SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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
SOUTHERN NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 56-0939887
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
200 West Second Street
Winston-Salem, NC 27101
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Share Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
<PAGE>
Item 1. Description of Registrant's Securities
To Be Registered
On December 17, 1996, the Board of Directors of
Southern National Corporation (the "Company") declared
a dividend distribution of one Right for each
outstanding share of Company Common Stock ("Common
Stock") to stockholders of record at the close of
business on January 17, 1997. One Right will also be
distributed for each share of Common Stock issued after
January 17, 1997 until the Distribution Date (which is
described in the next paragraph). Each Right entitles
the registered holder to purchase from the Company a
unit consisting of one one-hundredth of a share (a
"Unit") of Series B Junior Participating Preferred
Stock, $5 par value (the "Preferred Stock"), at a
Purchase Price of $145 per Unit, subject to adjustment.
The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between
the Company and Branch Banking and Trust Company, as
Rights Agent.
Initially, the Rights will attach to all Common
Stock certificates representing shares then
outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the
Common Stock and a Distribution Date will occur upon
the earliest of (i) 10 business days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), (ii) 10
business days following the commencement of a tender
offer or exchange offer that would result in a person
or group beneficially owning 20% or more of such
outstanding shares of Common Stock, subject to certain
limitations, or (iii) 10 business days after the
effectiveness of a declaration by the Board of
Directors of the Company that a person is an "Adverse
Person," upon a determination that such person, alone
or together with its affiliates and associates, has or
will become the beneficial owner of 10% or more of the
shares of Common Stock then outstanding (provided that
any such determination shall not be effective until
such person has become the beneficial owner of 10% or
more of the outstanding shares of Common Stock), after
reasonable inquiry and investigation, including
consultation with such persons as such directors shall
deem appropriate, that (a) such beneficial ownership by
such person is intended to cause, is reasonably likely
to cause or will cause the Company to repurchase the
<PAGE>
Common Stock beneficially owned by such person or to
cause pressure on the Company to take action or enter
into a transaction or series of transactions intended
to provide such person with short-term financial gain
under circumstances where the Board of Directors
determines that the best long-term interests of the
Company and its stockholders would not be served by
taking such action or entering into such transactions
or series of transactions at that time or (b) such
beneficial ownership is causing or is reasonably likely
to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers
or impairment of the Company's ability to maintain its
competitive position) on the business or prospects of
the Company or (c) such beneficial ownership otherwise
is determined to be not in the best interests of the
Company and its stockholders, employees, customers and
communities in which the Company and its subsidiaries
do business.
However, the Board of Directors may not declare
a person to be an Adverse Person if, prior to the time
that the person acquired 10% or more of the shares of
Common Stock then outstanding, such person provided to
the Board of Directors in writing a statement of the
person's purpose and intentions in connection with the
proposed acquisition of Common Stock, together with any
other information reasonably requested of the person by
the Board of Directors, and the Board of Directors,
based on such statement and reasonable inquiry and
investigation as it deems appropriate, determines to
notify and notifies such person in writing that it will
not declare the person to be an Adverse Person;
provided, however, that the Board of Directors may
expressly condition in any manner a determination not
to declare a person an Adverse Person on such
conditions as the Board of Directors may select,
including without limitation, such person's not
acquiring more than a specified amount of stock and/or
on such person's not taking actions inconsistent with
the purposes and intentions disclosed by such person in
the statement provided to the Board of Directors. In
the event that the Board of Directors should at any
time determine, upon reasonable inquiry and
investigation, that such person has not met or complied
with any conditions specified by the Board of
Directors, the Board of Directors may at any time
thereafter declare the person to be an Adverse Person.
Until the Distribution Date, (i) the Rights will
be evidenced by the Common Stock certificates and will
be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued
after January 17, 1997 will contain a notation
<PAGE>
incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates
for Common Stock outstanding will also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the
Distribution Date and will expire at the close of
business on December 31, 2006, unless earlier redeemed
by the Company as described below.
In the event that the Board of Directors
determines that a person is an Adverse Person or, at
any time following the Distribution Date, a person
becomes the beneficial owner of 25% or more of the
then-outstanding shares of Common Stock, each holder of
a Right will thereafter have the right to receive, upon
exercise, Common Stock (or, in certain circumstances,
cash, property or other securities of the Company)
having a value equal to two times the exercise price of
the Right. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth
in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring
Person or Adverse Person will be null and void.
However, Rights are not exercisable following the
occurrence of either of the events set forth above
until such time as the Rights are no longer redeemable
by the Company as set forth below.
In the event that, at any time following the
Stock Acquisition Date, (i) the Company is acquired in
a merger or other business combination transaction in
which the Company is not the surviving corporation, or
(ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set
forth above) shall thereafter have the right to
receive, upon exercise, common stock of the acquiring
company having a value equal to two times the exercise
price of the Right. The events set forth in this
paragraph and in the preceding paragraph are referred
to as the "Triggering Events."
The Purchase Price payable, and the number of
Units of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock
are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than
<PAGE>
the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase
Price. The Company may (but is not required to) issue
fractional Units and, in lieu thereof, an adjustment in
cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the
date of exercise.
In general, the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right,
at any time until 10 business days following the Stock
Acquisition Date. Redemption is not permitted after 10
business days following the effective date of a
declaration by the Board of Directors that a person is
an Adverse Person. After the redemption period has
expired, the Company's right of redemption may be
reinstated if an Acquiring Person reduces his
beneficial ownership to less than 10% of the
outstanding shares of Common Stock in a transaction or
series of transactions not involving the Company and if
there are no other Acquiring Persons or Adverse
Persons. Immediately upon the action of the Board of
Directors' ordering redemption of the Rights, the
Rights will terminate and the only right of the holders
of Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to
vote or to receive dividends. While the distribution
of the Rights will not be taxable to stockholders or to
the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event
that the Rights become exercisable for stock (or other
consideration) of the Company or for common stock of
the acquiring company as set forth above.
Other than certain of the provisions relating to
the principal economic terms of the Rights under
specified circumstances, any of the provisions of the
Rights Agreement may be amended by the Board of
Directors of the Company prior to the Distribution
Date. After the Distribution Date, the provisions of
the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes which do
not adversely affect the interests of holders of Rights
<PAGE>
(excluding the interests of any Acquiring Person or
Adverse Person), or to shorten or lengthen any time
period under the Rights Agreement; provided, however,
that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are
not redeemable.
One Right will be distributed to stockholders of
the Company for each share of Common Stock owned of
record by them on January 17, 1997. Until the
Distribution Date, the Company will issue one Right
with each share of Common Stock that shall become
outstanding so that all shares of Common Stock will
have attached Rights. The Company has initially
authorized and reserved 2,000,000 shares of Preferred
Stock for issuance upon exercise of the Rights. As of
December 31, 1996 there were 109,297,489 shares of
Common Stock issued and outstanding. Also as of
December 31, 1996 there were 46,394,757 shares of
Common Stock reserved for issuance upon consummation of
pending acquisitions, exercise of stock options, for
employee benefit plans and for a dividend reinvestment
plan.
The Rights may be deemed to have certain
antitakeover effects. The Rights generally may cause
substantial dilution to a person or group that attempts
to acquire the Company under circumstances not approved
by the Board of Directors of the Company.
The Rights Agreement between the Company and the
Rights Agent specifying the terms of the Rights, which
includes as exhibits the Form of Certificate of
Designations, Powers and Preferences of Series B Junior
Participating Preferred Stock, the Form of Rights
Certificate and the Form of Summary of Rights to
Purchase Shares, is attached hereto as an exhibit and
incorporated herein by reference. The foregoing
description of the Rights is qualified by reference to
such exhibit.
Item 2. Exhibits
1. Rights Agreement dated as of
December 17, 1996 between Southern National
Corporation and Branch Banking and Trust
Company, as Rights Agent, which includes, as
Exhibit A, the Form of Rights Certificate; as
Exhibit B, the Form of Summary of Rights to
Purchase Shares; and as Exhibit C, the Form of
Articles of Amendment setting forth the terms of
Series B Junior Participating Preferred Stock.
Pursuant to the Rights Agreement, Rights
Certificates will not be mailed until as soon as
<PAGE>
practicable after the earliest of the tenth
business day after public announcement that a
person or group has acquired beneficial
ownership of 20% or more of the shares of Common
Stock, the tenth business day following
commencement of a tender or exchange offer that
would result in a person or group beneficially
owning 20% or more of the shares of Common
Stock, subject to certain limitations, or the
tenth business day after the effective date of a
determination by the Board of Directors that a
person or group is an Adverse Person.
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of
the Securities Exchange Act of 1934, the registrant has
duly caused this registration statement to be signed on
its behalf by the undersigned, thereto duly authorized.
SOUTHERN NATIONAL CORPORATION
Date: January 8, 1997 By:
<PAGE>
EXHIBIT 1
<PAGE>
_______________________________________________________
SOUTHERN NATIONAL CORPORATION
and
BRANCH BANKING AND TRUST COMPANY
Rights Agent
________________________________
Rights Agreement
Dated as of December 17, 1996
_______________________________________________________
<PAGE>
TABLE OF CONTENTS
Section Page
1. Certain Definitions 1
2. Appointment of Rights Agent 6
3. Issue of Rights Certificates 7
4. Form of Rights Certificates 9
5. Countersignature and Registration 11
6. Transfer, Splitup, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or
Stolen Rights Certificates 11
7. Exercise of Rights; Purchase
Price; Expiration Date of Rights 12
8. Cancellation and Destruction of
Rights Certificates 15
9. Reservation and Availability of
Capital Stock 16
10. Preferred Stock Record Date 17
11. Adjustment of Purchase Price,
Number and Kind of Shares or
Number of Rights 18
12. Certificate of Adjusted Purchase
Price or Number of Shares 31
13. Consolidation, Merger or Sale
or Transfer of Assets or Earning
Power 31
14. Fractional Rights and Fractional
Shares 34
15. Rights of Action 36
16. Agreement of Rights Holders 36
17. Rights Certificate Holder Not Deemed
a Stockholder 37
18. Concerning the Rights Agent 38
<PAGE>
19. Merger or Consolidation or Change of
Name of Rights Agent 38
20. Duties of Rights Agent 39
21. Change of Rights Agent 42
22. Issuance of New Rights Certificates 44
23. Redemption and Termination 44
24. Notice of Certain Events 45
25. Notices 46
26. Supplements and Amendments 47
27. Successors 48
28. Determinations and Actions by
the Board of Directors, etc. 48
29. Benefits of This Agreement 49
30. Severability 49
31. Governing Law 49
32. Counterparts 49
33. Descriptive Headings 49
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
EXHIBIT C -- Form of Articles of Amendment
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of December 17, 1996
(the "Agreement"), between Southern National
Corporation, a North Carolina corporation (the
"Company"), and Branch Banking and Trust Company (the
"Rights Agent").
W I T N E S S E T H
WHEREAS, on December 17, 1996 (the "Rights
Dividend Declaration Date"), the Board of Directors of
the Company authorized and declared a dividend
distribution ("Distribution") of one Right for each
share of Common Stock (as hereinafter defined) of the
Company outstanding at the close of business on
January 17, 1997 (the "Record Date"), and has
authorized the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions
of Section 11(o) hereof) for each share of Common Stock
of the Company issued between the Record Date (whether
originally issued or delivered from the Company's
treasury) and the Distribution Date (as hereinafter
defined), each Right initially representing the right
to purchase one one- hundredth of a share of Preferred
Stock upon the terms and subject to the conditions
hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises
and the mutual agreements herein set forth, the parties
hereby agree as follows:
Section 1. Certain Definitions. For purposes
of this Agreement, the following terms have the
meanings indicated:
(a) "Acquiring Person" shall mean any
Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial
Owner of 20% or more of the shares of Common Stock then
outstanding, but shall not include the Company, any
Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any
Person organized, appointed or established by the
Company for or pursuant to the terms of any such plan.
(b) "Act" shall mean the Securities Act of
1933.
(c) "Adverse Person" shall mean any Person
declared to be an Adverse Person by the Board of
<PAGE>
Directors upon determination that the criteria set
forth in Section 11(a)(ii)(B) apply to such Person.
(d) "Affiliate" and "Associate" shall have
the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and in effect on the date of this
Agreement.
(e) A Person shall be deemed the
"Beneficial Owner" of, and shall be deemed to
"beneficially own," any securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether
such right is exercisable immediately or only
after the passage of time) pursuant to any
agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of
conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own,"
(A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of
such Person's Affiliates or Associates until
such tendered securities are accepted for
purchase or exchange, or (B) securities issuable
upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or
(C) securities issuable upon exercise of Rights
from and after the occurrence of a Triggering
Event which Rights were acquired by such Person
or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect
to any Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect
on the date of this Agreement), including
pursuant to any agreement, arrangement or
understanding, whether or not in writing;
provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this
<PAGE>
subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such
security if such agreement, arrangement or
understanding: (A) arises solely from a
revocable proxy given in response to a public
proxy or consent solicitation made pursuant to,
and in accordance with, the applicable
provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or
any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for
the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of
this paragraph (e)) or disposing of any voting
securities of the Company; provided, however,
that nothing in this paragraph (e) shall cause a
person engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or
to "beneficially own," any securities acquired
through such person's participation in good
faith in a firm commitment underwriting until
the expiration of forty days after the date of
such acquisition.
(f) "Business Day" shall mean any day other
than a Saturday, Sunday or a day on which banking
institutions in the State of North Carolina are
authorized or obligated by law or executive order to
close.
(g) "Close of business" on any given date
shall mean 5:00 P.M., Winston-Salem, North Carolina
time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M.,
Winston-Salem, North Carolina time, on the next
succeeding Business Day.
(h) "Common Stock" shall mean the common
stock, $5 par value, of the Company, except that
"Common Stock" when used with reference to any Person
other than the Company shall mean the capital stock of
such Person with the greatest aggregate voting power,
or the equity securities or other equity interest
having power to control or direct the management, of
such Person.
<PAGE>
(i) "Common stock equivalents" shall have
the meaning set forth in Section 11(a)(iii) hereof.
(j) "Current market price" shall have the
meaning set forth in Section 11(d)(i) hereof.
(k) "Current Value" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(l) "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof.
(m) "Exchange Act" shall have the meaning
set forth in Section 1(d) hereof.
(n) "Expiration Date" shall have the
meaning set forth in Section 7(a) hereof.
(o) "Final Expiration Date" shall mean the
close of business on December 31, 2006, unless extended
by the Board of Directors of the Company as provided in
Section 7 hereof.
(p) "Person" shall mean any individual,
firm, corporation, partnership, company or other
entity.
(q) "Preferred Stock" shall mean shares of
the Company's Series B Junior Participating Preferred
Stock, with the terms and rights set forth in the
Articles of Amendment attached as Exhibit C hereto,
and, to the extent that there is not a sufficient
number of shares of Preferred Stock authorized to
permit the full exercise of the Rights, any other
series of such Preferred Stock of the Company
designated for such purpose containing terms
substantially similar to the terms of the Series B
Preferred Stock.
(r) "Principal Party" shall have the
meaning set forth in Section 13(b) hereof.
(s) "Purchase Price" shall have the meaning
set forth in Section 4(a) hereof.
(t) "Record Date" shall have the meaning
set forth in the WHEREAS clause at the beginning of
this Agreement.
(u) "Redemption Price" shall have the
meaning set forth in Section 23(a) hereof.
<PAGE>
(v) "Rights" shall have the meaning set
forth in the WHEREAS clause at the beginning of this
Agreement.
(w) "Rights Certificates" shall have the
meaning set forth in Section 3(a) hereof.
(x) "Section 11(a)(ii) Event" shall mean
any event described in Section 11(a)(ii)(A) or (B)
hereof.
(y) "Section 11(a)(ii) Trigger Date" shall
have the meaning set forth in Section 11(a)(iii)
hereof.
(z) "Section 13 Event" shall mean any event
described in clause (x), (y) or (z) of Section 13(a)
hereof.
(aa) "Spread" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(bb) "Stock Acquisition Date" shall mean
the first date of a public announcement (which, for
purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d)
under the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such.
(cc) "Subsidiary" shall mean, with
reference to any Person, any corporation, partnership,
company or other entity of which an amount of voting
securities sufficient to elect at least a majority of
the directors, managers, trustees or similar persons,
of such entity is beneficially owned, directly or
indirectly, by such Person, or otherwise controlled by
such Person.
(dd) "Substitution Period" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(ee) "Trading Day" shall have the meaning
set forth in Section 11(d)(i) hereof.
(ff) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The
Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior
to the Distribution Date also be the holders of the
Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts
<PAGE>
such appointment. The Company may from time to time
appoint such Co-Rights Agents as it may deem necessary
or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the close of
business on the tenth Business Day after the Stock
Acquisition Date, (ii) the close of business on the
tenth Business Day after the latest of (A) the date
that a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person organized,
appointed or established by the Company for or pursuant
to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange
Act as in effect on the date hereof, if upon
consummation thereof, such Person would be the
Beneficial Owner of 20% or more of the shares of Common
Stock then outstanding, or (B) the date upon which all
regulatory approvals required for the acquisition of
stock pursuant to the tender or exchange offer referred
to in clause (A) have been obtained or waived, or
(C) the date upon which any approval required of the
security holders of the Person publishing or sending or
giving the tender or exchange offer referred to in
clause (A), for the acquisition of stock pursuant to
such tender or exchange offer, is obtained or waived or
(iii) the close of business on the tenth Business Day
after the Board of Directors of the Company determines,
pursuant to the criteria set forth in
Section 11(a)(ii)(B) hereof, that a Person is an
Adverse Person (the earliest of (i), (ii) and (iii)
being herein referred to as the "Distribution Date"),
(x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the
names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to
be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the
Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or
more rights hereto (the "Rights Certificates"),
evidencing one Right for each share of Common Stock so
held, subject to adjustment as provided herein. In the
<PAGE>
event that an adjustment in the number of Rights per
share of Common Stock has been made pursuant to
Section 11(o) hereof, at the time of distribution of
the Right Certificates, the Company shall make the
necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) As promptly as practicable following
the Record Date, the Company will send a copy of a
Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit B, by
first-class, postage prepaid mail, to each record
holder of the Common Stock as of the close of business
on the Record Date, at the address of such holder shown
on the records of the Company. With respect to
certificates for the Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights
will be evidenced by such certificates for the Common
Stock and the registered holders of the Common Stock
shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or
the Expiration Date, the transfer of any certificates
representing shares of Common Stock in respect of which
Rights have been issued shall also constitute the
transfer of the Rights associated with such shares of
Common Stock.
(c) Rights shall be issued in respect of
all shares of Common Stock which are issued after the
Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and certificates
issued after the Record Date shall bear the following
legend:
This certificate also evidences
and entitles the holder hereof to
certain Rights as set forth in the
Rights Agreement between Southern
National Corporation (the "Company")
and Branch Banking and Trust Company
(the "Rights Agent") dated as of
December 17, 1996 (the "Rights
Agreement"), the terms of which are
hereby incorporated herein by
reference and a copy of which is on
file at the principal offices of the
Company. Under certain circumstances,
<PAGE>
as set forth in the Rights Agreement,
such Rights will be evidenced by
separate certificates and will no
longer be evidenced by this
certificate. The Company will mail to
the holder of this certificate a copy
of the Rights Agreement, as in effect
on the date of mailing, without charge
promptly after receipt of a written
request therefor. Under certain
circumstances set forth in the Rights
Agreement, Rights issued to, or held
by, any Person who is, was or becomes
an Acquiring Person, an Adverse Person
or any Affiliate or Associate thereof
(as such terms are defined in the
Rights Agreement), whether currently
held by or on behalf of such Person or
by any subsequent holder, may become
null and void.
With respect to such certificates containing the
foregoing legend, until the earlier of (i) the
Distribution Date or (ii) the Expiration Date, the
Rights associated with the Common Stock represented by
such certificates shall be evidenced by such
Certificates alone and registered holders of Common
Stock shall also be the registered holders of the
associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by
such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms
of election to purchase shares and of assignment to be
printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto
and may have such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the
Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of
one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price set forth
<PAGE>
therein (such exercise price per one one-hundredths of
a share, the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each
Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant
to Section 3(a) or Section 22 hereof that represents
Rights beneficially owned by any Person known to be:
(i) an Acquiring Person, an Adverse Person or any
Associate or Affiliate of an Acquiring Person or an
Adverse Person; (ii) a transferee of an Acquiring
Person or an Adverse Person (or of any such Associate
or Affiliate) who becomes a transferee after the
Acquiring Person or Adverse Person becomes such; or
(iii) a transferee of an Acquiring Person or an Adverse
Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the
Acquiring Person or Adverse Person becoming such and
receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring
Person or Adverse Person (or from any such Associate or
Affiliate) to holders of equity interests in such
Acquiring Person or Adverse Person (or in any such
Associate or Affiliate) or to any Person with whom such
Acquiring Person or Adverse Person (or any such
Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan,
arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and
any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred
to in this sentence, shall when issued contain (to the
extent feasible in the circumstances) the following
legend, modified as applicable to apply to such Person:
The Rights represented by this Rights
Certificate are or were beneficially
owned by a Person who was or became an
[Acquiring] [Adverse] Person or an
Affiliate or Associate of an
[Acquiring] [Adverse] Person (as such
terms are defined in the Rights
Agreement). Accordingly, this Rights
Certificate and the Rights represented
hereby may become null and void in the
circumstances specified in
Section 7(e) of such Agreement.
<PAGE>
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be
executed on behalf of the Company by its Chairman of
the Board, its President or any Vice President, either
manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or
by facsimile signature. The Rights Certificates shall
be countersigned by the Rights Agent, manually or by
facsimile signature, and shall not be valid for any
purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who
signed such Rights Certificates had not ceased to be
such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by
any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of
the Company to sign such Rights Certificate, although
at the date of the execution of this Rights Agreement
any such person was not such an officer.
(b) Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its
office designated as the appropriate place for
surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders
of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights
Certificates and the certificate number and the date of
each of the Rights Certificates.
Section 6. Transfer, Splitup, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.
(a) Subject to the provisions of
Section 4(b), Section 7(e) and Section 14 hereof, at
any time after the close of business on the
Distribution Date, and at or prior to the close of
business on the Expiration Date, any Rights Certificate
or Certificates may be transferred, split up, combined
or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a share
<PAGE>
of Preferred Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets,
as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or
Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the
Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the
registered holder shall have completed and signed the
certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall,
subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights 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, splitup, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of a
Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as
otherwise provided herein including, without
<PAGE>
limitation, the restrictions on exercisability set
forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the
Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price with respect to
the total number of one one-hundredths of a share of
Preferred Stock (or other securities, cash or other
assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to
the earlier of (i) the Final Expiration Date, or (ii)
the time at which the Rights are redeemed as provided
in Section 23 hereof (the earlier of (i) and (ii) being
herein referred to as the "Expiration Date").
(b) The Purchase Price for each
one-hundredths of a share of Preferred Stock pursuant
to the exercise of a Right shall initially be $145.00
and shall be subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of
election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-
hundredths of a share of Preferred Stock (or other
shares, securities, cash or other assets, as the case
may be) to be purchased as set forth below and an
amount equal to any applicable transfer tax, the Rights
Agent shall, subject to Section 20(k) hereof thereupon
promptly (i)(A) requisition from any transfer agent of
the shares of Preferred Stock (or make available, if
the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-hundredths
of a share of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number
of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary
receipts representing such number of one one-
hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of
Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent
to comply with such request, (ii) requisition from the
<PAGE>
Company the amount of cash, if any, to be paid in lieu
of fractional shares in accordance with Section 14
hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as
may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as
such amount may be reduced pursuant to
Section 11(a)(iii) hereof) may be made in cash or by
certified bank check or money order payable to the
order of the Company. In the event that the Company is
obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other
property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other
securities, cash and/or other property are available
for distribution by or on behalf of the Rights Agent,
if and when appropriate.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such
name or names as may be designated by such holder,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person, an
Adverse Person or an Associate or Affiliate of an
Acquiring Person or an Adverse Person, (ii) a
transferee of an Acquiring Person or an Adverse Person
(or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person or Adverse Person
becomes such, or (iii) a transferee of an Acquiring
Person or an Adverse Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person or Adverse
Person becoming such and receives such Rights pursuant
to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse
Person (or from any such Associate or Affiliate) to
holders of equity interests in such Acquiring Person or
Adverse Person (or in any such Associate or Affiliate)
or to any Person with whom the Acquiring Person or
Adverse Person (or any such Associate or Affiliate) has
any continuing agreement, arrangement or understanding
<PAGE>
regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has
determined (whether before or after such transfer) is
part of a plan, arrangement or understanding which has
as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have
any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable
efforts to insure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with,
but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure
to make any determinations with respect to an Acquiring
Person or Adverse Person or any of their respective
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the
form of election to purchase set forth on the reverse
side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request.
Section 8. Cancellation and Destruction of
Rights Certificates. All Rights Certificates
surrendered for the purpose of exercise, transfer,
splitup, combination or exchange shall, if surrendered
to the Company or any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be
canceled by it, and no Rights Certificates shall be
issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company
shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the
Company.
<PAGE>
Section 9. Reservation and Availability of
Capital Stock.
(a) The Company covenants and agrees that
it will cause to be reserved and kept available out of
its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common
Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of
shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or
other securities) that, as provided in this Agreement,
including Section 11(a)(iii) hereof, will be sufficient
to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred
Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be
listed on any national securities exchange, the Company
shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such
exercise.
(c) The Company shall use its best efforts
to (i) file, as soon as practicable following the
earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to
be delivered by the Company upon exercise of the Rights
has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by
law following the Distribution Date, as the case may
be, a registration statement under the Act, with
respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as
practicable after such filing, and (iii) cause such
registration statement to remain effective (with a
prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities,
and (B) the date of the expiration of the Rights. The
Company will also take such action as may be
appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time
not to exceed ninety (90) days after the date set forth
in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order
<PAGE>
to prepare and file such registration statement and
permit it to become effective. Upon any such
suspension, the Company shall issue a public
announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is
no longer in effect. 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 has been
declared effective.
(d) The Company covenants and agrees that
it will take all such action as may be necessary to
ensure that all one one- hundredths of a share of
Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject
to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and
agrees that it will pay when due and payable any and
all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery
of the Rights Certificates and of any certificates for
a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than,
or the issuance or delivery of a number of one
one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in
respect of a name other than that of, the registered
holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any
certificates for a number of one one- hundredths of a
share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such
tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no
such tax is due.
Section 10. Preferred Stock Record Date. Each
person in whose name any certificate for a number of
one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may
<PAGE>
be) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record
of such fractional shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be)
represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all applicable transfer
taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred
Stock (or Common Stock and/or other securities, as the
case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate, as such, shall not
be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights
shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The
Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Company shall at
any time after the date of this Agreement (A) declare a
dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of
the Preferred Stock (including any such
reclassification in connection with a consolidation,
statutory share exchange or merger in which the Company
is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at
the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be,
issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised
<PAGE>
after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred Stock
or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date
and at a time when the Preferred Stock transfer books
of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification.
If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Person (other than the Company, any
Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the
Company, or any Person organized, appointed or
established by the Company for or pursuant to
the terms of any such plan), alone or together
with its Affiliates and Associates, shall, at
any time after the Rights Dividend Declaration
Date, become the Beneficial Owner of 25% or more
of the shares of Common Stock then outstanding,
unless the event causing the 25% threshold to be
crossed is a transaction set forth in
Section 13(a) hereof or
(B) subject to the requirements of this
Section 11(a)(ii), the Board of Directors of the
Company shall declare any Person to be an
Adverse Person, upon a determination by the
Board of Directors that such Person, alone or
together with its Affiliates and Associates, has
or will, at any time after the Rights Dividend
Declaration Date, become the Beneficial Owner of
10% or more of the outstanding shares of Common
Stock (provided that any such determination may
not be effective until such Person has become
the Beneficial Owner of 10% or more of the
outstanding shares of Common Stock), after
reasonable inquiry and investigation, including
consultation with such persons as such directors
shall deem appropriate, that (a) such Beneficial
Ownership by such Person is intended to cause,
is reasonably likely to cause or will cause the
Company to repurchase the Common Stock
beneficially owned by such Person or to cause
pressure on the Company to take action or enter
into a transaction or series of transactions
<PAGE>
which would provide such Person with short-term
financial gain under circumstances where the
Board of Directors determines that the best
longterm interests of the Company and its
stockholders, but for the actions and possible
actions of such Person, would not be served by
taking such action or entering into such
transactions or series of transactions at that
time or (b) such Beneficial Ownership is causing
or reasonably likely to cause a material adverse
impact (including, but not limited to,
impairment of relationships with customers or
impairment of the Company's ability to maintain
its competitive position) on the business or
prospects of the Company, or (c) such beneficial
ownership otherwise is determined to be not in
the best interests of the Company and its
stockholders, employees, customers and
communities in which the Company and its
Subsidiaries do business,
then, promptly following the first occurrence of a
Section 11(a)(ii) Event, proper provision shall be made
so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof at the
thencurrent Purchase Price in accordance with the terms
of this Agreement, in lieu of a number of one
one-hundredths of a share of Preferred Stock, such
number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the then-number of one
one-hundredths of a share of Preferred Stock for which
a Right would have been exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event
assuming the Distribution Date had already occurred,
and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as
the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the current
market price (determined pursuant to Section 11(d)
hereof) per share of Common Stock on the date of such
first occurrence (such number of shares, the
"Adjustment Shares"). Notwithstanding the provisions
of Section 11(a)(ii)(B) hereof, the Board of Directors
of the Company may not declare a Person to be an
Adverse Person if, prior to the time that such Person
acquired 10% or more of the shares of Common Stock then
outstanding, such Person provided to the Board of
Directors in writing a statement of such Person's
purpose and intentions in connection with the proposed
acquisition of Common Stock, together with any other
information reasonably requested of such Person by the
Board of Directors, and the Board of Directors, based
<PAGE>
on such statement and reasonable inquiry and
investigation, including consultation with such Persons
as such directors shall deem appropriate, determines to
notify and notifies such Person in writing that it will
not declare such Person to be an Adverse Person;
provided, however, that the Board of Directors may
expressly condition in any manner a determination not
to declare a Person an Adverse Person on such
conditions as the Board of Directors may select,
including, without limitation, such Person's not
acquiring more than a specified amount of Common Stock
and/or on such Person's not taking actions inconsistent
with the purposes and intentions disclosed by such
Person in the statement provided to the Board of
Directors. In the event that the Board of Directors
should at any time determine, upon reasonable inquiry
and investigation, including consultation with such
Persons as such directors shall deem appropriate, that
such Person has not met or complied with any condition
specified by the Board of Directors pursuant to the
preceding sentence, the Board of Directors may at any
time thereafter declare such Person to be an Adverse
Person pursuant to the provisions of this
Section 11(a)(ii).
(iii) In the event that the number of shares of
Common Stock which are authorized by the Company's
Amended and Restated Articles of Incorporation but not
outstanding or reserved for issuance for purposes other
than upon exercise of the Rights are not sufficient to
permit the exercise in full of the Rights in accordance
with the foregoing subparagraph (ii) of this
Section 11(a), the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess, the
"Spread"), and (B) with respect to each Right, make
adequate provision to substitute for the Adjustment
Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without
limitation, shares, or units of shares, of preferred
stock which the Board of Directors of the Company has
deemed to have substantially the same value as shares
of Common Stock (such shares of preferred stock,
"common stock equivalents")), (4) debt securities of
the Company, (5) other assets, or (6) any combination
of the foregoing, having an aggregate value equal to
the Current Value (less the amount of any reduction in
the Purchase Price), where such aggregate value has
been determined by the Board of Directors of the
Company based upon the advice of one or more investment
or financial advisors selected by the Board of
<PAGE>
Directors of the Company; provided, however, if the
Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and
(y) being referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares
of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith
that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon
exercise in full of the Rights, 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 period,
as it may be extended, the "Substitution Period"). To
the extent that the Company determines that some action
need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all outstanding
Rights, and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period
in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution
to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such
suspension, the Company shall issue a public
announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is
no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall
be the current market price (as determined pursuant to
Section 11(d) hereof) per share of the Common Stock on
the Section 11(a)(ii) Trigger Date and the value of any
"common stock equivalent" shall be deemed to have the
same value as the Common Stock on such date.
(iv) In lieu of issuing shares of Common Stock
in accordance with subparagraph (ii) of this Section
11(a), the Company may with respect to each Right, if a
majority of members of the Board of Directors determine
that such action is in the best interests of the
Company and not contrary to the interests of the
holders of Rights, make adequate provision to
<PAGE>
substitute for the Adjustment Shares, (x) upon the
surrender for exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in
Purchase Price, (3) Common Stock, or other equity
securities of the Company (including without limitation
common stock equivalents), (4) debt securities of the
Company, (5) other assets or (6) any combination of the
foregoing having an aggregate value equal to the
Current Value where such aggregate value has been
determined by the Board of Directors of the Company
based upon the advice of one or more investment or
financial advisers selected by the Board of Directors
of the Company or (y) upon the surrender for exercise
of a Right and without requiring payment of the
Purchase Price, (1) cash, (2) Common Stock or other
equity securities of the Company (including, without
limitation, common stock equivalents), (3) debt
securities of the Company, (4) other assets or (5) any
combination of the foregoing, having an aggregate value
equal to the Spread where such aggregate value has been
determined by the Board of Directors of the Company
based upon the advice of one or more investment or
financial advisors selected by the Board of Directors
of the Company.
(b) In case the Company shall fix a record
date for the issuance of rights, options or warrants to
all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date)
Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of Preferred
Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock
or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible
into Preferred Stock or equivalent preferred stock)
less than the current market price (as determined
pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, the Purchase Price
to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus
<PAGE>
the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares
of Preferred Stock and/or equivalent preferred stock so
to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered)
would purchase at such current market price, and the
denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date, plus
the number of additional shares of Preferred Stock
and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form
other than cash, the value of such consideration shall
be as determined in good faith by the Board of
Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the
holders of the Rights. Shares of Preferred Stock owned
by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such
computation. Such adjustment shall be made
successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record
date for a distribution to all holders of Preferred
Stock (including any such distribution made in
connection with a consolidation, statutory share
exchange or merger in which the Company is the
continuing corporation) of evidences of indebtedness,
cash (other than a regular quarterly cash dividend out
of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock
other than Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall
be the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on
such record date, less the fair market value (as
determined in good faith by the Board of Directors of
the Company, whose determination shall be described in
a statement filed with the Rights Agent) of the portion
of the cash, assets or evidences of indebtedness so to
be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and
the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock. Such adjustments shall
be made successively whenever such a record date is
fixed, and in the event that such distribution is not
so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such
record date had not been fixed.
<PAGE>
(d)(i) For the purpose of any computation
hereunder, other than computations made pursuant to
Section 11(a)(iii) and Section 11(a)(iv) hereof, the
"current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date,
and for purposes of computations made pursuant to
Section 11(a)(iii) and Section 11(a)(iv) hereof, the
"current market price" per share of Common Stock on any
date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the
ten (10) consecutive Trading Days immediately following
such date; provided, however, that in the event that
the current market price per share of the Common Stock
is determined during a period following the
announcement by the issuer of such Common Stock of (A)
a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities
convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination
or reclassification of such Common Stock, and prior to
the expiration of the requisite thirty (30) Trading Day
or ten (10) Trading Day period, as set forth above,
after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such
case, the "current market price" shall be properly
adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the
shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system
with respect to securities listed on the principal
national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if
the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the
over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then
in use, or, if on any such date the shares of Common
Stock are not quoted by any such organization, the
average of the closing bid and asked prices as
<PAGE>
furnished by a professional market maker making a
market in the Common Stock selected by the Board of
Directors of the Company. If on any such date no
market maker is making a market in the Common Stock,
the fair value of such shares on such date as
determined in good faith by the Board of Directors of
the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national
securities exchange on which the shares of Common Stock
are listed or admitted to trading is open for the
transaction of business or, if the shares of Common
Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or
traded, "current market price" per share shall mean the
fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the "current market price" per share of
Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in clause (i)
of this Section 11(d) (other than the last sentence
thereof). If the current market price per share of
Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not
publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the "current
market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as
such number may be appropriately adjusted for such
events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied
by the current market price per share of the Common
Stock. If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, "current
market price" per share of the Preferred Stock shall
mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the
"current market price" of one one- hundredth of a share
of Preferred Stock shall be equal to the "current
market price" of one share of Preferred Stock divided
by 100.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require
an increase or decrease of at least one percent (1%) in
<PAGE>
the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the
nearest cent or to the nearest ten-thousandth of a
share of Common Stock or other share or one-millionth
of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of
(i) three (3) years from the date of the transaction
which mandates such adjustment, or (ii) the Expiration
Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof,
the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock
other than Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock
contained in Sections 11(a), (b), (c), (e), (g), (h),
(i), (j) and (l), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a share of Preferred Stock
purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised
its election as provided in Section 11(i), upon each
adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number
of one one- hundredths of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of
a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the
<PAGE>
Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust
the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each
of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of
one one- hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one ten-
thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust
the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount
of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than
the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to
be distributed to holders of record of Rights
Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior
to the date of adjustment, and upon surrender thereof,
if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of
the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or
change in the Purchase Price or the number of one
one-hundredths of a share of Preferred Stock issuable
upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may
<PAGE>
continue to express the Purchase Price per one
one-hundredth of a share and the number of one
one-hundredths of a share which were expressed in the
initial Rights Certificates issued hereunder.
(k) In any case in which this Section 11
shall require that an adjustment in the Purchase Price
be made effective as of a record date for a specified
event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of
any Right exercised after such record date of the
number of one one-hundredths of a share of Preferred
Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of
Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive
such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring
such adjustment.
(l) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by
this Section 11, as and to the extent that in their
good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that
any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of
Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are
convertible into or exchangeable for shares of
Preferred Stock, (iv) stock dividends or (v) issuance
of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of
its Preferred Stock shall not be taxable to such
stockholders.
(m) The Company covenants and agrees that
it shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which
complies with Section 11(n) hereof), (ii) merge with or
into or enter into a statutory share exchange with any
other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(n)
hereof), or (iii) sell or transfer (or permit any
Subsidiary to sell or transfer), in one transaction, or
<PAGE>
a series of related transactions, assets or earning
power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with
Section 11(n) hereof), if (x) at the time of or
immediately after such consolidation, merger, statutory
share exchange, sale or transfer there are any rights,
warrants or other instruments or securities outstanding
or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such
consolidation, merger, sale or transfer, the
stockholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its
Affiliates and Associates.
(n) The Company covenants and agrees that,
after the Distribution Date, it will not, except as
permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable
that such action will diminish substantially or
otherwise eliminate the benefits intended to be
afforded by the Rights.
(o) Anything in this Agreement to the
contrary notwithstanding, in the event that the Company
shall at any time on or after the Rights Dividend
Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common
Stock payable in shares of Common Stock, (ii) subdivide
the outstanding shares of Common Stock, or (iii)
combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights
associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but
prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock
following any such event shall equal the result
obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to
such event by a fraction the numerator of which shall
be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total
number of shares of Common Stock outstanding
immediately following the occurrence of such event.
<PAGE>
(p) Before taking any action that would
cause an adjustment reducing the Purchase Price below
the then par value, if any, of the Common Stock
issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable
shares of Common Stock at such adjusted Purchase Price.
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is
made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate
setting forth such adjustment and a brief statement of
the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a
copy of such certificate, and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in
accordance with Section 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 such
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 that, following the Stock
Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, enter into a statutory
share exchange or merge with and into, any other Person
(other than a Subsidiary of the Company in a
transaction which complies with Section 11(n) hereof),
and the Company shall not be the continuing or
surviving corporation of such consolidation, statutory
share exchange or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction which
complies with Section 11(n) hereof) shall consolidate
with, enter into a statutory share exchange with, or
merge with or into, the Company, and the Company shall
be the continuing or surviving corporation of such
consolidation, statutory share exchange or merger and,
in connection with such consolidation, statutory share
exchange or merger, all or part of the outstanding
shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the
Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related
<PAGE>
transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any Person
or Persons (other than the Company or any Subsidiary of
the Company in one or more transactions each of which
complies with Section 11(n) hereof), then, and in each
such case, proper provision shall be made so that: (i)
each holder of a Right, except holders described in
Section 7(e) hereof, shall thereafter have the right to
receive, upon the exercise thereof at the then- current
Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable
shares of Common Stock of the Principal Party (as such
term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by
(1) multiplying the then-current Purchase Price by the
number of one one-hundredths of a share of Preferred
Stock for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying
the number of such one one-hundredths of a share of
Preferred Stock for which a Right was exercisable
immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and
dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to
as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2) 50% of the current
market price (determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock of such Principal
Party on the date of consummation of such Section 13
Event; (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to
such Principal Party following the first occurrence of
a Section 13 Event; (iv) such Principal Party shall
take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its
Common Stock) in connection with the consummation of
any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its
shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
<PAGE>
(b) "Principal Party" shall mean
(i) in the case of any transaction
described in clause (x) or (y) of the first
sentence of Section 13(a), the Person that is
the issuer of any securities into which shares
of Common Stock of the Company are converted in
such merger, statutory share exchange or
consolidation, and if no securities are so
issued, the Person that is the other party to
such merger, statutory share exchange or
consolidation; and
(ii) in the case of any transaction
described in clause (z) of the first sentence of
Section 13(a), the Person that is the party
receiving the greatest portion of the assets or
earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve (12)
month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall
refer to such other Person; and (2) in case such Person
is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stocks of two or more of which
are and have been so registered, "Principal Party"
shall refer to whichever of such Persons is the issuer
of the Common Stock having the greatest aggregate
market value.
(c) The Company shall not consummate any
such consolidation, statutory share exchange, merger,
sale or transfer unless the Principal Party shall have
a sufficient number of authorized shares of its Common
Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights
in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set
forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after
the date of any consolidation, statutory share
exchange, merger, sale or transfer mentioned in
paragraph (a) of this Section 13, the Principal Party
will:
<PAGE>
(i) prepare and file a registration
statement under the Act, with respect to the
Rights and the securities purchasable upon
exercise of the Rights on an appropriate form,
and will use its best efforts to cause such
registration statement to (A) become effective
as soon as practicable after such filing and
(B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until
the Expiration Date; and
(ii) deliver to holders of the Rights
historical financial statements for the
Principal Party and each of its Affiliates which
comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply
to successive mergers, statutory share exchanges or
consolidations or sales or other transfers. In the
event that a Section 13 Event shall occur at any time
after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described
in Section 13(a).
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(o) hereof,
or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights,
there may be paid to the registered holders of the
Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the
current market value of a whole Right. For purposes of
this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
The closing price of the Rights for any day shall be
the last sale price, regular way, or in case no such
sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either
case as reported in the principal consolidated
transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted
to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting
system with respect to securities listed on the
<PAGE>
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 shares of Preferred Stock (other
than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of
one one- hundredths of a share of Preferred Stock). In
lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-hundredths of a share
of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current
market value of one one- hundredths of a share of
Preferred Stock. For purposes of this Section 14(b),
the current market value of one one-hundredths of a
share of Preferred Stock shall be one one-hundredths of
the closing price of a share of Preferred Stock (as
determined pursuant to Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a
Triggering Event, the Company shall not be required to
issue fractions of shares of Common Stock upon exercise
of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the
current market value of one (1) share of Common Stock.
For purposes of this Section 14(c), the current market
value of one share of Common Stock shall be the closing
price of one share of Common Stock (as determined
<PAGE>
pursuant to Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance
of the Rights expressly waives his right to receive any
fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of
action in respect of this Agreement, other than rights
of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective
registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders
of the Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the
Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach
of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the
obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders. Every
holder of a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the
principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with
the appropriate forms and certificates fully executed;
<PAGE>
(c) subject to Section 6(a) and
Section 7(f) hereof, the Company and the Rights Agent
may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice
to the contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of
a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted
or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any
Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of
the number of one one-hundredths of a share of
Preferred Stock or any other securities of the Company
which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting
stockholders (except as provided in Section 24 hereof),
or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in
accordance with the provisions hereof.
<PAGE>
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered
by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel
fees and disbursements and other disbursements incurred
in the administration and execution of this Agreement
and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part
of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs
and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and
shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company,
instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to
be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change
of Name of Rights Agent.
(a) Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or
with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to
the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on
the part of any of the parties hereto; provided,
however, that such corporation would be eligible for
appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights
Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt
the countersignature of a predecessor Rights Agent and
<PAGE>
deliver such Rights Certificates so countersigned; and
in case at that time any of the Rights Certificates
shall not have been countersigned, any successor Rights
Agent may countersign such Rights Certificates either
in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of
the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have
been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights
Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights
Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and
the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter
(including, without limitation, the identity of any
Acquiring Person or Adverse Person and the
determination of "current market price") be proved or
established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of
the Board, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or
any Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
<PAGE>
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable
for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except
as to its countersignature on such Rights
Certificates), but all such statements and recitals are
and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company
of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the
provisions of Section 11 or Section 13 hereof or
responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except
with respect to the exercise of Rights evidenced by
Rights Certificates after receipt of the certificate
described in Section 12 hereof setting forth any such
adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common
Stock or Preferred Stock to be issued pursuant to this
Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will,
when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to
be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman
of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer of the Company, and to apply to
<PAGE>
such officers for advice or instructions in connection
with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good
faith in accordance with instructions of any such
officer.
(h) 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 Rights 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 the Chairman of the
Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer 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.
(i) 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.
(j) The Rights Agent may execute and
exercise any of the rights or powers hereby vested in
it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection
and continued employment thereof.
(k) No provision of this Agreement shall
require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the
<PAGE>
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) If, with respect to any Rights
Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as
the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or
transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and
thereby be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing
mailed to the Company, and to each transfer agent of
the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and
to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after
giving notice of such removal or after it has been
notified in writing of such resignation or incapacity
by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with
such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder
of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be
(a) a corporation or financial institution organized
and doing business under the laws of the United States
or of the States of New York or North Carolina (or of
any other state of the United States so long as such
corporation is authorized to do business as a banking
institution in the States of New York or North
Carolina), in good standing, and having a principal
office in the States of New York or North Carolina,
<PAGE>
which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or
examination by federal or state authority and which has
at the time of its appointment as Rights Agent a
combined capital and surplus of at least $10,000,000 or
(b) an affiliate of a corporation or financial
institution described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and
responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver, and transfer to
the successor Rights Agent any property at the time
held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights
Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities
or property purchasable under the Rights Certificates
made in accordance with the provisions of this
Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following
the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued
by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in
connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be
issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a
significant risk of material adverse tax consequences
<PAGE>
to the Company or the Person to whom such Rights
Certificate would be issued, and (ii) no such Rights
Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made
in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a)(i) The Board of Directors of the
Company may, at its option, at any time prior to the
earlier of (x) the close of business on the tenth
Business Day following the Stock Acquisition Date (or,
if the Stock Acquisition Date shall have occurred prior
to the Record Date, the close of business on the tenth
Business Day following the Record Date), or (y) the
Final Expiration Date, redeem all but not less than all
the then outstanding Rights at a redemption price of
$0.01 per Right, as such amount may be appropriately
adjusted, as determined by the Board of Directors, to
reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the
"Redemption Price"). Notwithstanding the foregoing,
but subject to Section 23(a)(ii) hereof, the Board of
Directors of the Company may not redeem any Rights
after the tenth Business Day following the effective
date of any declaration that any Person is an Adverse
Person (as provided in Section 11(a)(ii)(B)).
(ii) If, following the occurrence of a
Stock Acquisition Date and/or following the expiration
of the right of redemption hereunder but prior to any
Triggering Event, (x) a Person who is an Acquiring
Person shall have transferred or otherwise disposed of
a number of shares of Common Stock in one transaction
or series of transactions, not directly or indirectly
involving the Company or any of its Subsidiaries, which
did not result in the occurrence of a Triggering Event
such that such Person is thereafter a Beneficial Owner
of less than 10% of the outstanding shares of Common
Stock, and (y) there are no other Persons, immediately
following the occurrence of the event described in
clause (x), who are Acquiring Persons or Adverse
Persons, then the right of redemption shall be
reinstated and thereafter be subject to the provisions
of this Section 23.
(iii) Notwithstanding anything
contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of
an event described in Section 11(a)(ii) until such time
as the Company's right of redemption hereunder has
expired.
<PAGE>
(iv) The Company may, at its option,
pay the Redemption Price in cash, shares of Common
Stock (based on the "current market price," as defined
in Section 11(d)(i) hereof, of the Common Stock at the
time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the
Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any
further action and without any notice, the right to
exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive
the Redemption Price for each Right so held. Promptly
after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders
of the then outstanding Rights by mailing such notice
to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books
of the Transfer Agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price
will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders
of Preferred Stock or to make any other distribution to
the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect
any reclassification of its Preferred Stock (other than
a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to
effect any consolidation, statutory share exchange or
merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which
complies with Section 11(n) hereof), or to effect any
sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in
one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any
<PAGE>
other Person or Persons (other than the Company and/or
any of its Subsidiaries in one or more transactions
each of which complies with Section 11(n) hereof), or
(v) to effect the liquidation, dissolution or winding
up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to
the extent feasible and in accordance with Section 25
hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the
date on which such reclassification, consolidation,
statutory share exchange, merger, sale, transfer,
liquidation, dissolution, or winding up is to take
place and the date of participation therein by the
holders of the shares of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given
in the case of any action covered by clause (i) or (ii)
above at least twenty (20) days prior to the record
date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of
any such other action, at least twenty (20) days prior
to the date of the taking of such proposed action or
the date of participation therein by the holders of the
shares of Preferred Stock, whichever shall be the
earlier.
(b) In case any of the events set forth in
Section 11(a)(ii) hereof shall occur, then, in any such
case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate,
to the extent feasible and in accordance with
Section 25 hereof, a notice of the occurrence of such
event, which shall specify the event and the
consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in
the preceding paragraph to Preferred Stock shall be
deemed thereafter to refer to Common Stock and/or, if
appropriate, other securities.
Section 25. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or
made if delivered by hand, sent by overnight courier or
sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the
Rights Agent) as follows:
Southern National Corporation
200 West Second Street
Winston-Salem, NC 27101-4036
Attention: Secretary
<PAGE>
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made
by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be
sufficiently given or made if delivered by hand, sent
by overnight courier or sent by first-class mail,
postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Branch Banking and Trust Company
200 West Second Street
Winston-Salem, NC 27101-4036
Attention: Secretary
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be
sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the
address of such holder as shown on the registry books
of the Company.
Section 26. Supplements and Amendments. Prior
to the Distribution Date, the Company and the Rights
Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the
approval of any holders of certificates representing
shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend
this Agreement without the approval of any holders of
Rights Certificates in order (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen
any time period hereunder, including the Final
Expiration Date, (iv) to alter the Purchase Price if
the Final Expiration Date is changed, or (v) to change
or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring
Person, an Adverse Person or an Affiliate or Associate
of any such Person); provided, this Agreement may not
be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or (B) any
other time period unless such lengthening of such other
time period is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to,
the holders of Rights. Upon the delivery of a
<PAGE>
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 26, the
Rights Agent shall execute such supplement or
amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common
Stock.
Section 27. 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 28. Determinations and Actions by the
Board of Directors, etc. (a) For all purposes of this
Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time,
including for purposes of determining the particular
percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act as in effect on the date hereof. The
Board of Directors of the Company (or, as set forth
herein, certain specified members thereof) shall have
the exclusive power and authority to administer this
Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the
Company or to the Company, or as may be necessary or
advisable in the administration of this 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, but not limited to, a determination to
redeem or not redeem the Rights, to declare that a
Person is an Adverse Person 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) which 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 and all
other parties, and (y) not subject the Board to any
liability to the holders of the Rights.
(b) For purposes of this Agreement, any
determination to be made by the Board of Directors of
the Company may be made by a duly constituted committee
thereof if so authorized to act by the Board of
Directors pursuant to the Company's Bylaws, and in such
<PAGE>
circumstances any reference to the Board of Directors
herein shall be deemed to include a reference to such
committee.
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 Rights Certificates (and,
prior to the Distribution Date, registered holders of
the Common Stock) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company,
the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 30. Severability. If any term,
provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith
judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect
of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth
Business Day following the date of such determination
by the Board of Directors of the Company.
Section 31. Governing Law. This Agreement,
each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of
the State of North Carolina and for all purposes shall
be governed by and construed in accordance with the
laws of such State applicable to contracts made and to
be performed entirely within such State.
Section 32. 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 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
<PAGE>
affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above
written.
Attest: SOUTHERN NATIONAL CORPORATION
By ____________________ By ____________________
Name: Name:
Title: Title:
Attest: BRANCH BANKING AND TRUST
COMPANY
By ____________________ By ____________________
Name: Name:
Title: Title:
<PAGE>
Exhibit A
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER DECEMBER 31, 2006 OR
EARLIER IF REDEEMED BY THE COMPANY, UNLESS
EXTENDED BY THE COMPANY. THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIR-
ING [ADVERSE] PERSON OR AN AFFILIATE OR ASSO-
CIATE OF AN ACQUIRING [ADVERSE] PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.] 1
Rights Certificate
SOUTHERN NATIONAL CORPORATION
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 December 17, 1996 (the "Rights Agreement"),
between Southern National Corporation, a North Carolina
corporation (the "Company"), and Branch Banking and
Trust Company (the "Rights Agent"), to purchase from
the Company at any time prior to 5:00 P.M.
___________________
1 The portion of the legend
in brackets shall be inserted
only if applicable, shall be
modified to apply to an
Acquiring Person or an Adverse
Person, as applicable, and
shall replace the preceding
sentence.
<PAGE>
(Winston-Salem, North Carolina time) on December 31,
2006 at the office or offices of the Rights Agent
designated for such purpose, or its successors as
Rights Agent, one one- hundredths of a fully paid,
nonassessable share of Series B Preferred Stock designated
as Junior Participating Preferred Stock (the "Preferred
Stock") of the Company, at a purchase price of $145.00 per
one one-hundredths of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related
Certificate duly executed. The Purchase Price may be
paid in cash or by certified bank check or money order
payable to the order of the Company. The number of
Rights evidenced by this Rights Certificate (and the
number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase
Price as of December 17, 1996, based on the Preferred
Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event
(as such term is defined in the Rights Agreement), if
the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such
Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring
Person, Adverse Person, Associate or Affiliate, or
(iii) under certain circumstances specified in the
Rights Agreement, a transferee of a person who, after
such transfer, became an Acquiring Person, an Adverse
Person or an Affiliate or Associate of any such Person,
such Rights shall become null and void and no holder
hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares of
Preferred Stock or other securities which may be
purchased upon the exercise of the Rights evidenced by
this Rights Certificate are subject to modification and
adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in
the Rights Agreement).
This Rights Certificate is subject to all of the
terms, provisions, and conditions of the Rights
Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is
hereby made for a full description of the rights,
limitations of rights, obligations, duties and
<PAGE>
immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension
of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are available upon
written request to the Company.
This Rights Certificate, with or without other
Rights Certificates, upon surrender at the principal
office or offices of the Rights Agent designated for
such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and
date evidencing Rights entitling the holder to purchase
a like aggregate number of one one-hundredths of a
share of Preferred Stock as the Rights evidenced by the
Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Certificate may
be redeemed by the Company at its option at a
redemption price of $0.01 per Right at any time prior
to the earliest of the close of business on (i) the
tenth business day following the Stock Acquisition Date
(as such time period may be extended pursuant to the
Rights Agreement), (ii) the tenth business day
following the effectiveness of a declaration by the
Board of Directors that a Person is an Adverse Person,
and (iii) the Final Expiration Date. After the
expiration of the redemption period, the Company's
right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to less than
10% of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the
Company and there are no other Acquiring Persons or
Adverse Persons.
The Company may (but shall not be required to)
issue fractional shares of Preferred Stock upon the
exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock, which may,
at the election of the Company, be evidenced by
depositary receipts), and in lieu thereof a cash
payment may be made, as provided in the Rights
Agreement.
<PAGE>
No holder of this Rights Certificate, as such,
shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the
Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a
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 Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS, the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of ____________ __, ______
ATTEST: SOUTHERN NATIONAL CORPORATION
____________________ By ____________________
Secretary Title:
Countersigned:
BRANCH BANKING AND TRUST
COMPANY
By ________________________
Authorized Signature
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________________________
hereby
sells, assigns and transfers unto __________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably
constitute and appoint ________________ Attorney, to
transfer the within Rights Certificate on the books of
the within-named Company, with full power of
substitution.
Dated: ____________ __, ______
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not
being sold, assigned and transferred by or on behalf of
a Person who is or was an Acquiring Person, an Adverse
Person or an Affiliate or Associate of any such Person
(as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge
of the undersigned, it [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring
<PAGE>
Person, an Adverse Person or an Affiliate or Associate
of any such Person.
Dated: ____________ __, ______
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon
the face of this Rights Certificate in every
particular, without alteration or enlargement or any
change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: SOUTHERN NATIONAL CORPORATION
The undersigned hereby irrevocably elects to
exercise ______________ Rights represented by this
Rights Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person
which may be issuable upon the exercise of the Rights)
and requests that certificates for such shares be
issued in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new
Rights Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: ____________ __, ______
Signature
Signature Guaranteed:
<PAGE>
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights
Certificate [ ] are [ ] are not being exercised by or
on behalf of a Person who is or was an Acquiring
Person, an Adverse Person or an Affiliate or Associate
of any such Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge
of the undersigned, it [ ] did [ ] did not acquire the
Rights evidenced by this Rights Certificate from any
Person who is, was or became an Acquiring Person, an
Adverse Person or an Affiliate or Associate of any such
Person.
Dated: ______________ __, ______
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to
Purchase and Certificate must correspond to the name as
written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or
any change whatsoever.
<PAGE>
Exhibit B
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On December 17, 1996, the Board of Directors of
Southern National Corporation (the "Company") declared
a dividend distribution of one Right for each
outstanding share of Company Common Stock to
stockholders of record at the close of business on
January 17, 1997. One Right will also be distributed
for each share of Common Stock issued after January 17,
1997, until the Distribution Date (which is described
in the next paragraph). Each Right entitles the
registered holder to purchase from the Company a unit
consisting of one one-hundredths of a share (a "Unit")
of Series B Preferred Stock, designated as Junior
Participating Preferred Stock (the "Preferred Stock"),
at a Purchase Price of $145.00 per Unit, subject to
adjustment. The description and terms of the Rights
are set forth in a Rights Agreement dated as of
December 17, 1996 (the "Rights Agreement") between the
Company and Branch Banking and Trust Company, as Rights
Agent.
Initially, the Rights will be attached to all
Common Stock certificates representing shares then
outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the
Common Stock and a Distribution Date will occur upon
the earliest of (i) 10 business days following a public
announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), (ii) 10
business days following the commencement of a tender
offer or exchange offer that would if consummated
result in a person or group beneficially owning 20% or
more of such outstanding shares of Common Stock,
subject to certain limitations, or (iii) 10 business
days after the Board of Directors of the Company shall
declare any Person to be an "Adverse Person," upon a
determination that such person, alone or together with
its affiliates and associates, has or will become the
Beneficial Owner of 10% or more of the outstanding
shares of Common Stock (provided that any such
determination shall not be effective until such Person
has become the Beneficial Owner of 10% or more of the
outstanding shares of Common Stock), including
consultation with such persons as such directors shall
deem appropriate, that (a) such beneficial ownership by
such person is intended to cause, is reasonably likely
<PAGE>
to cause or will cause the Company to repurchase the
Common Stock beneficially owned by such person or to
cause pressure on the Company to take action or enter
into a transaction or series of transactions intended
to provide such person with short-term financial gain
under circumstances where the Board of Directors
determines that the best long-term interests of the
Company and its stockholders would not be served by
taking such action or entering into such transactions
or series of transactions at that time or (b) such
beneficial ownership is causing or is reasonably likely
to cause a material adverse impact (including, but not
limited to, impairment of relationships with customers
or impairment of the Company's ability to maintain its
competitive position) on the business or prospects of
the Company or (c) such beneficial ownership otherwise
is determined to be not in the best interests of the
Company and its stockholders, employees, customers and
communities in which the Company and its subsidiaries
do business.
However, the Board of Directors may not declare
a person to be an Adverse Person if, prior to the time
that the person acquired 10% or more of the shares of
Common Stock then outstanding, such person provided to
the Board of Directors in writing a statement of the
person's purpose and intentions in connection with the
proposed acquisition of Common Stock, together with any
other information reasonably requested of the person by
the Board of Directors, and the Board of Directors,
based on such statement and reasonable inquiry and
investigation as it deems appropriate, determines to
notify and notifies such person in writing that it will
not declare the person to be an Adverse Person;
provided, however, that the Board of Directors may
expressly condition in any manner a determination not
to declare a person an Adverse Person on such
conditions as the Board of Directors may select,
including, without limitation, such person's not
acquiring more than a specified amount of stock and/or
on such person's not taking actions inconsistent with
the purposes and intentions disclosed by such person in
the statement provided to the Board of Directors. In
the event that the Board of Directors should at any
time determine, upon reasonable inquiry and
investigation, that such person has not met or complied
with any conditions specified by the Board of
Directors, the Board of Directors may at any time
thereafter declare the person to be an Adverse Person.
Until the Distribution Date (i) the Rights will
be evidenced by the Common Stock certificates and will
be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued
<PAGE>
after January 17, 1997 will contain a notation
incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates
for Common Stock outstanding will also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the
Distribution Date and will expire at the close of
business on December 31, 2006, subject to extension by
the Board of Directors, or unless earlier redeemed by
the Company as described below.
As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of
record of the Common Stock as of the close of business
on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
Except for certain issuances in connection with
outstanding options and convertible securities and as
otherwise determined by the Board of Directors, only
shares of Common Stock issued prior to the Distribution
Date will be issued with Rights.
In the event that the Board of Directors
determines that a person is an Adverse Person or, at
any time following the Distribution Date, a person
becomes the beneficial owner of 25% or more of the
then-outstanding shares of Common Stock, each holder of
a Right will thereafter have the right to receive at
the time specified in the Rights Agreement, (x) upon
exercise and payment of the exercise price, Common
Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal
to two times the exercise price of the Right or (y) at
the discretion of the Board of Directors, upon exercise
and without payment of the exercise price, Common Stock
(or, in certain circumstances, cash, property or other
securities of the Company) having a value equal to the
difference between the exercise price of the Right and
the value of the consideration which would be payable
under clause (x). Notwithstanding any of the
foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any
Acquiring Person or Adverse Person will be null and
void. However, Rights are not exercisable following
the occurrence of either of the events set forth above
until such time as the Rights are no longer redeemable
by the Company as set forth below.
For example, at an exercise price of $145.00 per
Right, each Right not owned by an Acquiring Person or
<PAGE>
an Adverse Person (or by certain related parties)
following an event set forth in the preceding paragraph
would entitle its holder to purchase $290.00 worth of
Common Stock (or other consideration, as noted above)
for $145.00. Assuming that the Common Stock had a per
share value of $72.50 at such time, the holder of each
valid Right would be entitled to purchase four shares
of Common Stock for $145.00. Alternatively, at the
discretion of the Board of Directors, each Right
following an event set forth in the preceding
paragraph, without payment of the exercise price, would
entitle its holder to Common Stock (or other
consideration, as noted above) worth $145.00.
In the event that, at any time following the
Stock Acquisition Date, (i) the Company is acquired in
a merger, statutory share exchange or other business
combination transaction in which the Company is not the
surviving corporation, or (ii) 50% or more of the
Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights
which previously have been voided as set forth above)
shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having
a value equal to two times the exercise price of the
Right. The events set forth in this paragraph and in
the second preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, and the number of
Units of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock
are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than
the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu
thereof, an adjustment in cash will be made based on
the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
<PAGE>
In general, the Company may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right,
at any time until 10 business days following the Stock
Acquisition Date. Moreover, redemption would not be
permitted after 10 business days following the
effective date of any declaration by the Board of
Directors that any person is an Adverse Person. After
the redemption period has expired, the Company's right
of redemption may be reinstated if an Acquiring Person
or Adverse Person reduces his beneficial ownership to
less than 10% of the outstanding shares of Common Stock
in a transaction or series of transactions not
involving the Company and there are no other Acquiring
Persons or Adverse Persons. Immediately upon the
action of the Board of Directors ordering redemption of
the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the
$0.01 redemption price.
Until a Right is exercised, the holder thereof,
as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to
vote or to receive dividends. While the distribution
of the Rights will not be taxable to stockholders or to
the Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event
that the Rights become exercisable for stock (or other
consideration) of the Company or for common stock of
the acquiring company as set forth above.
Other than certain provisions relating to the
principal economic terms of the Rights under certain
specified circumstances, any of the provisions of the
Rights Agreement may be amended by the Board of
Directors of the Company prior to the Distribution
Date. After the Distribution Date, the provisions of
the Rights Agreement may be amended by the Board in
order to cure any ambiguity, to make changes which do
not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person or
Adverse Person), or to shorten or lengthen any time
period under the Rights Agreement; provided, however,
that no amendment to adjust the time period governing
redemption shall be made when the Rights are not
redeemable.
A copy of the Rights Agreement has been filed
with the Securities and Exchange Commission as an
Exhibit to a Registration Statement on Form 8-A dated
_____________, 1996. 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
<PAGE>
reference to the Rights Agreement, which is
incorporated herein by reference.
<PAGE>
Exhibit C
ARTICLES OF AMENDMENT
WITH RESPECT TO THE SERIES B JUNIOR PARTICIPATING
PREFERRED STOCK OF SOUTHERN NATIONAL CORPORATION
(Pursuant to Sections 55-6-02 and 55-10-06
of the North Carolina Business Corporations Act)
Southern National Corporation, a North Carolina
corporation (the "Corporation"), hereby submits these
Articles of Amendment for the purpose of amending its
Articles of Incorporation to determine the preferences,
limitations, and relative rights (within the limits set
forth in Section 55-6-01 of the North Carolina Business
Corporation Act) of a new series of Preferred Stock,
par value $5 per share:
(1) The name of the Corporation is Southern
National Corporation.
(2) Pursuant to authority granted by
Article IV of the Amended and Restated Articles of
Incorporation of the Corporation and in accordance with
the provisions of Section 55-6- 02 of the North
Carolina Business Corporation Act, the Board of
Directors of the Corporation duly adopted on
December 17, 1996, the following amendment to the
Articles of Incorporation of the Corporation:
1. Designation and Amount. The shares of
such series shall be designated as "Series B Junior
Participating Preferred Stock" and the number of shares
constituting such series initially shall be 2,000,000.
Such number of shares may be increased or decreased by
the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series B Junior
Participating Preferred Stock to a number less than the
number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the
Corporation convertible into Series B Junior
Participating Preferred Stock.
2. Dividends and Distributions.
(a) Subject to the prior and superior
rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the
shares of Series B Junior Participating Preferred Stock
with respect to dividends, the holders of shares of
<PAGE>
Series B Junior Participating Preferred Stock, in
preference to the holders of Common Stock, par value $5
per share, of the Corporation (the "Common Stock") and
of any other junior stock, 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
first day of February, May, August and November 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 B
Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the
greater of (a) $1.00 or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and
100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of
Series B Junior Participating Preferred Stock. In the
event the Corporation shall on or at any time after
December 17, 1996 (the "Rights Declaration Date") (i)
declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine or consolidate the outstanding
shares of Common Stock into a smaller number of shares,
then in each such case the amount to which holders of
shares of Series B Junior Participating Preferred Stock
were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator
of which is the number of shares of Common Stock
outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
(b) The Corporation shall declare a
dividend or distribution on the Series B 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); provided that,
subject to the requirements of applicable law and the
Articles of Incorporation, in the event no dividend or
distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend
<PAGE>
Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the
Series B Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series B Junior
Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue
of such shares of Series B 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 B 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 B
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 B 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 B Junior Participating Preferred Stock shall
have the following voting rights:
(a) Subject to the provision for adjustment
hereinafter set forth, each share of Series B Junior
Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote
of the shareholders of the Corporation. In the event
the Corporation shall at any time on or after the
Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii)
combine or consolidate the outstanding Common Stock
into a smaller number of shares, then in each such case
the number of votes per share to which holders of
<PAGE>
shares of Series B Junior Participating Preferred Stock
were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided herein, in
any other amendment to the Articles of Incorporation of
the Corporation or by law, the holders of shares of
Series B Junior Participating Preferred Stock and the
holders of shares of Common Stock shall vote together
as one group on all matters submitted to a vote of
shareholders of the Corporation.
(c) Except as set forth herein, holders of
Series B 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 B
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 B Junior
Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on,
redeem or purchase or otherwise acquire for
consideration, or make any other distributions
on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or
winding up) to the Series B Junior Participating
Preferred Stock;
(ii) declare or pay dividends on,
redeem or purchase or otherwise acquire for
consideration, or make any other distributions
on any shares of stock ranking on a parity
(either as to dividends or upon liquidation,
dissolution or winding up) with the Series B
Junior Participating Preferred Stock, provided
that there may be declared and paid ratably
dividends on the Series B Junior Participating
Preferred Stock and all such parity stock on
which dividends are payable or in arrears in
<PAGE>
proportion to the total amounts to which the
holders of all such shares are then entitled;
and provided further that the Corporation may at
any time redeem or purchase or otherwise acquire
shares of any such parity stock in exchange for
shares of any stock of the Corporation ranking
junior (either as to dividends or upon
dissolution, liquidation or winding up) to the
Series B Junior Participating Preferred Stock;
(iii) purchase or otherwise acquire
for consideration any shares of Series B Junior
Participating Preferred Stock, or redeem or
purchase or otherwise acquire any shares of
stock ranking on a parity with the Series B
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 such shares upon
such terms as the Board of Directors, after
consideration of the respective annual dividend
rates and other relative rights and preferences
of the respective series and classes, shall
determine in good faith will result in fair and
equitable treatment among the respective series
or classes.
(b) The Corporation shall not permit any
subsidiary of the Corporation (for the account of such
subsidiary) 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.
(c) No dividend shall be declared and paid,
or set apart for payment on, any share of the Series B
Junior Participating Preferred Stock or any share of
any other series of Preferred Stock or any share of any
class of stock, or series thereof, ranking on a parity
with this Series as to dividends, for any dividend
period unless at the same time a like proportionate
dividend for the same dividend period, ratably in
proportion to the respective dividends applicable
thereto, shall be declared and paid, or set apart for
payment on, all shares of this Series and all shares of
all other series of Preferred Stock and all shares of
any class, or series thereof, ranking on a parity with
this Series as to dividends, then issued and
outstanding and entitled to receive dividends.
5. Reacquired Shares. Any shares of Series B
Junior Participating Preferred Stock purchased or
otherwise acquired by the Corporation in any manner
<PAGE>
whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall
upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock, subject to the
conditions and restrictions on issuance set forth
herein, in the Articles of Incorporation of the
Corporation (including Articles of Amendment duly
adopted in accordance with the North Carolina Business
Corporation Act), creating a series of Preferred Stock
or any similar stock, or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up.
(a) Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding
up) to the Series B Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of
Series B Junior Participating Preferred Stock shall
have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment
(the "Series B Liquidation Preference"). Following the
payment of the full amount of the Series B Liquidation
Preference, no additional distributions shall be made
to the holders of shares of Series B Junior
Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the
Series B Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph (c)
below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the
Common Stock) (such number in clause (ii), the
"Adjustment Number"). Following the payment of the
full amount of the Series B Liquidation Preference and
the Common Adjustment in respect of all outstanding
shares of Series B Junior Participating Preferred Stock
and Common Stock, respectively, holders of Series B
Junior Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to
one (1) with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(b) In the event, however, that there are
not sufficient assets available to permit payment in
full of the Series B Liquidation Preference and the
liquidation preferences of all other series of
<PAGE>
Preferred Stock, if any, which rank on a parity with
the Series B Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to
their respective liquidation preferences. In the event
that there are not sufficient assets available to
permit payment in full of the Common Adjustment, then
such remaining assets shall be distributed ratably to
the holders of Common Stock.
(c) In the event the Corporation shall at
any time on or after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case
the 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.
(d) Neither the sale, lease or conveyance
of all or substantially all of the property or business
of the Corporation, nor the merger, consolidation or
statutory share exchange of the Corporation into or
with any other corporation or the merger, consolidation
or statutory share exchange of any other corporation
into or with the Corporation, shall be deemed to be a
liquidation, dissolution or winding-up, voluntary or
involuntary, for the purposes of this Paragraph 6.
7. Statutory Share Exchange, Merger
Consolidation, etc. In case the Corporation shall
enter into any statutory share exchange, merger,
consolidation, combination or other transaction in
which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any
other property, then in any such case the shares of
Series B Junior Participating Preferred Stock shall at
the same time be similarly exchanged or changed in an
amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times
the aggregate amount of stock, securities, cash and/or
any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Corporation
shall at any time on or after the Rights Declaration
Date (i) declare any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine or
consolidate the outstanding Common Stock into a smaller
<PAGE>
number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the
exchange or change of shares of Series B Junior
Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock
outstanding immediately after such event and the
denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such
event.
8. No Redemption. The shares of Series A
Junior Participating Preferred Stock shall not be
redeemable.
9. Ranking. The Series B Junior Participating
Preferred Stock shall rank junior to all other series
of the Corporation's Preferred Stock as to the payment
of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
10. Amendment. The Articles of Incorporation
of the Corporation shall not be further amended in any
manner which would materially alter or change the
powers, preferences or special rights of the Series B
Junior Participating Preferred Stock so as to affect
them adversely, except in accordance with the
provisions of Section 55-10-04 of the North Carolina
Business Corporation Act, or as otherwise permitted by
law.
11. Fractional Shares. Series B Junior
Participating Preferred Stock may be issued in
fractions of a share (which shall be integral multiples
of one one-hundredth of a share of Series B Junior
Participating Preferred Stock), which 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 B Junior
Participating Preferred Stock.
* * *
<PAGE>
This ___ day of January 1997.
SOUTHERN NATIONAL CORPORATION
By:__________________________
Name:
Title:
