowledge of such an
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.
(a) In the event, directly or indirectly, at any time after the
Flip-In Event (i) the Company shall consolidate with or shall merge into any
other Person, (ii) any Person shall merge with and into the Company and the
Company shall be the continuing or surviving corporation of such merger and,
in connection with such merger, all or part of the Common Stock shall be
changed into or exchanged for stock or other securities of any other Person
(or of the Company) or cash or any other property, or (iii) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one or more transactions, assets or earning
power aggregating 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person (other than the
Company or one or more wholly-owned Subsidiaries of the Company), then upon
the first occurrence of such event, proper provision shall be made so that:
(A) each holder of a Right (other than Rights which have become void
pursuant to Section 11(a)(ii) hereof) shall thereafter have the right to
receive, upon the exercise thereof at the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof), in accordance with
the terms of this Agreement and in lieu of shares of Preferred Stock or
Common Stock of the Company, such number of validly authorized and issued,
fully paid, non-assessable 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 equal the result obtained by dividing the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) by 50% of
the current per share market price of the Common Stock of such Principal
Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided,
however, that the Purchase Price (as theretofore adjusted in accordance with
Section 11(a)(ii) hereof) and the number of shares of Common Stock of such
Principal Party so receivable upon exercise of a Right shall be subject to
further adjustment as appropriate in accordance with Section 11(f) hereof to
reflect any events occurring in respect of the Common Stock of such
Principal Party after the occurrence of such consolidation, merger, sale or
transfer; (B) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Rights Agreement; (C)
the term "Company" shall thereafter be deemed to refer to such Principal
Party; and (D) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of its shares of
Common Stock in accordance with Section 9 hereof) in connection with such
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 the shares of its Common Stock thereafter deliverable
upon the exercise of the Rights; provided that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of
a Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13(a), such cash,
shares, rights, warrants and other property which such holder would have
been entitled to receive had such holder, at the time of such transaction,
owned the Common Stock of the Principal Party receivable upon the exercise
of a Right pursuant to this Section 13(a), and such Principal Party shall
take such steps (including, but not limited to, reservation of shares of
stock) as may be necessary to permit the subsequent exercise of the Rights
in accordance with the terms hereof for such cash, shares, rights, warrants
and other property.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (i) or
(ii) of the first sentence of Section 13(a) hereof: (A) the Person that is
the issuer of the securities into which the shares of Common Stock are
converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer the shares of Common Stock of which have the
greatest aggregate market value of shares outstanding, or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger, if such Person survives said merger, or, if there is more than one
such Person, the Person the shares of Common Stock of which have the
greatest aggregate market value of shares outstanding or (y) if the Person
that is the other party to the merger does not survive the merger, the
Person that does survive the merger (including the Company if it survives)
or (z) the Person resulting from the consolidation; and
(ii) in the case of any transaction described in (iii) of
the first sentence in Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot be determined,
whichever of such Persons is the issuer of Common Stock having the greatest
aggregate market value of shares outstanding; provided, however, that in any
such case described in the foregoing clause (b)(i) or (b)(ii), if the Common
Stock of such Person is not at such time or has not been continuously over
the preceding 12-month period registered under Section 12 of the Exchange
Act, then (1) if such Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so registered, the term
"Principal Party" shall refer to such other Person, or (2) if such Person is
a Subsidiary, directly or indirectly, of more than one Person, the Common
Stock of all of which is and has been so registered, the term "Principal
Party" shall refer to whichever of such Persons is the issuer of Common
Stock having the greatest aggregate market value of shares outstanding, or
(3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by
the same Person, the rules set forth in clauses (1) and (2) above shall
apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of such
joint venturers, and the Principal Party in each such case shall bear the
obligations set forth in this Section 13 in the same ratio as its interest
in such Person bears to the total of such interests.
(c) The Company shall not consummate any consolidation, merger,
sale or transfer referred to in Section 13(a) hereof unless prior thereto
the Company and the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that the requirements
of Sections 13(a) and (b) hereof shall promptly be performed in accordance
with their terms and that such consolidation, merger, sale or transfer of
assets shall not result in a default by the Principal Party under this
Agreement as the same shall have been assumed by the Principal Party
pursuant to Sections 13(a) and (b) hereof and providing that, as soon as
practicable after executing such agreement pursuant to this Section 13, the
Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date
and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall be listed or admitted to trading on the New York Stock
Exchange or on another national securities exchange, to list or admit to
trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on the New York Stock Exchange or
such securities exchange, or, if the Common Stock of the Principal Party
shall not be listed or admitted to trading on the New York Stock Exchange or
a national securities exchange, to cause the Rights and the securities
receivable upon exercise of the Rights to be authorized for quotation on
Nasdaq or on such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has provision in any of its
authorized securities or in its certificate of incorporation or by-laws or
other instrument governing its corporate affairs, which provision would have
the effect of (i) causing such Principal Party to issue (other than to
holders of Rights pursuant to this Section 13), in connection with, or as a
consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock or Common Stock Equivalents of such
Principal Party at less than the then current market price per share thereof
(determined pursuant to Section 11(d) hereof) or securities exercisable for,
or convertible into, Common Stock or Common Stock Equivalents of such
Principal Party at less than such then current market price, or (ii)
providing for any special payment, tax or similar provision in connection
with the issuance of the Common Stock of such Principal Party pursuant to
the provisions of Section 13, then, in such event, the Company hereby agrees
with each holder of Rights that it shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have
been canceled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any
time after the Flip-In Event, enter into any transaction of the type
described in clauses (i) through (iii) of Section 13(a) hereof if (i) at the
time of or immediately after such consolidation, merger, sale, transfer or
other transaction 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, (ii) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the stockholders
of the Person who constitutes, or would constitute, the Principal Party for
purposes of Section 13(b) hereof shall have received a distribution of
Rights previously owned by such Person or any of its Affiliates or
Associates or (iii) the form or nature of organization of the Principal
Party would preclude or limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights
(except prior to the Distribution Date in accordance with Section 11(n)
hereof). In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right. For the
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 for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading
or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors of the
Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good
faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions
which are integral multiples of one one-thousandth of a share of Preferred
Stock) upon the exercise or exchange of Rights. Interests in fractions of
Preferred Stock in integral multiples of one one-thousandth of a share of
Preferred Stock may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the
Company and a depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as beneficial
owners of the Preferred Stock represented by such depositary receipts. In
lieu of fractional shares of Preferred Stock that are not integral multiples
of one one-thousandth of a share of Preferred Stock, the Company shall pay
to the registered holders of Right Certificates at the time such Rights are
exercised or exchanged as herein provided an amount in cash equal to the
same fraction of the current market value of a whole share of Preferred
Stock (as determined in accordance with Section 14(a) hereof) for the
Trading Day immediately prior to the date of such exercise or exchange.
(c) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock upon the exercise or exchange of Rights.
In lieu of such fractional shares of Common Stock, the Company shall pay to
the registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole share
of Common Stock (as determined in accordance with Section 14(a) hereof) for
the Trading Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise or exchange of a Right (except as provided
above).
Section 15. Rights of Action. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Right
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 Right
Certificate (or, prior to the Distribution Date, of the Common Stock), on
his own behalf and for his own benefit, may enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate (or, prior to the Distribution Date, such Common
Stock) in the manner provided therein and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights,
it is specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and will be entitled
to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.
Section 16. Agreement of Right 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 the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office or agency of the Rights Agent designated for such purpose,
duly endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution
Date, the 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 Right Certificates or the Common Stock
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preferred
Stock or any other securities of the Company which may at any time be
issuable on the exercise or exchange of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights
of a stockholder of the Company 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 this Agreement), or to receive dividends or subscription
rights, or otherwise, until the Rights evidenced by such Right Certificate
shall have been exercised or exchanged 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 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 negli-
gence 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 arising therefrom, directly or
indirectly. The indemnification provided for hereunder shall survive the
expiration of the Rights and the termination of this Agreement. The costs
and expenses of enforcing this right of indemnification shall also be paid
by the Company.
(b) The Rights Agent may conclusively rely upon and 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 Right Certificate or certificate for the
Preferred Stock or Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or
other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any bank or corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated,
or any corporation or bank resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or
any bank or corporation succeeding to the stock transfer or corporate trust
powers 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, that such bank or 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 Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of
the predecessor Rights Agent or in the name of the successor Rights Agent;
and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name and in all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this 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, and no implied duties or obligations shall be read
into this Agreement against the Rights Agent, by all of which the Company
and the holders of Right Certificates, by their acceptance thereof, shall be
bound:
(a) Before the Rights Agent acts or refrains from acting, it 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, Affiliate, or Associate and the determination of current per share
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 any person
believed in good faith by the Rights Agent to be one of the President 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 to the Company
and any other Person only for its own negligence 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
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent is serving as an administrative agent and,
accordingly, the Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
provided for in Sections 3, 11, 13, 23 and 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after
receipt of a certificate furnished pursuant to Section 12, describing such
change or adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
shares of Preferred Stock or other securities to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock or other securities will, when 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
any person reasonably believed by the Rights Agent to be one of the
President 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 by it in good faith in accordance
with instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent under this Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in any such application
on or after the date specified in such application (which date shall not be
less than five Business Days after the date any officer of the Company
actually receives such application unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(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.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in the
form of assignment or the form of election to purchase set forth on the
reverse thereof, as the case may be, has not been completed to certify the
holder is not an Acquiring Person (or an Affiliate or Associate thereof),
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(k) No provision of this Agreement shall require the Rights
Agent to expand 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.
(l) The Rights Agent shall not be required to take notice or be
deemed to have notice of any fact, event or determination (including,
without limitation, any dates or events defined in this Agreement or the
designation of any Person as an Acquiring Person, Affiliate or Associate)
under this Agreement unless and until the Rights Agent shall be specifically
notified in writing by the Company of such fact, event or determination.
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 or Preferred Stock by registered or
certified mail, at the expense of the Company, and, following the
Distribution Date, to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common
Stock or Preferred Stock by registered or certified mail, and, following the
Distribution Date, to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who
shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right 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 bank or corporation organized and doing business
under the laws of the United States or the laws of any state of the United
States or the District of Columbia, in good standing, having an office in
the State of Illinois, which is authorized under such laws to exercise
corporate trust or stock transfer 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
million. 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 or Preferred Stock, and, following the
Distribution Date, mail a notice thereof in writing to the registered
holders of the Right 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 Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing
Rights in such forms as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Stock following
the Distribution Date and prior to the Expiration Date, the Company may with
respect to shares of Common Stock so issued or sold pursuant to (i) the
exercise of stock options, (ii) under any employee plan or arrangement,
(iii) upon the exercise, conversion or exchange of securities, notes or
debentures issued by the Company or (iv) a contractual obligation of the
Company, in each case existing prior to the Distribution Date, issue Rights
Certificates representing the appropriate number of Rights in connection
with such issuance or sale.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at any time prior
to the Flip-In Event, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (the redemption price being hereinafter referred to as
the "Redemption Price"). The redemption of the Rights may be made effective
at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. The Redemption Price shall
be payable, at the option of the Company, in cash, shares of Common Stock,
or such other form of consideration as the Board of Directors shall
determine.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23 (or at such later time as the Board of Directors may establish
for the effectiveness of such redemption), 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. The Company shall promptly give public notice of any such
redemption; provided, however, that 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 (or such later time as the Board of Directors may establish for
the effectiveness of such redemption), the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent
for the Common 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 shall 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 after the Flip-In 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 11(a)(ii) hereof) for
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such amount per Right being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after an Acquiring Person shall have become the
Beneficial Owner of shares of Common Stock aggregating 50% or more of the
shares of Common Stock then outstanding. From and after the occurrence of
an event specified in Section 13(a) hereof, any Rights that theretofore have
not been exchanged pursuant to this Section 24(a) shall thereafter be
exercisable only in accordance with Section 13 and may not be exchanged
pursuant to this Section 24(a). The exchange of the Rights by the Board of
Directors may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the effectiveness of the action of the
Board of Directors of the Company ordering the exchange of any Rights
pursuant to paragraph (a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights
held by such holder multiplied by the 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 shall promptly mail a notice of any
such exchange to all of the holders of the Rights so exchanged 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
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 11(a)(ii) hereof)
held by each holder of Rights.
(c) The Company may at its option substitute, and, in the event
that there shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit an exchange of Rights for
Common Stock as contemplated in accordance with this Section 24, the Company
shall substitute to the extent of such insufficiency, for each share of
Common Stock that would otherwise be issuable upon exchange of a Right, a
number of shares of Preferred Stock or fraction thereof (or equivalent
preferred shares, as such term is defined in Section 11(b)) such that the
current per share market price (determined pursuant to Section 11(d) hereof)
of one share of Preferred Stock (or equivalent preferred share) multiplied
by such number or fraction is equal to the current per share market price of
one share of Common Stock (determined pursuant to Section 11(d) hereof) as
of the date of such exchange.
Section 25. Notice of Certain Events.
(a) In case the Company shall at any time after the earlier of
the Distribution Date or the Stock Acquisition Date propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Stock
or to make any other distribution to the holders of its Preferred Stock
(other than a regular quarterly cash dividend), (ii) to offer to the holders
of its 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, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision or combination of outstanding Preferred
Stock), (iv) to effect the liquidation, dissolution or winding up of the
Company, or (v) to pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to each
holder of a Right Certificate, 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, or distribution of rights or warrants, or
the date on which such liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of the Common
Stock and/or 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 10 days prior to the record date for determining holders
of the Preferred Stock for purposes of such action, and in the case of any
such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Stock and/or Preferred Stock, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii) or Section
13 shall occur then the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate (or if occurring prior to the
Distribution Date, the holders of the Common Stock) in accordance with
Section 26 hereof, a notice of the occurrence of such event, which notice
shall describe such event and the consequences of such event to holders of
Rights under Section 11(a)(ii) and Section 13 hereof.
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
Right 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:
CoVest Bancshares, Inc.
749 Lee Street
Des Plaines, Illinois 60016-6471
Attention: Mr. Larry G. Gillie
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sent by
registered or certified mail and shall be deemed given upon receipt and
addressed (until another address is filed in writing with the Company) as
follows:
Harris Trust and Savings Bank
P.O. Box 3504
Chicago, Illinois 60690
Attention: Mr. Ken Penn, Corporate Trust
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate 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. Except as provided in
the penultimate sentence of this Section 27, for so long as the Rights are
then redeemable, the Company may in its sole and absolute discretion, and
the Rights Agent shall if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any
holders of the Rights. At any time when the Rights are no longer
redeemable, except as provided in the penultimate sentence of this Section
27, the Company may, and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of
Rights in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provision herein, (iii) shorten or lengthen any time period hereunder,
or (iv) change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders
of Rights as such (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person), and no such amendment may cause the
Rights again to become redeemable or cause this Agreement again to become
amendable other than in accordance with this sentence. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price. 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. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights
Agent under this Agreement shall be effective without the written consent of
the Rights Agent.
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. 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 Right Certificates (and,
prior to the Distribution Date, 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 Right Certificates (and, prior to the Distribution
Date, the Common Stock).
Section 30. Determinations and Actions by the Board of Directors.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise the rights and powers
specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
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, without limitation, a determination to redeem or not redeem the
Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) that are done or made by
the Board of Directors of the Company in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
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.
Section 32. Governing Law. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State except as to Sections
18, 20 and 21, which shall be governed by and construed in accordance with
the laws of the State of Illinois.
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, all as of the day and year first above written.
COVEST BANCSHARES, INC. HARRIS TRUST AND SAVINGS BANK, as
Rights Agent
By: By:
Name: Name:
Title: Title:
Exhibit A
FORM OF CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
COVEST BANCSHARES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
COVEST BANCSHARES, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors in
accordance with the provisions of the Certificate of Incorporation of the
said Corporation, the said Board of Directors on July 28, 1997 adopted the
following resolution creating a series of 7,500 shares of Preferred Stock
designated as "Series A Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions
of the Certificate of Incorporation, a series of Preferred Stock,
par value $.01 per share, of the Corporation be and hereby is
created, and that the designation and number of shares thereof and
the voting and other powers, preferences and relative,
participating, optional or other rights of the shares of such series
and the qualifications, limitations and restrictions thereof are as
follows:
Series A Junior Participating Preferred Stock
1. Designation and Amount. There shall be a series of Preferred
Stock that shall be designated as "Series A Junior Participating Preferred
Stock," and the number of shares constituting such series shall be 7,500.
Such number of shares may be increased or decreased by resolution of the
Board of Directors; provided, however, that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred Stock to less
than the number of shares then issued and outstanding plus the number of
shares issuable upon exercise of outstanding rights, options or warrants or
upon conversion of outstanding securities issued by the Corporation.
2. Dividends and Distribution.
(A) Subject to the prior and superior rights of the holders of
any shares of any class or series of stock of the Corporation ranking prior
and superior to the shares of Series A Junior Participating Preferred Stock
with respect to dividends, the holders of shares of Series A Junior
Participating Preferred Stock, in preference to the holders of shares of
any class or series of stock of the Corporation ranking junior to the Series
A Junior Participating Preferred Stock in respect thereof, shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on
the 20th day of April, July, October and January, in 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 Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent) equal
to the greater of (a) $10.00 or (b) the Adjustment Number (as defined
below) times the aggregate per share amount of all cash dividends, and the
Adjustment Number times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common
Stock, par value $0.01 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. The "Adjustment Number" shall initially be
1,000. In the event the Corporation shall at any time after July 28, 1997
(the "Rights Declaration Date") (i) declare and pay any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in paragraph
(A) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Junior Participating Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Junior Participating Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable
on such shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 60
days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred Stock
shall entitle the holder thereof to a number of votes equal to the
Adjustment Number on all matters submitted to a vote of the stockholders of
the Corporation.
(B) Except as required by law and by Section 10 hereof, holders
of Series A Junior Participating 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 Junior Participating 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 Junior Participating Preferred Stock outstanding shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating 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; or
(iii) purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock, or any shares of
stock ranking on a parity with the Series A Junior Participating 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
Series A Junior Participating Preferred Stock, or to such holders and
holders of any such shares ranking on a parity therewith, 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 Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired promptly after the
acquisition thereof. All such shares shall upon their retirement become
authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to any conditions and
restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation, dissolution or winding up of the Corporation, voluntary or
otherwise, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received an amount per share (the "Series A
Liquidation Preference") equal to the greater of (i) $1,000 plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, or (ii) the Adjustment Number
times the per share amount of all cash and other property to be distributed
in respect of the Common Stock upon such liquidation, dissolution or winding
up of the Corporation.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other classes and series
of stock of the Corporation, if any, that rank on a parity with the Series A
Junior Participating Preferred Stock in respect thereof, then the assets
available for such distribution shall be distributed ratably to the holders
of the Series A Junior Participating Preferred Stock and the holders of such
parity shares in proportion to their respective liquidation preferences.
(C) Neither the merger or consolidation of the
Corporation into or with another corporation nor the merger or consolidation
of any other corporation into or with the Corporation shall be deemed to be
a liquidation, dissolution or winding up of the Corporation within the
meaning of this Section 6.
7. Consolidation, Merger, Etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in
which the outstanding shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case each share of Series A Junior Participating Preferred Stock shall
at the same time be similarly exchanged or changed in an amount per share
equal to the Adjustment Number times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged.
8. No Redemption. Shares of Series A Junior Participating
Preferred Stock shall not be subject to redemption by the Company.
9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Preferred Stock as to the
payment of dividends and as to the distribution of assets upon liquidation,
dissolution or winding up, unless the terms of any such series shall provide
otherwise, and shall rank senior to the Common Stock as to such matters.
10. Amendment. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Restated Certificate 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 Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share that shall entitle the holder,
in proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Junior Participating Preferred
Stock.
IN WITNESS WHEREOF, the undersigned has executed this Certificate
this 28th day of July, 1997.
COVEST BANCSHARES, INC.
By:
Name:
Title:
Exhibit B
Form of Right Certificate
Certificate No. R-______
NOT EXERCISABLE AFTER JULY 28, 2007 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME
NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
RIGHT CERTIFICATE
COVEST BANCSHARES, 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 July 28, 1997, as the
same may be amended from time to time (the "Rights Agreement"), between
CoVest Bancshares, Inc., a Delaware corporation (the "Company"), and Harris
Trust and Savings Bank, as Rights Agent (the "Rights Agent"), to purchase
from the Company at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and prior to 5:00 P.M., Chicago, Illinois
time, on July 28, 2007 at the office or agency of the Rights Agent
designated for such purpose, or of its successor as Rights Agent, one one-
thousandth of a fully paid non-assessable share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Stock"), of the Company at a purchase price of $65.00 per one one-thousandth
of a share of Preferred Stock (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Rights Certificate
(and the number of one one-thousandths of a share of Preferred Stock which
may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of July 28,
1997, based on the Preferred Stock as constituted at such date. As provided
in the Rights Agreement, the Purchase Price, the number of one one-
thousandths of a share of Preferred Stock (or other securities or property)
which may be purchased upon the exercise of the Rights and the number of
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right 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
Right Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office or
agency of the Rights Agent. The Company will mail to the holder of this
Right Certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office or agency of the Rights Agent designated for
such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in
part for shares of the Company's Common Stock, par value $.01 per share, or
shares of Preferred Stock.
No fractional shares of Preferred Stock or Common Stock will be
issued upon the exercise or exchange of any Right or Rights evidenced hereby
(other than fractions of Preferred Stock which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of
the Company, be evidenced by depository receipts), but in lieu thereof a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise or exchange hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company 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 the Rights Agreement) or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised or
exchanged as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of July 28, 1997.
COVEST BANCSHARES, INC.
By:
Its:
ATTEST:
Its:
Countersigned:
HARRIS TRUST AND SAVINGS BANK, as Rights Agent
By
Its:
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED _______________ hereby sells, assigns and
transfers unto _______________________________
______________________________________________________________
(Please print name and address of transferee)
______________________________________________________________
Rights represented by this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
_________________ ________Attorney, to transfer said Rights on the books of
the within-named Company, with full power of substitution.
Dated: ____________________________
____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker,
dealer or other eligible institution participating in a recognized signature
guarantee medallion program.
.............................................................
(To be completed)
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
____________________________________
Signature
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
To COVEST BANCSHARES, INC.:
The undersigned hereby irrevocably elects to exercise ________
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock (or other securities or property) issuable upon the exercise
of such Rights and requests that certificates for such shares of Preferred
Stock (or such other securities) be issued in the name of:
______________________________________________________________
(Please print name and address)
______________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
______________________________________________________________
(Please print name and address)
______________________________________________________________
Dated:________________________
____________________________________
Signature
(Signature must conform to holder specified on Right Certificate)
Signature Guaranteed:
Signature must be guaranteed by a bank, trust company, broker,
dealer or other eligible institution participating in a recognized signature
guarantee medallion program.
Form of Reverse Side of Right Certificate - continued
______________________________________________________________
(To be completed)
The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).
____________________________________
Signature
_____________________________________________________________
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, such Assignment or Election to Purchase will not be honored.
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON
WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF PREFERRED STOCK OF
COVEST BANCSHARES, INC.
On July 28, 1997, the Board of Directors of CoVest Bancshares,
Inc. (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $.01
per share, of the Company (the "Common Stock"). The dividend is payable on
August 25, 1997 to stockholders of record on August 11, 1997 (the "Record
Date"). Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of Series A Participating Preferred
Stock, par value $.01 per share, of the Company (the "Preferred Stock") at a
price of $65.00 per one one-thousandth of a share of Preferred Stock (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement dated as of July 28, 1997, as the
same may be amended from time to time (the "Rights Agreement"), between the
Company and Harris Trust and Savings Bank, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons
(with certain exceptions, an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding shares of Common Stock or (ii)
10 business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person
or group of 15% or more of the outstanding shares of Common Stock (the
earlier of such dates being called the "Distribution Date"), the Rights will
be evidenced, with respect to any of the Common Stock certificates
outstanding as of the Record Date, by such Common Stock certificate together
with a copy of this Summary of Rights.
The Rights Agreement provides that, until the Distribution Date
(or earlier expiration of the Rights), the Rights will be transferred with
and only with the Common Stock. Until the Distribution Date (or earlier
expiration of the Rights), new Common Stock certificates issued after the
Record Date upon transfer or new issuances of Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier expiration of the Rights), the surrender for
transfer of any certificates for shares of Common Stock outstanding as of
the Record Date, even without such notation or a copy of this Summary of
Rights, will also constitute the transfer of the Rights associated with the
shares of Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on July 28, 2007 (the "Final Expiration Date"), unless
the Final Expiration Date is advanced or extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described
below.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights
is 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) upon the grant to holders of
the Preferred Stock of certain rights or warrants to subscribe for or
purchase Preferred Stock at a price, or securities convertible into
Preferred Stock with a conversion price, less than the then-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 periodic cash dividends or dividends payable in Preferred Stock) or
of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights is subject to adjustment in the
event of a stock dividend on the Common Stock payable in shares of Common
Stock or subdivisions, consolidations or combinations of the Common Stock
occurring, in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each share of Preferred Stock will be entitled,
when, as and if declared, to a minimum preferential quarterly dividend
payment of $10.00 per share but will be entitled to an aggregate dividend of
1,000 times the dividend declared per share of Common Stock. In the event of
liquidation, dissolution or winding up of the Company, the holders of the
Preferred Stock will be entitled to a minimum preferential payment of $1,000
per share (plus any accrued but unpaid dividends) but will be entitled to an
aggregate payment of 1,000 times the payment made per share of Common Stock.
Each share of Preferred Stock will have 1,000 votes, voting together with
the Common Stock. Finally, in the event of any merger, consolidation or
other transaction in which outstanding shares of Common Stock are converted
or exchanged, each share of Preferred Stock will be entitled to receive
1,000 times the amount received per share of Common Stock. These rights are
protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-thousandth interest
in a share of Preferred Stock purchasable upon exercise of each Right should
approximate the value of one share of Common Stock.
In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, each holder of a Right,
other than Rights beneficially owned by the Acquiring Person (which will
thereupon become void), will thereafter have the right to receive upon
exercise of a Right that number of shares of Common Stock having a market
value of two times the exercise price of the Right.
In the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provisions will be made so that each holder of a
Right (other than Rights beneficially owned by an Acquiring Person which
will have become void) will thereafter have the right to receive upon the
exercise of a Right that number of shares of common stock of the person with
whom the Company has engaged in the foregoing transaction (or its parent)
that at the time of such transaction have a market value of two times the
exercise price of the Right.
At any time after any person or group becomes an Acquiring
Person and prior to the earlier of one of the events described in the
previous paragraph or the acquisition by such Acquiring Person of 50% or
more of the outstanding shares of Common Stock, the Board of Directors of
the Company may exchange the Rights (other than Rights owned by such
Acquiring Person which will have become void), in whole or in part, for
shares of Common Stock or Preferred Stock (or a series of the Company's
preferred stock having equivalent rights, preferences and privileges), at an
exchange ratio of one share of Common Stock, or a fractional share of
Preferred Stock (or other preferred stock) equivalent in value thereto, per
Right.
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at
least 1% in such Purchase Price. No fractional shares of Preferred Stock or
Common Stock will be issued (other than fractions of Preferred Stock which
are integral multiples of one one-thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary
receipts), and in lieu thereof an adjustment in cash will be made based on
the current market price of the Preferred Stock or the Common Stock.
At any time prior to the time an Acquiring Person becomes such,
the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.01 per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors in its sole discretion
may establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company may,
except with respect to the redemption price, amend the Rights Agreement in
any manner. After the Rights are no longer redeemable, the Company may,
except with respect to the redemption price, amend the Rights Agreement in
any manner that does not adversely affect the interests of holders of the
Rights.
Until a Right is exercised or exchanged, 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.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as Exhibit 99.1 to the Form 8-A dated
August 5, 1997. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, as the same may be amended from time to time, which is hereby
incorporated herein by reference.
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