SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 15, 1999
THE SOUTHERN BANC COMPANY, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 1-13964 63-1146351
-------- ------- ----------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
221 S. 6th Street, Gadsden, Alabama 35901-4102
----------------------------------------------
(Address of principal executive offices)
(256) 543-3860
--------------
Registrant's telephone number, including area code
Not Applicable
--------------
(Former Name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On July 15, 1999, the Board of Directors of The Southern Banc Company,
Inc. (the "Company") declared a dividend of one common share purchase right (a
"Right") for each outstanding share of common stock, par value $ .01 per share
(the "Common Shares"), of the Company. The dividend is payable on August 2, 1999
to the stockholders of record on August 2, 1999 (the "Record Date").
The Rights become exercisable on the first date after the Distribution
Date (as defined below), and not before. Upon the Distribution Date, each Right
will initially entitle the registered holder to purchase from the Company one
one-hundredth of a Common Share at a price of $30.00 (the "Purchase Price"),
subject to adjustment. In addition, under certain events described below, the
Rights will entitle the holder to purchase Common Shares of the Company or
securities of an acquiring company at a 50% discount. The complete terms of the
Rights are set forth in a Rights Agreement, as may be amended from time to time
(the "Rights Agreement") between the Company and Registrar and Transfer Company,
as Rights Agent (the "Rights Agent").
Until the Distribution Date: (i) the Rights will be evidenced by the
outstanding certificates for Common Shares and will be transferred with and only
with the Common Share certificates and no separate Right Certificates will be
distributed; (ii) new certificates for Common Shares issued after the close of
business on August 2, 1999 will contain a notation incorporating the Rights
Agreement by reference; and (iii) the surrender for transfer of any certificates
for Common Shares outstanding will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. The Rights
will not be exercisable until the Distribution Date and will expire on July 15,
2009 (the "Final Expiration Date"), unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed or exchanged by the Company, in each
case as described below.
Unless previously redeemed, the Rights will separate from the Common
Shares and a Distribution Date will be deemed to occur at the earlier of: (i) 10
business days following a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding Common Shares; (ii) 10 business days
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in a person or
group beneficially owning 15% or more of such outstanding Common Shares; or
(iii) 10 business days after the Board of Directors of the Company declares 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
become the beneficial owner of a number of Common Shares that is substantial
(which amount shall in no event be less than 10% of the Common Shares then
outstanding) and that (a) such person's ownership is intended to cause the
Company to repurchase the Common Shares owned by such person or to take other
action to provide such person with short-term financial gain where the best
long-term interests of the Company and its stockholders would not be served by
taking such action at that time or (b) such person's ownership may cause a
material adverse impact (including by jeopardizing the Company's authorizations
from, or relationships with, federal or state regulators, or impairment of the
Company's relationships with customers or its ability to maintain its financial
or competitive position) on the business or prospects of the Company to the
detriment of the Company's stockholders.
Following the Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights. Except as
<PAGE>
otherwise determined by the Board of Directors, only Common Shares issued prior
to the earlier of the Distribution Date or the Expiration Date will be issued
with Rights.
Subject to the right of the Board of Directors to redeem or exchange
the Rights (as described below), in the event that (i) the Board of Directors
determines that a 10% or greater stockholder is an Adverse Person, or (ii) a
person or group of affiliated or associated persons becomes an Acquiring Person
(except pursuant to an offer for all outstanding Common Shares that the
independent directors determine to be fair to and otherwise in the best
interests of the Company and its stockholders - a "Fair Offer"), each holder of
a Right, other than Rights beneficially owned by the Acquiring Person (which
will thereupon become void), will thereafter have the right to receive, upon
exercise, that number of Common Shares having a market value of two times the
Purchase Price of the Right.
In the event that, after any person or group becomes an Acquiring
Person, (i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation or in which
the Common Shares are changed into or exchanged for stock or other securities of
any other person, cash or any other property (other than a merger that follows,
and is at the same price as, a Fair Offer), or (ii) 50% or more of the Company's
consolidated assets or earning power are sold or transferred, each holder of a
Right (other than Rights beneficially owned by an Acquiring Person, which will
thereupon become void) will 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.
At any time after any person or group becomes an Acquiring Person or is
determined to be an Adverse Person and prior to the earlier of one of the events
described in the previous paragraph or the acquisition by such person or group
of 50% or more of the outstanding shares of Common Stock, the Board of Directors
of the Company may exchange the Rights (other than Rights owned by such person
or group that will have become void), in whole or in part, for shares of Common
Stock at an exchange ratio of one Common Share per Right (subject to
adjustment).
At any time prior to the close of business on the tenth business day
after the public announcement that a person or group has become an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $0.001 per right (the "Redemption Price"), which
may be paid in cash or with shares of Common Stock or other consideration deemed
appropriate by the Board of Directors of the Company. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner. After the
Rights are no longer redeemable, the Company may, except with respect to the
redemption price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
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.
The Purchase Price payable, and the number of Common Shares 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 Common
Shares, (ii) upon the issuance of certain rights, options or warrants to
subscribe for or purchase Common
2
<PAGE>
Shares at a price, or securities convertible into Common Shares, with a
conversion price less than the then current market price of the Common Shares,
or (iii) upon the distribution to holders of the Common Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Common Shares) 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 require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued (other than
fractions that are integral multiples of one one-hundredth of a Common Share,
which may, at the election of the Company, be evidenced by depository receipts)
and in lieu thereof, an adjustment in cash will be made based on the market
price of the Common Shares on the last trading day prior to the date of
exercise.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. However, the
Rights should not interfere with any merger or other business combination
approved by the Board of Directors since (subject to the limitations described
above) the Rights may be redeemed by the Company at the Redemption Price prior
to the Distribution Date. Thus, the Rights are intended to encourage persons who
may seek to acquire control of the Company to initiate such an acquisition
through negotiations with the Board of Directors.
The Rights Agreement, including the Form of Right Certificate attached
as Exhibit A thereto, and the Summary of Rights to Purchase Common Shares
attached as Exhibit B thereto, together with a letter to the Company's
stockholders, dated August 2, 1999, explaining the Rights, and a Press Release,
dated July 15, 1999, are attached hereto as exhibits and are incorporated herein
by reference. The foregoing description of the Rights is qualified in its
entirety by reference to such exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) - (b) Not applicable.
(c) 4.1 Rights Agreement, dated as of July 15, 1999, between The
Southern Banc Company, Inc. and Registrar and Transfer Company, as
Rights Agent, including the Form of Right Certificate as Exhibit A and
the Summary of Rights to Purchase Common Shares as Exhibit B.
20.1 Letter to The Southern Banc Company, Inc. Stockholders, dated
August 2, 1999
99.1 Press release dated July 15, 1999
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on behalf by the
undersigned hereunto duly authorized.
THE SOUTHERN BANC COMPANY, INC.
Date: August 2, 1999 By: /s/ James B. Little, Jr.
----------------------------------------------
James B. Little, Jr.
Chairman of the Board, President and Chief
Executive Officer
<PAGE>
EXHIBIT INDEX
4.1 Rights Agreement, dated as of July 15, 1999, between The Southern Banc
Company, Inc. and Registrar and Transfer Company, as Rights Agent,
including the Form of Right Certificate as Exhibit A and the Summary of
Rights to Purchase Common Shares as Exhibit B.
20.1 Letter to The Southern Banc Company, Inc. Stockholders, dated August 2,
1999
99.1 Press release dated July 15, 1999
EXHIBIT 4.1
================================================================================
RIGHTS AGREEMENT
Between
THE SOUTHERN BANC COMPANY, INC.
and
REGISTRAR AND TRANSFER COMPANY
(as Rights Agent)
================================================================================
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions ..............................................1
Section 2. Appointment of Rights Agent.......................................4
Section 3. Issue of Right Certificates.......................................4
Section 4. Form of Right Certificates........................................6
Section 5. Countersignature and Registration.................................7
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificate;
Mutilated, Destroyed, Lost or Stolen Right Certificates...........7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.....8
Section 8. Cancellation and Destruction of Right Certificate.................9
Section 9. Reservation and Availability of Common Stock.....................10
Section 10. Common Shares Record Date........................................11
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights........................................................11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.......19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power............................................................19
Section 14. Fractional Rights and Fractional Shares..........................22
Section 15. Agreement of Rights Holders......................................23
Section 16. Right Certificate Holder Not Deemed a Stockholder................23
Section 17. Concerning the Rights Agent......................................23
Section 18. Merger or Consolidation or Change of Name of Rights Agent........24
Section 19. Duties of Rights Agent...........................................24
Section 20. Change of Rights Agent...........................................26
Section 21. Issuance of New Right Certificates...............................27
Section 22. Redemption.......................................................27
Section 23. Exchange.........................................................28
Section 24. Notice of Certain Events.........................................29
Section 25. Notices..........................................................29
Section 26. Changes, Deletions, Supplements and Amendments...................30
Section 27. Successors.......................................................31
Section 28. Rights of Action.................................................31
Section 29. Benefits of this Agreement.......................................31
Section 30. Severability.....................................................32
Section 31. Determinations and Actions by the Board of Directors.............32
Section 32. Governing Law....................................................32
Section 33. Counterparts.....................................................32
Section 34. Descriptive Headings.............................................33
EXHIBITS
- --------
Exhibit A Form of Right Certificate
Exhibit B Summary of Rights to Purchase Common Shares
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of July 15, 1999, between The Southern Banc
Company, Inc., a Delaware corporation (the "Company"), and Registrar and
Transfer Company (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one common stock purchase right (a "Right") for each Common Share
(as hereinafter defined), of the Company outstanding as of the Close of Business
on August 2, 1999 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a Common Share of the Company upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share of the
Company that shall become outstanding between the Record Date and the earliest
of the Distribution Date, the Redemption Date and the Final Expiration Date (as
such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms (in addition to those defined elsewhere herein) shall have the
meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
then outstanding, but shall not include: (i) the Company, (ii) any Subsidiary
(as such term is hereinafter defined) of the Company, (iii) any employee benefit
plan of the Company or any Subsidiary of the Company, (iv) any Person holding
Common Shares for or pursuant to the terms of any such employee benefit plan to
the extent, and only to the extent, of the Common Shares so held, (v) any Person
who or which, together with all Affiliates and Associates of such Person, would
be an Acquiring Person solely by reason of (A) being the Beneficial Owner of
Common Shares, the Beneficial Ownership of which was acquired by such Person
pursuant to any action or transaction or series of related actions or
transactions approved by the Board of Directors (PROVIDED that at the time of
such approval of the Board there are then in office not less than two
Disinterested Directors (as such term is hereinafter defined) and such action or
transaction or series of related actions or transactions are approved by a
majority of the Disinterested Directors then in office) before such Person
otherwise became an Acquiring Person (a "Company-Approved Issuance") or (B) a
reduction in the number of issued and outstanding shares of Common Stock of the
Company pursuant to a transaction or a series of related transactions approved
by the Board of Directors (PROVIDED that at the time of such approval of the
Board of Directors there are then in office not less than two Disinterested
Directors and such transaction or series of related transactions are approved by
a majority of the Disinterested Directors then in office); PROVIDED, further,
however, that in the event that such Person described in the foregoing clause
(v) does not become an Acquiring Person by reason of subclause (A) or (B) of
said clause (v), such Person shall nonetheless become an Acquiring Person in the
event such Person thereafter acquires Beneficial Ownership of an additional 1%
of the Common Stock of the Company, unless the acquisition of such additional
Common Stock
<PAGE>
would not result in such Person becoming an Acquiring Person by reason of
subclause (A) or (B) of said clause (v), or (vi) any such Person who has
reported or is required to report such ownership on Schedule 13G under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (or any
comparable or successor report) or on Schedule 13D under the Exchange Act (or
any comparable or successor report), which Schedule 13D does not state any
intention to or reserve the right to control or influence the management or
policies of the Company or engage in any of the actions specified in Item 4 of
such Schedule (other than the disposition of the Common Stock) and, within 10
Business Days of being requested by the Company to advise it regarding the same,
certifies to the Company that such Person acquired Common Stock in excess of 15%
inadvertently or without knowledge of the terms of the Rights and who, together
with all Affiliates and Associates, within 45 Days following the date of this
Agreement disposes of sufficient shares such that such Person shall be and then
remain thereafter a Beneficial Owner of less than 15% of the Common Stock then
outstanding; PROVIDED, HOWEVER, that if the Person requested to so certify fails
to do so within 10 Business Days, then such Person shall become an Acquiring
Person immediately after such 10 Business Day Period. 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 of this Agreement.
(b) "Adverse Person" shall mean any Person declared to be an
Adverse Person by the Board upon determination that the criteria set forth in
Section 11(a)(ii)(B) apply to such person.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any such Person's Affiliates
or Associates beneficially own, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates have 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), other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities, or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights), warrants
or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, securities tendered pursuant to
a tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange;
2
<PAGE>
(iii) which such Person or any of such Person's
Affiliates or Associates has the right to vote 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 if the agreement, arrangement or understanding to vote such
security (A) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act, and (B) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iv) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
(other than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the
"provided, however" clause contained in Section 1(c) (iii)), or disposing of
any securities of the Company. Notwithstanding the foregoing, any securities
that are owned or held by (i) the Company, (ii) any Subsidiary of the Company,
(iii) any Person pursuant to a Company-Approved Issuance, or (iv) any employee
benefit plan of the Company or of any Subsidiary of the Company (and any
securities that are owned or held by any Person pursuant to the terms of any
such employee benefit plan), shall not be deemed to be beneficially owned by any
other Person and no other Person shall be deemed to be the Beneficial Owner of
such securities to the extent, and only to the extent, of the securities so
held.
(e) "Board" or "Board of Directors" means the Board of
Directors of the Company.
(f) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of Alabama are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall means 5:00
p.m., Gadsden, Alabama time, on such date; PROVIDED, HOWEVER, that if such date
is not a Business Day it shall mean 5:00 p.m., Gadsden, Alabama time, on the
next succeeding Business Day.
(h) "Common Shares" when used with reference to the Company
(specifically or in context) shall mean the shares of common stock, par value
$.01 per share, of the Company ("Common Stock"). "Common Shares" when used with
reference to any Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons that
ultimately control such first-mentioned Person.
(i) "Company-Approved Issuance" shall have the meaning set
forth in Section 1(a) hereof.
(j) "Disinterested Director" shall have the meaning set forth
in Section 22(d) hereof.
3
<PAGE>
(k) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(l) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(m) "Person" shall mean any individual, firm, corporation,
incorporated or unincorporated association, limited liability company,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(n) "Purchase Price" shall have the meaning set forth in
Section 7 hereof, as the same may be adjusted from time to time in accordance
with the terms of this Agreement.
(o) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(p) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.
(q) "Subsidiary" of any Person shall mean any corporation,
incorporated or unincorporated association, limited liability company,
partnership or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
such Person.
Certain additional terms used wholly within a subsequent Section of
this Agreement shall have the meaning given them in the relevant Section of this
Agreement for purposes of such Section.
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 in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earliest to occur of the Close of Business (i)
on the tenth Business Day after the Shares Acquisition Date, (ii) on the tenth
Business Day after the date of the commencement by any Person (other than the
Company, any wholly owned Subsidiary of the Company, any Person holding Common
Stock acquired in a Company-Approved Issuance, any employee benefit plan of the
Company or of any wholly owned Subsidiary of the Company, or any entity holding
Common Stock for or pursuant to the terms of any such plan to the extent such
entity is so acting with the approval or consent of the Company) of, or of the
first public announcement of the intention of any Person (other than the
Company, any Person holding Common Stock acquired in a Company-Approved
Issuance, any wholly owned Subsidiary of the Company, any employee benefit plan
of the Company or of any wholly owned Subsidiary of the Company, or any entity
holding Common Stock for or pursuant to the terms of any such plan to
4
<PAGE>
the extent such entity is so acting with the approval or consent of the Company
or as part of its ordinary activities with respect to any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming the Beneficial Owner of 15% or more of the then-outstanding
Common Shares, or (iii) on the tenth Business Day after the Board determines,
pursuant to the criteria set forth in Section 11(a)(ii)(B) hereof, that a Person
is an Adverse Person (the earliest to occur of the events described in clauses
(i), (ii) and (iii) of this paragraph (a) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) solely by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of Common Shares of the Company. As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send), by first-class, insured, postage prepaid mail,
to each record holder of Common Shares as of the close of business on the
Distribution Date (other than any Acquiring Person or any Associate or Affiliate
of an Acquiring Person), at the address of such holder shown on the records of
the Company, a Right Certificate, in substantially the form of EXHIBIT A hereto
(a "Right Certificate"), evidencing one Right for each Common Share of the
Company so held. As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Common Shares, in
substantially the form of EXHIBIT B hereto (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder of Common Shares 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 Common Shares of
the Company outstanding as of the Record Date, until the Distribution Date, the
Rights associated with the Common Shares represented by such certificates shall
be evidenced by such certificates together with a copy of the Summary of Rights
attached thereto. Until the Distribution Date (or the earlier of the Redemption
Date and the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(c) Certificates for Common Shares that become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date)
shall have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
The Southern Banc Company, Inc. (the "Company") and Registrar
and Transfer Company, dated as of July 15, 1999, as the same
may be amended from time to time (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices
of the Company. Under certain
5
<PAGE>
circumstances, as set forth in the Rights Agreement, the
Rights described therein will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. As described in
the Rights Agreement, Rights issued to any Person who is, was
or becomes an Acquiring Person, an Adverse Person, or any
Affiliate or Associate thereof (as those terms are defined in
the Rights Agreement) shall become null and void. The Rights
shall not be exercisable by a holder in any jurisdiction
where the requisite qualification to the issuance to such
holder of the Rights, or the exercise by such holder of the
Rights in such jurisdiction, shall not have been obtained or
obtainable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares that are no
longer outstanding. Notwithstanding this subparagraph (c), the omission of a
legend shall not affect the enforceability of any part of this Rights Agreement
or the rights of any holder of the Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase Common Shares and of assignment to be printed on the reverse thereof)
shall be in substantially the form of EXHIBIT A hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company and the Rights Agent 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 quoted, or to conform to usage.
Subject to the provisions of Sections 11, 22 and 23 hereof, the Right
Certificate shall entitle the holder thereof to purchase such number of
one-hundredths of a Common Share as shall be set forth therein at the price per
one-hundredth of a Common Share set forth therein (the "Purchase Price"), but
the number of such one-hundredths of a Common Share and the Purchase Price shall
be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 21 hereof that represents Rights beneficially owned by: (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 Associate or Affiliate thereof) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
or an Adverse Person (or of any Associate or Affiliate thereof) who becomes a
transferee prior to or concurrently with the Acquiring Person or the Adverse
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the
6
<PAGE>
Acquiring Person or the Adverse Person to holders of equity interests in such
Acquiring Person or Adverse Person or to any Person with whom such Acquiring
Person or Adverse Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer that the Board
has determined is part of a plan, arrangement or understanding that has as a
primary purpose or effect avoidance of Section 7(e) hereof, and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or Adverse Person or an Affiliate or Associate of an
Acquiring Person or Adverse Person (as such terms are defined
in the Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(e) of such Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board of
Directors, its President or any Vice President, either manually or by facsimile
signature, may have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office or offices, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
rights evidenced on its face by each of the Right Certificates, and the date of
each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATE; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject to
the provisions of Sections 4(b), 7, 11 and 14 hereof, at any time after the
Distribution Date, and at or prior to the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates (other than
Right Certificates representing Rights that have become void pursuant to Section
11(a)(iii) hereof or that have been exchanged pursuant to Section 23 hereof) may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one-
7
<PAGE>
hundredths of a Common Share as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall endorse and surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
office of the Rights Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Right Certificate and shall have provided such additional evidence
of the identify of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent, subject to Sections 4(b), 7, 11 and 14 hereof, shall
countersign and deliver to the person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. The Rights Agent shall have no duty or obligation under this
Section unless and until it is satisfied that all such taxes and/or charges have
been paid.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The Rights shall become exercisable immediately after the
Distribution Date, and only after the Distribution Date, and thereafter, subject
to Section 7(c) hereof, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part upon surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the principal office of the Rights Agent, together with payment of the
aggregate Purchase Price (or the Alternative Purchase Price, if applicable) with
respect to the total number of one-hundredths of a Common Share (or other
securities, cash or other assets, as the case may be) as to which such Rights
are then exercisable, at any time that is both after the Distribution Date and
prior to the earliest of (i) the close of business on July 15, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 22 hereof (the "Redemption Date"), and (iii) the time at which such
Rights are exchanged as provided in Section 23 hereof.
(b) The Purchase Price for each one one-hundredth of a Common
Share pursuant to the exercise of a Right shall initially be $30.00 (the
"Purchase Price"), and shall be subject to
8
<PAGE>
adjustment from time to time as provided in Sections 11 and 13 hereof, and shall
be payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a
Right Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the Purchase Price for the
shares to be purchased (plus an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in accordance with
Section 9 hereof) by certified check, cashier's check or money order payable to
the order of the Company, the Rights Agent shall thereupon promptly (i)
requisition from any transfer agent of the Common Shares certificates for the
number of Common Shares to be purchased, and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, and (iv) when appropriate,
after receipt deliver such cash, property or other securities to or upon the
order of the registered holder of such Right Certificate.
(d) Except as may be otherwise provided herein, in case the
registered holder of any Right Certificate shall exercise less than all the
Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to such holder's duly authorized
assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the Flip-In Event, as defined in Section 11(a)(ii)
hereof, 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 Adverse Person (or of any Associate
or Affiliate thereof) who becomes a transferee after the Acquiring Person or
Adverse Person becomes such, or (iii) a transferee of any such Acquiring Person
or Adverse Person (or of any Associate or Affiliate thereof) who becomes a
transferee prior to or concurrently with the Acquiring Person or Adverse Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person or Adverse Person
to holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person or Adverse Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
that the Board has determined is part of a plan, arrangement or understanding
that 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 Right Certificates or any other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or Adverse Person or any
Affiliates, Associates or transferees hereunder.
9
<PAGE>
(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 of Rights upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed a certificate contained in
the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any Right Certificate representing Rights purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON SHARES.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Common Shares or
any Common Shares held in its treasury, the number of Common Shares that will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Common Shares (and, following
the time that any person becomes an Acquiring Person, shares of Common Stock and
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(c) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
that are payable in respect of the issuance or delivery of the Right
Certificates or of any Common Shares (or other securities that may become or be
issuable under the terms of this Agreement) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax that may be
payable in respect of any transfer or delivery of Right Certificates to a Person
other than, or the issuance or delivery of certificates for the Common Shares
(or other securities that may become or be issuable under the terms of this
Agreement) in a name other than that of, the registered holder of the Right
Certificates evidencing Rights surrendered for transfer, delivery or exercise or
to issue or to deliver any certificates for Common Shares (or other securities
that may become or be issuable under the terms of this Agreement) upon the
exercise of any Rights until any such tax shall have
10
<PAGE>
been paid (any such tax being payable by the holder of such Right Certificates
at the time of surrender) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
(d) From and after such time as the Rights become exercisable,
the Company shall use its best efforts, if then necessary, to permit the
issuance of Common Shares upon the exercise of Rights, to register and qualify
such Common Shares under the Securities Act of 1993 or "Blue Sky" laws (to the
extent exemptions therefrom are not applicable), cause such registration
statement and qualifications to become effective as soon as possible after such
filing, and keep such registration statement and qualifications effective (with
a prospectus at all times meeting the requirements of the Act) until no longer
required to do so under the Act with respect to securities purchasable upon
exercise of the Rights. The Company may temporarily suspend, for a period not to
exceed ninety (90) days following the Distribution Date, the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective. Upon any such suspension of exercisability of Rights
referred to in this paragraph, 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 Rights Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act of 1933 (if required) shall have
been deemed effective.
(e) Notwithstanding any provision in this Agreement to the
contrary, the Rights shall not be exercisable by a holder in any jurisdiction
where the requisite qualification to the issuance to such holder, or the
exercise by such holder of the Rights in such jurisdiction, shall not have been
obtained or be obtainable, or the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.
(f) So long as the Common Shares (and, following the
occurrence of a Flip-In Event, other securities) issuable and deliverable upon
the exercise of the Rights may be listed on any national securities exchange or
authorized for quotation on any interdealer quotation system of any securities
association, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares reserved for such
issuances to be listed on such exchange or quoted on such system upon official
notice of issuance upon such exercise.
SECTION 10. COMMON SHARES RECORD DATE. Each Person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; PROVIDED,
HOWEVER, that if the date of such surrender and payment is a date upon which the
Common Stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Common Stock
transfer books of the Company are open.
11
<PAGE>
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER
OF RIGHTS. The Purchase Price, the number of Common Shares that the holder of a
Right Certificate is entitled to purchase on the exercise of the Rights
evidenced thereby, 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 Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares into a smaller number of Common Shares, or (D) issue
any shares of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and in Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or at
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock that, if such Right had been exercised immediately prior to such
date and at a time when the Common Stock transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; PROVIDED, HOWEVER, that in no event shall the consideration to
be paid upon the exercise of one Right be less then the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.
If an event occurs that would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Section 23 of this Agreement, in the
event that:
(A) any Person shall become an Acquiring
Person, unless the event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof or is an acquisition of shares of
Common Stock pursuant to a tender offer, or an exchange offer for all
outstanding shares of Common Stock of the Company at a price and on terms
determined by at least a majority of the Disinterested Directors to be (a)
at a price which is fair to stockholders (taking into account all factors which
such members of the Board of Directors deem relevant, including, without
limitation, prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its stockholders, or
(B) the Board shall declare any Person to be
an Adverse Person, upon a determination by the Board that such Person, alone or
together with its Affiliates and Associates, has, at any time after the
Rights Dividend Declaration Date, become the Beneficial Owner of a number of
Common Shares that the Board determines to be substantial (which amount shall in
no event be less than 10% of the then-outstanding Common Shares) and a
determination by a majority of the Board who are not officers of the Company,
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
12
<PAGE>
reasonably likely to cause, or will cause the Company to repurchase the Common
Shares beneficially owned by such Person or to take action or enter into a
transaction or series of transactions intended to provide such Person with
short-term financial gain under circumstances where the Board determines that
the best long-term interests of the Company and its stockholders would not be
served by taking such action or entering into such transaction 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, by jeopardizing the Company's or its Subsidiaries' authorizations from, or
relationships with, federal or state regulators, or impairment of the Company's
relationships with customers or its ability to maintain its financial or
competitive position) on the business or prospects of the Company to the
detriment of the Company's stockholders, then, promptly following the occurrence
of any event described in Section 11(a)(ii)(A) or Section 11(a)(ii)(B) hereof
(the first occurrence of either such event being referred to herein as the
"Flip-In Event"), proper provision shall be made so that each holder of a Right
shall thereafter have the right to receive, upon exercise thereof at the
then-current Purchase Price in accordance with the terms of this Agreement, in
lieu of a number of one-hundredths of a Common Share for which a Right was
theretofore exercisable, such number of Common Shares as shall equal the result
obtained by (x) multiplying the then-current Purchase Price by the then number
of one-hundredths of a Common Share for which a Right was exercisable
immediately prior to the Flip-In Event, and (y) dividing that product (which,
following the Flip-In Event, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes under this Agreement) by 50% of the
current per share market price of the Common Stock (determined pursuant to
Section 11(d) hereof) on the date of such Flip-In Event; PROVIDED, HOWEVER, that
the Purchase Price (as so adjusted) and the number of shares of Common Stock so
receivable upon exercise of a Right shall, following the Flip-In Event, be
subject to further adjustment as appropriate in accordance with Section 11(f)
hereof.
(iii) In the event that the number of shares of
Common Stock that are authorized by the Company's Certificate of Incorporation
(the "Certificate of Incorporation"), but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Board of Directors shall, to the extent permitted by
applicable law and any material agreements then in effect to which the Company
is a party, (A) determine the excess (such excess, the "Spread") of (1) the
value of the shares of Common Stock issuable upon the exercise of a Right in
accordance with the foregoing subparagraph (ii) (the "Current Value") over (2)
the initial Purchase Price (as adjusted in accordance with the foregoing
subparagraph (ii)), and (B) with respect to each Right (other than Rights that
have become void pursuant to the foregoing subparagraph (ii)), make adequate
provision to substitute for the shares of Common Stock issuable in accordance
with the foregoing subparagraph (ii) upon exercise of the Right and payment of
the Purchase Price (as adjusted in accordance therewith), (1) cash, (2) a
reduction in such Purchase Price, (3) other equity securities of the Company
(including, without limitation, shares or fractions of shares of preferred stock
that, by virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by
the Board of Directors to have substantially the same value as the shares of
Common Stock (such shares of preferred stock are hereinafter referred to as
"Common Stock equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having a value that, when added
to the value of the shares of Common Stock actually
13
<PAGE>
issued upon exercise of such Right, shall have an aggregate value equal to the
Current Value (less the amount of any reduction in such Purchase Price), where
such aggregate value has been determined by the Board of Directors upon the
advice of a nationally or regionally recognized investment banking firm selected
in good faith by the Board of Directors; PROVIDED, HOWEVER, that if the Company
shall not make adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the Flip-In Event (the "Section 11(a)(ii)
Trigger Date"), then the Company shall be obligated to deliver, to the extent
permitted by applicable law and any material agreements then in effect to which
the Company is a party, upon the surrender for exercise of a Right and without
requiring payment of such Purchase Price, shares of Common Stock (to the extent
available), and then, if necessary, such number of fractions of shares of
preferred stock (to the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the Spread. If, upon the
occurrence of the Flip-In Event, the Board of Directors shall determine in good
faith that it is likely that sufficient additional shares of Common Stock could
be authorized for issuance upon exercise in full of the Rights, then, if the
Board of Directors so elects, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than one hundred twenty (120)
days after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional shares (such
thirty (30) day period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the second and/or third sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 11(a)(ii)
hereof and the last sentence of this Section 11(a)(iii), that such action shall
apply uniformly to all outstanding rights, and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such second sentence and
to determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section 11(a)(iii),
the value of the shares of Common Stock shall be the current per share market
price (as determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii)
Trigger Date and the per share or fractional value of any "Common Stock
equivalent" shall be deemed to equal the current per share market price of the
Common Stock. The Board of Directors of the Company may, but shall not be
required to, establish procedures to allocate the right to receive shares of
Common Stock upon the exercise of the Rights, among holders of Rights pursuant
to this Section 11(a)(iii).
(iv) Notwithstanding the foregoing or anything in
this Agreement to the contrary, from and after the time any Person becomes an
Acquiring Person, any Rights that are or were acquired or beneficially owned
by such Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) shall be null and void without any further action, and any holder of
such Rights shall thereafter have no rights whatsoever with respect to such
Rights, whether under this Agreement (including the right to exercise such
Rights under any provision of this Agreement) or otherwise.
(v) No Right Certificate shall be issued pursuant to
Section 3 that represents Rights beneficially owned by an Acquiring Person or
an Adverse Person; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person or
14
<PAGE>
an Adverse Person or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Adverse Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person or
an Adverse Person shall be canceled.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock entitling
them (for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares (or shares having the same rights,
privileges and preferences as the Common Shares ("equivalent common shares")) or
securities convertible into Common Shares or equivalent common shares at a price
per Common Share or equivalent common share (or having a conversion price per
share, if a security convertible into Common Shares or equivalent common shares)
less than the then current per share market price of the Common Shares (as
defined in Section 11(d)) 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 Common Shares and equivalent common
shares outstanding on such record date plus the number of Common Shares that the
aggregate offering price of the total number of Common Shares and equivalent
common shares that the aggregate offering price of the total number of Common
Shares and/or equivalent common shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the
number of Common Shares and equivalent common shares outstanding on such record
date plus the number of additional Common Shares and/or equivalent common shares
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); PROVIDED, HOWEVER, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Common Shares and equivalent common shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights, options
or warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price that would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular periodic cash dividend paid out of earnings or
retained earnings or a dividend payable in Common Shares) or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then current per share market
price of the Common Shares (determined pursuant to Section 11(d) hereof) on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with
15
<PAGE>
the Rights Agent) of the portion of the assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to one
Common Share, and the denominator of which shall be such current per share
market price (determined pursuant to Section 11(d) hereof) of the Common Shares;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.
(d) (i) Except as otherwise provided herein, for the purposes
of any computation hereunder, the "current per share market price" of any
security (a "Security" for the purpose of this Section 11(d)(i)) on any date
shall be deemed to be the average of the daily closing prices per share of such
Security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; PROVIDED, HOWEVER, that in the event
that the current per share market price of the Security is determined during a
period following the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of such Security or
securities convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security, taking
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 American Stock Exchange or,
if the Security is not listed or admitted to trading on the American Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted sales 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 Quotations System ("NASDAQ")
or such other system then in use or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. If the Security is not
publicly held or so listed or traded, and no market maker is making, or has made
during the relevant period, a market in the Security, "current per share market
price" shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
16
<PAGE>
(e) 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 the Purchase Price; PROVIDED, HOWEVER, that any adjustments that
by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest one
ten-thousandth of a Common Share or other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction that requires such adjustment, or
(ii) the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Common Shares, thereafter the Purchase Price and the number of such
other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of this Section 11 with respect to the Common
Shares, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Common Shares 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-hundredths of a
Common Share 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-hundredths of a Common Share (calculated to the nearest one ten-thousandth
of a Common Share) obtained by (i) multiplying (x) the number of one-hundredths
of a share covered by a Right immediately prior to such adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price pursuant to Sections 11(a)(i), 11(b) or 11(c)
hereof to adjust the number of Rights, in substitution for any adjustment in the
number of one-hundredths of a Common Share purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-hundredths of a Common Shares
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 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
17
<PAGE>
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company may, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates to be so distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one-hundredths of a Common Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one-hundredths of a
Common Share that were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Common
Shares or other shares of capital stock issuable upon exercise of the Rights,
the Company shall take any corporate action that may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Common Shares or other such shares at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Common Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Common Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Stock payable in Common Stock or (ii) effect a
subdivision, combination or consolidation of the Common Stock (by
reclassification or otherwise than by payment of a dividend payable in Common
Stock) into a greater or lesser number of Common Stock, then in such case, the
number of Rights associated with each share of Common Stock then outstanding, or
issued or delivered thereafter, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of
18
<PAGE>
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.
(n) 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 the Board of Directors in its sole
discretion shall determine to be advisable in order that any consolidation or
subdivision of the Common Shares, issuance wholly for cash of any Common Shares
at less than the current market price, issuance wholly for cash of Common Shares
or securities that by their terms are convertible into or exchangeable for
Common Shares, dividends on Common Stock payable in Common Shares, or issuance
of rights, options or warrants referred to in Section 11(b) hereafter made by
the Company to holders of its Common Shares shall not be taxable to such
stockholders.
(o) Unless a majority of the Disinterested Directors agree in
writing to the contrary, 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 wholly owned Subsidiary of the Company in a transaction that
complies with Section 11(p) hereof), (ii) merge with or into any other Person
(other than a wholly owned Subsidiary of the Company in a transaction that
complies with Section 11(p) hereof), (iii) effect a share exchange with any
other Person or conversion of the Company into another entity (other than with a
wholly owned Subsidiary of the Company in a transaction that complies with
Section 11(p) hereof), or (iv) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction or 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 wholly owned Subsidiaries in one or
more transactions, each of which complies with the requirements of this
Section), if (x) at the time of or immediately after such consolidation, merger,
exchange, conversion or sale, there are any rights, warrants or other
instruments or securities outstanding or agreements in effect that would
materially 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, exchange, conversion or sale, the stockholders or
interest holders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13 hereof, would have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates. Nothing in this Section 11 shall be construed to limit or
otherwise restrict in any manner the rights of redemption contained in Section
22 hereof.
(p) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 22, 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 in any material manner or otherwise eliminate the benefits intended to
be afforded by the Rights.
19
<PAGE>
(q) The failure by the Board to declare a Person to be an
Adverse Person following such Person becoming the Beneficial Owner of 10% or
more of the outstanding Common Stock shall not imply that such Person is not an
Adverse Person or limit the Board's right at any time in the future to declare
such Person to be an Adverse Person.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with the transfer agent for the Common Stock a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 24 hereof (if so required by Section 24
hereof). The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event, directly or indirectly at any time after the
Flip-In Event, (i) the Company shall consolidate with, merge with and into, or
effect a share exchange or conversion with or into any Person, (ii) any Person
shall merge with and into the Company or effect a share exchange or conversion
with or into the Company, the Company shall be the continuing or surviving
corporation in such transaction and, in connection with such transaction, all or
part of the Common Shares shall be changed into or exchanged for stock or other
securities of any Person (including the Company) or cash or any other property,
or (iii) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
other than the Company or one or more of its wholly owned Subsidiaries, then,
and in each such case, proper provision shall be made so that: (A) each holder
of a Right (except as otherwise provided herein) shall thereafter have the right
to receive, upon the exercise thereof and payment of the Purchase Price (as
theretofore adjusted in accordance with Section 11(a)(ii) hereof) in accordance
with the terms of this Agreement and in lieu of Common Shares of the Company,
such number of validly authorized and issued, fully paid, non-assessable and
freely tradeable Common Shares of the Principal Party (as defined in Section
13(b) hereof), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall equal the result obtained by dividing the
Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof) by 50% of the then current per share market price of the Common Shares
of the Principal Party (determined pursuant to Section 11(d) hereof) on the date
of consummation of such transaction; PROVIDED HOWEVER, that the Purchase Price
(as theretofore adjusted in accordance with Section 11(a)(ii) hereof) and the
number of Common Shares of such Principal Party so receivable upon exercise of a
Right shall be subject to further adjustment as appropriate in accordance with
Section 11(f) hereof to reflect any events occurring in respect of the Common
Shares of such Principal Party after the occurrence of such transaction; (B) the
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such transaction, all the obligations and duties of the Company pursuant to this
Rights Agreement; (C) the term "Company," as used in this Rights Agreement,
shall thereafter be deemed to mean and refer to such Principal Party;
20
<PAGE>
and (D) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its Common Shares in accordance
with this Agreement) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares of the Principal Party
thereafter deliverable upon the exercise of the Rights; PROVIDED that, upon the
subsequent occurrence of any consolidation, merger, sale or transfer of assets
or other extraordinary transaction in respect of such Principal Party, each
holder of a Right shall thereupon be entitled to receive, upon exercise of a
Right and payment of the Purchase Price as provided in this Section 13(a), such
cash, shares, rights, warrants and other property that such holder would have
been entitled to receive had such holder, at the time of such transaction, owned
the Common Shares of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of capital stock) as may
be necessary to permit the subsequent exercise of the Rights in accordance with
the terms hereof for such cash, shares, rights, warrants and other property.
The Company shall not consummate any transaction of the type
referenced in the first sentence of this Section 13(a) unless prior thereto the
Company and the Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement so providing and further providing that,
immediately after the date of any such transaction mentioned in this paragraph
(a) of this Section 13, the Principal Party at its own expense will (i) prepare
and file a registration statement under the Act with respect to the Rights and
any securities purchasable upon exercise of the Rights on an appropriate form,
will cause such registration statement to become effective as soon as possible
after such filing and will cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act) until no
longer required under the Act with respect to any securities purchasable upon
exercise of the Rights; and (ii) qualify or register the Rights and any
securities purchasable upon exercise of the Rights, and take all such other
action as may be required or as is appropriate, under the securities or blue sky
laws of such jurisdictions as may be necessary or appropriate. Unless a majority
of Disinterested Directors agree in writing to the contrary, the Company shall
not enter into any transaction of the kind referred to in this Section 13 if at
the time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements that, as a result of
the consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers, consolidations,
exchanges, conversions, sales or other transfers.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (i) or
(ii) of the first sentence of Section 13(a) hereof: (A) the Person that is the
issuer of the securities into which the shares of Common Stock are converted in
such merger or consolidation, or, if there is more than one such issuer, the
issuer of the shares of Common Stock of which have the greatest aggregate market
value of shares outstanding, or (B) if no securities are so issued, (x) the
Person that is the other party to the merger, if such Person survives said
merger, or, if there is more than one such Person, the Person the shares of
Common Stock of which have the greatest aggregate market value of shares
outstanding or (y) if the Person that is the other party to the merger does not
21
<PAGE>
survive the merger, the Person that does survive the merger (including the
Company if it survives) or (z) the Person resulting from the consolidation; and
(ii) in the case of any transaction described in
(iii) of the first sentence in Section 13(a) hereof, the Person that is the
party receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of such Persons as
is the issuer of Common Stock having the greatest aggregate market value of
shares outstanding;
PROVIDED, HOWEVER, that in any such case, (1) if the securities of such Person
are not at such time or have not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the securities of which are and
have been so registered, "Principal Party" shall mean such other Person; (2) in
case such Person is a Subsidiary, directly or indirectly, of more than one other
Person, the securities of two or more of which are and have been so registered,
"Principal Party" shall mean whichever of such other Persons is the issuer of
the securities so registered having the greatest aggregate market value; and (3)
in case such Person is owned, directly or indirectly, by a joint venture formed
by two or more other Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a "Subsidiary" of both or all of such other Persons and the Principal
Parties in each such chain shall bear the obligations set forth in this Section
13 in the same ratio as their direct and indirect interests in such Person bear
to the total of such interests.
(c) Notwithstanding the foregoing or anything in this
Agreement to the contrary, from and after the time any Person becomes an
Acquiring person, any Rights that are or were acquired or beneficially owned by
such Acquiring Person (or any Associate or Affiliate of such Acquiring Person)
shall be null and void without any further action, and any holder of such Rights
shall thereafter have no rights whatsoever with respect to such Rights, whether
under this Agreement (including the right to exercise such Rights under any
provision of this Agreement) or otherwise.
(d) The Company covenants and agrees that it shall not, at any
time after the Flip-In Event, enter into any transaction of the type described
in clauses (i) through (iii) of Section 13(a) hereof if (i) at the time of or
immediately after such consolidation, merger, sale, transfer or other
transaction there are any rights, warrants or other instruments or securities
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (ii)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (iii) the form or nature
of organization of the Principal Party would preclude or limit the
exercisability of the Rights.
22
<PAGE>
(e) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (i) and (ii) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock that complies with that portion of Section 11(a)(ii)(A) relating to
a determination by a majority of the Disinterested Directors that such tender
offer or exchange offer is fair to the stockholders and otherwise in the best
interests of the Company and its stockholders, all as set forth in Section
11(a)(ii)(A) hereof (or a wholly owned subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender offer
or exchange offer and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as the form of consideration paid pursuant to such tender offer or exchange
offer. Upon consummation of any such transaction contemplated by this Section
13(e), all Rights hereunder shall expire.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company may in the discretion of its Board of
Directors, but shall not be required to, issue fractions of Rights or to
distribute Right Certificates that evidence fractional Rights. In lieu of such
fractional Rights, the Board of Directors, in its discretion, may direct the
Company to pay to the registered holders of the Right Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
purposes of this Section 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 otherwise be issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the American Stock Exchange, or, if the rights are not listed or
admitted to trading on the American Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
the American Stock Exchange or any other 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 to determine
the current market value of a Right for purposes of this Section 14(a).
Notwithstanding anything in this Section 14(a) to the contrary, prior to the
Distribution Date, the current market value of the Right for purposes of this
Section 14(a) shall for all purposes hereof be deemed to be zero.
23
<PAGE>
(b) The Company may in the discretion of its Board of
Directors, but shall not be required to, issue fractional interests in Common
Shares (other than fractions that are integral multiples of one one-hundredth of
a Common Share) upon exercise of the Rights or distribute certificates that
evidence fractional interests in Common Shares (other than fractions that are
integral multiples of one one-hundredth of a Common Share). In lieu of
fractional interests in Common Shares that are not integral multiples of one
one-hundredth of a Common Share, the Board of Directors may, in its discretion,
direct the Company to pay to the registered holders of Right Certificates, at
the time such Rights are exercised as herein provided, an amount in cash equal
to the same fraction of the current market value of one Common Share. Fractions
of Common Shares in integral multiples of one one-hundredths of a Common Share
may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and the depositary
selected by it; PROVIDED, that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Common Shares represented
by such depositary receipts. For purposes of this Section 14(b), the current
market value of a Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
SECTION 15. 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 the Common Shares of the
Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name any Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
SECTION 16. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or other distributions or be deemed for any purpose the holder of the
Common Shares or interests therein or any other securities of the Company that
may at any time be issuable on the exercise of the
24
<PAGE>
Rights represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in this Agreement), or to receive dividends or subscription rights, or
otherwise, or to exercise preemptive rights (if any), until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
SECTION 17. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom.
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 Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 19 hereof.
SECTION 18. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 20 hereof. In case
at the time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
25
<PAGE>
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned, and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such case Certificates shall have the full forces provided in
the Right Certificates and in this Agreement.
SECTION 19. 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 Right 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 be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board of
Directors, President, any Vice President, the Secretary or the Treasurer of the
Company and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for the Rights Agent's own gross negligence, bad faith
or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including any Rights that become void pursuant to Section 11(a)(iii) hereof) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Sections 3, 11, 13, 22 or 23 hereof, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except
26
<PAGE>
with respect to the exercise of Rights evidenced by Right Certificates after
actual notice that such change or adjustment is required); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Common Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Common Shares will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board of Directors, President, any Vice
President, the Secretary or the Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company (including, without limitation, acting as
transfer agent for the Common Shares of the Company) or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the
rights or power hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
(j) No provisions of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
SECTION 20. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall
27
<PAGE>
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation or entity, or an affiliate of such a corporation or entity,
organized and doing business under the laws of the United States or of the State
of Alabama (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 State
of Alabama), in good standing, that is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by the predecessor Rights Agent hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 20, 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 21. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such 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 Right Certificates made in
accordance with the provisions of this Agreement.
SECTION 22. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of
Directors of the Company at such time, on such basis and with (or without) such
conditions as the Board of Directors in its sole and absolute discretion may
establish. Notwithstanding anything contained or that may be implied in this
Agreement to the contrary, the Rights shall not be exercisable after any Person
becomes an Acquiring Person until such time as the Company's rights of
redemption hereunder shall have finally expired.
(b) The Board of Directors of the Company may, at its option
and in its sole and absolute discretion, at any time prior to the close of
business on the tenth Business Day after the Shares Acquisition Date, redeem
all, but not less than all, the then outstanding Rights at a redemption price of
$0.001 (one-tenth of one cent) per Right, appropriately adjusted to reflect
28
<PAGE>
any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights may be made effective at such time, on
such basis and with (or without) such conditions as the Board of Directors in
its sole and absolute discretion may establish; PROVIDED, HOWEVER, that with
respect to any redemption of Rights under either of the circumstances set forth
in clauses (i) and (ii) below, the Rights may be redeemed only if there are
Disinterested Directors then in office and the Board of Directors of the
Company, with the concurrence of a majority of the Disinterested Directors then
in office, approve such redemption; (i) such approval occurs at any time after
any Person becomes an Acquiring Person, or (ii) such approval occurs at any time
after a change (resulting from a proxy solicitation or from a vote of
stockholders or in any other manner) in a majority of the directors in office at
the commencement of such solicitation, or prior to such vote, if any Person who
is a participant in such solicitation or vote has stated (or, if the majority of
the directors in office at the commencement of such solicitation or prior to
such vote has determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take or may consider taking, any action
that would result in such Person becoming an Acquiring Person or that would
result in the occurrence of an event described in Section 11(a)(ii) hereof. The
Company may, at its option, pay the Redemption Price in cash, in Common Shares
(based on the current per share market price of the Common Shares at the time of
redemption determined pursuant to Section 11(d) hereof) or any other form of
consideration deemed appropriate by the Board of Directors of the Company;
PROVIDED that if the Company elects to pay the Redemption Price in Common
Shares, the Company shall not be required to issue fractional Common Shares and
the number of Common Shares issuable to each holder of Rights shall be rounded
down to the next whole shares.
(c) Notwithstanding the foregoing provisions of this Section
22, the Board may not redeem any Rights following its determination that any
Person is an Adverse Person. If, following the occurrence of a Shares
Acquisition Date and following the expiration of the right of redemption under
Section 22(b) hereof but prior to the Flip-In Event or the occurrence of any
transaction described in clauses (i) through (iii) of Section 13(a) hereof (any
one of which is referred to herein as a "Triggering Event"), (i) a Person who is
an Acquiring Person shall have transferred or otherwise disposed of a number of
Common Shares in one transaction or series of transactions, not directly or
indirectly involving the Company or any of its Subsidiaries, that did not result
in the occurrence of a Triggering Event such that such Person is thereafter a
Beneficial Owner of 10% or less of the outstanding shares of Common Stock, (ii)
there are no other Persons, immediately following the occurrence of the event
described in clause (i) hereof, who are Acquiring Persons, and (iii) a majority
of the Disinterested Directors shall so approve, then the right of redemption
shall be reinstated and thereafter be subject to the provisions of this Section
22.
(d) "Disinterested Director" shall mean (i) any member of the
Board of Directors of the Company who is not an officer or employee of the
Company or any of its Subsidiaries and who is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, or (ii) any successor to a
director meeting the requirements of clause (i) of this sentence (a "Prior
Director") if such successor is a member of the Board of Directors of the
Company who is not an officer or employee of the Company or any of its
Subsidiaries and who is not an Acquiring Person or an Affiliate or Associate of
an Acquiring Person or a nominee or representative of an Acquiring
29
<PAGE>
Person or of any such Affiliate or Associate, and who was recommended for
election or elected to succeed the Prior Director by a majority of the
Disinterested Directors then on the Board of Directors of the Company.
(e) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (b) of
this Section 22, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; PROVIDED, HOWEVER, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
ordering the redemption of the Rights pursuant to paragraph (b), the Company
shall mail a notice of redemption to all the holders of the then outstanding
Rights at their addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry books of the transfer
agent for the Common Shares of the Company. Any notice that is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
SECTION 23. EXCHANGE.
(a) The Board of Directors of the Company may, at its option,
at any time after the Flip-In Event, exchange all or any part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) at an exchange
ratio of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date of such
Flip-In Event (such amount per Right being hereinafter referred to as the
"Exchange Consideration"); PROVIDED, HOWEVER, that with respect to any such
action by the Board of Directors as to such an exchange, the Rights may be so
exchanged only if (i) there are Disinterested Directors then in office, and (ii)
the Board of Directors of the Company approves such exchange with the
concurrence of a majority of the Disinterested Directors then in office. From
and after the occurrence of an event specified in Section 13(a) hereof, any
Rights that theretofore have not been exchanged pursuant to this Section 23(a)
shall thereafter be exercisable only in accordance with Section 13 and may not
be exchanged pursuant to this Section 23(a).
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 23 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive the Exchange Consideration. The
Company shall promptly give public notice of any such exchange; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company shall promptly mail a notice
of any such exchange to all of the holders of such Rights at their addresses as
they appear upon the registry books of the Rights Agent. Any notice that is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the Common Shares for Rights will be effected and, in
the event of any
30
<PAGE>
partial exchange, the number of Rights that will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights that have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) Notwithstanding anything in this Section 23 to the
contrary, in the event there shall not be sufficient authorized but unissued
Common Shares to permit the exchange in full of the Rights as provided in
paragraph (a) of this Section 23, then, in such case, to the extent of such
insufficiency, each Right Certificate shall entitle the holder thereof to
exchange each Right for the number of Common Shares equal to a fraction, (i) the
numerator of which shall be the number of Common Shares authorized as of the
Distribution Date, less: (A) the number of Common Shares issued and outstanding
as of the Distribution Date, (B) the number of Common Shares reserved for
issuance pursuant to stock options, warrants, and other rights to purchase
Common Shares from the Company outstanding on the Distribution Date, and (C) the
number of Common Shares reserved for issuance by the Company under convertible
debentures, preferred stock, or other securities outstanding on the Distribution
Date and convertible into or exchangeable for Common Shares; and (ii) the
denominator of which shall be the number of Common Shares issued and outstanding
as of the Distribution Date, less Common Shares of which an Acquiring Person is
the Beneficial Owner.
(d) The Company may, but need not be required to, issue
fractions of Common Shares or to distribute certificates that evidence
fractional Common Shares. In lieu of such fractional Common Shares, the Company
may pay to the registered holders of the Right Certificates with regard to which
such fractional Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole Common Share.
For the purpose of this paragraph (d), the current market value of a whole
Common Share of the Company shall be the closing price of a Common Share of the
Company (as determined pursuant to the second and third sentences of Section
11(d) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 23.
SECTION 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Common Stock or to make any
other distribution to the holders of its Common Stock (other than a regular
periodic cash dividend), (ii) to offer to the holders of its Common Stock rights
or warrants to subscribe for or to purchase any additional Common Shares or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision of outstanding Common Shares),
(iv) to effect any consolidation or merger into or with, 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 or more transactions, of 50% of more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, 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 Right Certificate, in accordance with Section 25 hereof, a notice of
such proposed action, which shall specify the record date for purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
31
<PAGE>
participation therein by the holders of the Common Shares if any such date is to
be fixed, and such notice shall be so given in the case of any action described
by clause (i) or (ii) above at least 10 days prior to the record date for
determining holders of the Common Shares for purposes of such action, and in the
case of any such other action, at least 10 days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of
the Common Shares, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii) or
Section 13 shall occur, then the Company shall as soon as practicable thereafter
give to each holder of a Right Certificate, in accordance with Section 25
hereof, a notice of the occurrence of such event, which notice shall describe
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) and Section 13 hereof.
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 Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
The Southern Banc Company, Inc.
221 South 6th Street
Gadsden, Alabama 35901-4102
Attention: President and Chief Executive Officer
Subject to the provisions of Section 20 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016-3572
Attention: William Tatler
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 26. CHANGES, DELETIONS, SUPPLEMENTS AND AMENDMENTS. For so long
as the Rights are then redeemable, the Company in its sole and absolute
discretion may (and the Rights Agent shall at the direction of the Company) from
time to time change, supplement or amend this Agreement in any respect without
the approval of any holders of Right Certificates. At any time when the Rights
are no longer redeemable, the Company may, and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Right Certificates in order to (i) cure any ambiguity, (ii)
correct or supplement any provision contained herein that may be defective or
inconsistent with any other
32
<PAGE>
provisions herein, (iii) shorten or lengthen any time period hereunder, or (iv)
change or supplement the provisions hereunder in any manner that the Company may
deem necessary or desirable and that shall not adversely affect the interests of
the holders of Right Certificates (other than an Acquiring Person, an Adverse
Person, or an Affiliate or Associate of an Acquiring Person or Adverse Person);
PROVIDED, HOWEVER, that 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 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 certificate from an
appropriate officer of the Company that states that the proposed supplement or
amendment is in compliance with the terms of this Section 26, and such
supplement or amendment does not change or increase the Rights Agent's duties,
liabilities or obligations, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement to the contrary,
no supplement or amendment shall be made that changes the Redemption Price, the
Final Expiration Date, the Purchase Price or the number of one-hundredths of a
Common Share for which a Right is exercisable. Furthermore, the Company may not
amend this Agreement following the determination that any Person is an Adverse
Person.
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. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her 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 or her 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 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares of the Company) any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares
of the Company).
33
<PAGE>
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 the foregoing, 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, with
the concurrence of the majority of the Disinterested Directors then in office,
determines in its good faith judgment that severing the invalid language from
this Agreement would materially and adversely affect the purpose and effect of
this Agreement, the right of redemption set forth in Section 22 hereof shall be
reinstated and shall not expire until the Close of Business on the tenth day
following the date of such determination by the Board of Directors.
SECTION 31. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. For
all purposes of this Agreement, Common Shares shall be deemed outstanding when
and as actually issued by the Company, but shall not include Common Shares
reacquired by the Company in any manner, whether held as treasury shares or
canceled. The calculation for the purpose of determining the particular
percentage of the outstanding Common Shares of which any Person is the
Beneficial Owner shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Board of Directors of the Company (with, where specifically provided for herein,
the concurrence of the Disinterested Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors (with, where specifically
provided for herein, the concurrence of the Disinterested Directors) or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors (with, where specifically provided
for herein, the concurrence of the Disinterested Directors) in good faith, shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other Persons, and (y) not subject the Board of
Directors or the Disinterested Directors to any liability to the holders of the
Rights.
SECTION 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State without giving effect to the conflicts of
law provisions thereof.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, 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.
34
<PAGE>
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: THE SOUTHERN BANC COMPANY, INC.
By: /s/ Gates Little By: /s/ James P. Little, Jr.
----------------------------- --------------------------------------
Gates Little James P. Little, Jr.
President and Chief Executive Officer
Attest: REGISTRAR AND TRANSFER COMPANY
By: /s/ William J. Saeger By: /s/ William P. Tatler
----------------------------- --------------------------------------
William J. Saeger William P. Tatler
Vice President
35
<PAGE>
EXHIBIT A
FORM OF RIGHT CERTIFICATE
Certificate No. R. _________________ _________ Rights
NOT EXERCISABLE AFTER July 15, 2009 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $ 0.001 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
THE SOUTHERN BANC COMPANY, INC.
This certifies that __________________________________________, or
registered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of July 15, 1999
(the "Rights Agreement"), between The Southern Banc Company, Inc. a Delaware
corporation (the "Company"), and Registrar and Transfer Company (the "Rights
Agent"), to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to the close of
business (as defined in the Rights Agreement) on July 15, 2009, at the principal
offices of the Rights Agent, or at the offices of its successor as Rights Agent,
one one-hundredth of a fully paid non-assessable share of common stock, $0.01
par value (the "Common Shares") of the Company, at a purchase price of $30.00
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. As provided in
the Rights Agreement, the Purchase Price and the number of one-hundredths of a
Common Share that may be purchased upon the exercise of the Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
As described in the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person shall become null and void.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent. The Company will
mail to the holder of this Right Certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificate of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of interests in
Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
<PAGE>
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$0.001 (one-tenth of one cent) per Right payable in cash, in Common Shares or
other consideration, or (ii) may be exchanged in whole or in part for Common
Shares.
Fractional interests in Common Shares may, but need not, be issued upon
the exercise of any Right or Rights evidenced hereby, and in lieu thereof a cash
payment may be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company that may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a 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 actions, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of ____________ ___, 1999.
ATTEST: THE SOUTHERN BANC COMPANY, INC.
_____________________________ By _____________________________________________
Countersigned: President and Chief Executive Officer
By _____________________________________________
Its ____________________________________________
2
<PAGE>
FORM OF REVERSE SIDE OF RIGHT CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Right Certificate.)
FOR VALUE RECEIVED ___________________________________ hereby sells,
assigns and transfers unto __________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _____________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _______________, _____.
____________________________________________
Signature
Signature Guarantee:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
________________________________________________________________________________
(To be completed)
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and that
after due inquiry and to the best of the knowledge of the undersigned, it did
not acquire the Rights evidenced by this Right Certificate for any Person who
is, was or subsequently became an Acquiring Person or an Affiliate or Associate
of such Person.
____________________________________________
Signature
3
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
the Right Certificate.)
To: The Southern Banc Company, Inc.
The undersigned hereby irrevocably elects to exercise _________ Rights
represented by this Right Certificate to purchase the Common Shares (or other
securities or property) issuable upon the exercise of such Rights and requests
that certificates for such Common Shares (or such other securities) be issued in
the name of:
- ---------------------------------------------
- ---------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
- ----------------------------------------------
- ----------------------------------------------
(Please print name and address)
Please provide Social Security or other tax identification number: _____________
Dated: _______________, _____.
____________________________________________
Signature
(Signature must conform to holder specified on Right Certificate)
Signature Guarantee: Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States acceptable to the Rights Agent and the
Company.
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and that after due
inquiry and to the best of the knowledge of the undersigned, it did not acquire
the Rights evidenced by this Right Certificate for any Person who is, was or
subsequently became an Acquiring Person or Affiliate or Associate of such
Person.
____________________________________________
Signature
4
<PAGE>
********************************************************************************
NOTICE
The signature in the foregoing Forms of Assignment and Election must conform to
the name as written upon the face of this Right Certificate in every particular,
without alternation or enlargement or any change whatsoever.
In the event the certificate set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the Company
and the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
5
<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
On July 15, 1999, the Board of Directors of The Southern Banc Company,
Inc. (the "Company") declared a dividend of one common share purchase right (a
"Right") for each outstanding share of common stock, par value $ .01 per share
(the "Common Shares"), of the Company. The dividend is payable on August 2, 1999
to the stockholders of record on August 2, 1999 (the "Record Date").
The Rights become exercisable on the first date after the Distribution
Date (as defined below), and not before. Upon the Distribution Date, each Right
will initially entitle the registered holder to purchase from the Company one
one-hundredth of a Common Share at a price of $30.00 (the "Purchase Price"),
subject to adjustment. In addition, under certain events described below, the
Rights will entitle the holder to purchase Common Shares of the Company or
securities of an acquiring company at a 50% discount. The complete terms of the
Rights are set forth in a Rights Agreement, as may be amended from time to time
(the "Rights Agreement") between the Company and Registrar and Transfer Company,
as Rights Agent (the "Rights Agent").
Until the Distribution Date:
(i) the Rights will be evidenced by the outstanding certificates for
Common Shares and will be transferred with and only with the
Common Share certificates and no separate Right Certificates will
be distributed;
(ii) new certificates for Common Shares issued after the close of
business on August 2, 1999 will contain a notation incorporating
the Rights Agreement by reference; and
(iii) the surrender for transfer of any certificates for Common Shares
outstanding will also constitute the transfer of the Rights
associated with the Common Shares represented by such
certificate.
The Rights will not be exercisable until the Distribution Date and will
expire on July 15, 2009 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.
Unless previously redeemed, the Rights will separate from the Common
Shares and a Distribution Date will be deemed to occur at the earlier of :
(i) 10 business days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person")
has acquired beneficial ownership of 15% or more of the
outstanding Common Shares;
(ii) 10 business days following the commencement of, or announcement
of an intention to make, a tender offer or exchange offer the
consummation of which
<PAGE>
would result in a person or group beneficially owning 15% or more
of such outstanding Common Shares; or
(iii) 10 business days after the Board of Directors of the Company
declares 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 become the beneficial
owner of a number of Common Shares that is substantial (which
amount shall in no event be less than 10% of the Common Shares
then outstanding) and that (a) such person's ownership is
intended to cause the Company to repurchase the Common Shares
owned by such person or to take other action to provide such
person with short-term financial gain where the best long-term
interests of the Company and its stockholders would not be served
by taking such action at that time or (b) such person's ownership
may cause a material adverse impact (including by jeopardizing
the Company's authorizations from, or relationships with, federal
or state regulators, or impairment of the Company's relationships
with customers or its ability to maintain its financial or
competitive position) on the business or prospects of the Company
to the detriment of the Company's stockholders.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights. Except as otherwise determined by the Board of Directors, only Common
shares issued prior to the earlier of the Distribution Date or the Expiration
Date will be issued with Rights.
Subject to the right of the Board of Directors to redeem or exchange
the Rights (as described below), in the event that
(i) the Board of Directors determines that a 10% or greater
stockholder is an Adverse Person, or
(ii) a person or group of affiliated or associated persons becomes an
Acquiring Person (except pursuant to an offer for all outstanding
Common Shares that the independent directors determine to be fair
to and otherwise in the best interests of the Company and its
stockholders - a "Fair Offer"),
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereupon become void), will thereafter have the right to
receive, upon exercise, that number of Common Shares having a market value of
two times the Purchase Price of the Right. In other words, the Rights holders
other than the Acquiring Person may purchase Common Shares at a 50% discount to
their market value.
In the event that, after any person or group becomes an Acquiring
Person,
(i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation
or in which the Common
2
<PAGE>
Shares are changed into or exchanged for stock or other
securities of any other person, cash or any other property (other
than a merger that follows, and is at the same price as, a Fair
Offer), or
(ii) 50% or more of the Company's consolidated assets or earning power
are sold or transferred,
each holder of a Right (other than Rights beneficially owned by an Acquiring
Person, which will thereupon become void) will 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. In other words, the holders
of the Rights will be entitled to purchase common stock of the acquiring person
at a 50% discount to its market value.
At any time after any person or group becomes an Acquiring Person or is
determined to be an Adverse Person and prior to the earlier of one of the events
described in the previous paragraph or the acquisition by such person or group
of 50% or more of the outstanding shares of Common Stock, the Board of Directors
of the Company may exchange the Rights (other than Rights owned by such person
or group that will have become void), in whole or in part, for shares of Common
Stock at an exchange ratio of one Common Share per Right (subject to
adjustment).
At any time prior to the close of business on the tenth business day
after the public announcement that a person or group has become an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $0.001 per right (the "Redemption Price"), which
may be paid in cash or with shares of Common Stock or other consideration deemed
appropriate by the Board of Directors of the Company. The Company may not redeem
the Rights if the Board of Directors has previously declared a person to be an
Adverse Person. After the redemption period has expired, the Company's right of
redemption may be reinstated if an Acquiring Person reduces its beneficial
ownership to 10% or less of the outstanding Common Shares in a transaction or
series of transactions not involving the Company. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner. After the
Rights are no longer redeemable, the Company may, except with respect to the
redemption price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
securities of the acquiring company as set forth above.
The Purchase Price payable, and the number of Common Shares or other
securities or property issuable, upon exercise of the Rights, are subject to
adjustment from time to time to
3
<PAGE>
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Shares, (ii) upon the issuance of
certain rights, options or warrants to subscribe for or purchase Common Shares
at a price, or securities convertible into Common Shares, with a conversion
price less than the then current market price of the Common Shares, or (iii)
upon the distribution to holders of the Common Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Common Shares) 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 require an adjustment of at least 1% in such Purchase
Price. No fractional Common Shares will be issued (other than fractions that are
integral multiples of one one-hundredth of a Common Share, which may, at the
election of the Company, be evidenced by depository receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading day prior to the date of exercise.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K. In addition,
a copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
4
EXHIBIT 20.1
August 2, 1999
To Our Stockholders:
On July 15, 1999, the Board of Directors of The Southern Banc Company, Inc. (the
"Company") adopted a shareholder rights plan (the "Plan") and declared a
dividend distribution of one common stock purchase right (a "Right") on each
outstanding share of the Company's common stock (the "Common Stock"). This
letter briefly describes the Plan and the Board's reasons for adopting it. A
more detailed summary of the Plan is enclosed.
The Plan is designed to protect our stockholders against certain unsolicited
attempts to acquire the Company, including a partial or two-tier tender offer
that does not treat all stockholders equally, a squeeze-out merger and other
abusive or unfair takeover tactics that the Board believes are not in the best
interests of the Company. The Rights Plan is not intended to prevent an
acquisition of the Company in which all of our stockholders are offered a fair
price for all of their shares. In this connection, at this time we have no
indication that any third party is interested in acquiring the Company.
The Rights are being issued to stockholders of record at the close of business
on August 2, 1999 and they expire on July 15, 2009. Because the Rights are not
immediately exercisable, it is not necessary to send you a separate certificate
for the Rights. The Rights will automatically trade with the Common Stock.
The Rights would only become exercisable if one of the following were to occur:
(i) a public announcement that a person has acquired 15% or more of the
outstanding Common Stock;
(ii) the commencement of, or announcement of an intention to make, a tender
offer that would result in the acquisition by a person or group of 15% or
more of the outstanding Common Stock; or
(iii) the Company's Board of Directors declares a 10% or greater stockholder to
be an "Adverse Person," as defined in the Plan.
10 business days following any of the above events, the Rights would become
exercisable and separate certificates representing the Rights would be
distributed to the stockholders of the Company. We expect that the Rights would
begin to trade independently of the Common Stock at that time.
When the Rights first become exercisable, a holder would be entitled to buy from
the Company one-hundredth (1/100th) of a share of Common Stock at an exercise
price of $30.00. Upon the occurrence of certain triggering events, as set forth
below, each Right would entitle the holder to purchase additional shares of
Common Stock, or securities of a company that acquires the Company, at a 50%
discount to their respective market values at such time. In other words:
<PAGE>
o If the Company is involved in a merger or other business combination
at any time after a person or group has acquired 15% or more of the Common
Stock, the Rights would entitle a holder to buy a number of shares of
common stock of the acquiring company having a market value of twice the
exercise price of the Right. For example, if at the time of the business
combination the acquiring company's common stock has a per share value of
$30.00, the holder of each Right would be entitled to receive 2 shares of
the acquiring company's common stock for $30.00.
o Upon the acquisition by any person or group of 15% or more of the
Common Stock, the "flip-in" provision of the Rights would be triggered and
the Rights would entitle the holder to buy a number of additional shares of
Common Stock having a market value of twice the exercise price of the
Right. Thus, if at the time of the "flip-in," the Common Stock's market
value were $15 per share, the holder of each Right would be entitled to
receive 4 shares of Common Stock for $30.00.
The Rights do not interfere with the Company's business plans or affect its
financial position. The issuance of the Rights has no dilutive effect, will not
affect earnings per share, is not taxable to you or the Company, and will not
change the way in which the Common Stock is traded on the American Stock
Exchange. Depending on individual circumstances, stockholders may recognize
taxable income, but only when (and if) the Rights become exercisable or upon the
occurrence of certain events thereafter.
In adopting the Plan, your Board of Directors has expressed its confidence in
the future of the Company and its determination that you, our stockholders, be
given every opportunity to participate fully in the future of The Southern Banc
Company.
Sincerely,
/s/ James P. Little, Jr.
James P. Little, Jr.
Chairman of the Board and President
2
EXHIBIT 99.1
THE SOUTHERN BANC COMPANY, INC.
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT
July 15, 1999 Mr. James B. Little, Jr.
Chairman of the Board and President
(256) 543-3860
THE SOUTHERN BANC COMPANY, INC.
ADOPTS SHAREHOLDER RIGHTS PLAN
Gadsden, Alabama - July 15, 1999 - The Board of Directors of The Southern Banc
Company, Inc. (AMEX: SRN) adopted a shareholder rights plan (the "Plan") and
declared a dividend distribution of one common stock purchase right on each
outstanding share of the Company's common stock.
Mr. James B. Little, Jr., Chairman of the Board and President of the Company,
stated: "The Board of Directors determined that the adoption of the Plan is an
effective and reasonable method to protect our stockholders against certain
coercive or unfair takeover attempts. We are particularly concerned that the
future benefits of our current business plan could be denied to stockholders by
an opportunistic, undervalued acquisition of the Company. The Plan is designed
to ensure that the Company's stockholders are not deprived of their rights to
share in the Company's long-term potential, while not preventing offers in which
all stockholders are offered a fair price for their shares."
The Plan provides for the distribution of one common stock purchase right for
each outstanding share of the Company's common stock on August 2, 1999. Each
stockholder is automatically entitled to the rights and no physical distribution
of new certificates will be made at this time. The distribution of rights will
not be taxable to stockholders.
Under the Plan, the rights to purchase shares of the Company's common stock will
be exercisable only if (i) a person or group acquires, or announces an intention
to acquire, 15% or more of the Company's common stock or (ii) the Company's
Board of Directors declares a 10% or greater stockholder to be an Adverse
Person, as defined in the Plan. Upon the occurrence of certain triggering
events, each right would entitle the holder to purchase additional shares of the
Company's common stock, or securities of a company that acquires the Company, at
a 50% discount to their respective market values at such time.
At March 31, 1999, the Company had total assets of $99.8 million and
stockholders' equity of $17.9 million, or 17.9% of total assets. The Company is
the holding company for First Federal Savings and Loan Association of Gadsden,
which operates four banking offices in Gadsden, Albertville, Guntersville, and
Centre, Alabama.
