RIGHTS AGREEMENT BETWEEN UNION NATIONAL FINANCIAL CORPORATION and REGISTRAR AND TRANSFER COMPANY Dated as of August 27, 2007
BETWEEN
UNION
NATIONAL FINANCIAL CORPORATION
and
REGISTRAR
AND TRANSFER COMPANY
Dated
as of August 27, 2007
THIS
RIGHTS AGREEMENT
(the
“Agreement”) is dated as of August 27, 2007, and is between Union National
Financial Corporation, a Pennsylvania corporation (the “Company”), and Registrar
and Transfer Company, a New Jersey corporation (the “Rights
Agent”).
BACKGROUND:
On
August
27, 2007 (the “Rights Dividend Declaration Date”), the Board of Directors of the
Company authorized and declared a dividend distribution of one Right for each
share of common stock, par value $0.25 per share, of the Company (the “Common
Stock”) outstanding at the close of business on September 10, 2007 (the “Record
Date”), and authorized the issuance of one Right for each share of Common Stock
of the Company outstanding on the Record Date, each Right initially representing
the right to purchase one share of Common Stock of the Company, upon the terms
and subject to the conditions hereafter set forth (the “Rights”).
NOW,
THEREFORE,
in
consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:
Section
1. Certain Definitions.
For
purposes of this Agreement, the following terms have the meanings
indicated:
(a)
“Acquiring Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
15%
or more of the shares of Common Stock then outstanding, but shall not include
the Company, any Subsidiary of the Company, any trust, whether or not created
pursuant to statute, of which the Company or a Subsidiary of the Company is
a
sponsor or grantor, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such
plan.
(b)
“Adjustment Shares” shall have the meaning set forth in Section
11(a)(ii).
(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
Securities
Exchange
Act of 1934, as amended (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 of such Person’s Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the exercise
of
conversion rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the “Beneficial Owner” of,
or to “beneficially own,” (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or exchange,
or (B) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event;
(ii)
which such Person or any of such Person’s Affiliates or Associates, directly or
indirectly, has the right to vote or direct the voting of or to dispose of
or
direct the disposition of or “beneficial ownership” of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether
or
not in writing; provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own,” any security under this
subparagraph (ii) as a result of an agreement, arrangement or understanding
to
vote such security if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act, and (B) is not
also
then reportable by such Person on Schedule 13D under the Exchange Act (or on
any
comparable or successor report); or
(iii)
which are beneficially owned, directly or indirectly, by any other Person (or
any Affiliate or Associate thereof) with which such Person (or any of such
Person’s Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company.
(e)
“Business Day” shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the Commonwealth of Pennsylvania are authorized
or
obligated by law or by executive or regulatory order to close.
(f)
“Close of Business” on any given date shall mean 5:00 P.M., Lancaster,
Pennsylvania time, on such date; provided, however, that if such date is not
a
Business Day it shall mean 5:00 P.M., Lancaster, Pennsylvania time, on the
next
succeeding Business Day.
(g)
“Common Stock” shall mean the common stock, par value $0.25 per share, of the
Company, except that “Common Stock” when used with reference to any Person other
than the Company shall mean the capital stock of such Person with the greatest
voting power or the equity securities or other equity interest having power
to
control or direct the management of such Person.
(h)
“Common stock equivalent” shall have the meaning set forth in Section
11(a)(iii).
(i)
“Continuing Director” shall mean (i) any member of the Board of Directors of the
Company, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any Affiliate or Associate of an Acquiring Person,
and was a member of the Board prior to the date of this Agreement, or (ii)
any
Person who subsequently becomes a member of the Board, while such person is
a
member of the Board, who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of an Acquiring Person
or
of any Affiliate or Associate of an Acquiring Person, if such Person’s
nomination for election or election to the Board is recommended or approved
by a
majority of the Continuing Directors.
(j)
“Current market price” shall have the meaning set forth in Section
11(d).
(k)
“Current Value” shall have the meaning set forth in Section
11(a)(iii).
(l)
“Distribution Date” shall mean the earlier of (i) the close of business on the
tenth Business Day after the Stock Acquisition Date (or such later date as
may
be determined by action of the Company’s Board of Directors and publicly
announced by the Company), or (ii) the close of business on the tenth Business
Day (or such later date as may be determined by action of the Company’s Board of
Directors and publicly announced by the Company) after the date that a tender
or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14e-2(a) of the General Rules and
Regulations under the Exchange Act if, upon consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the shares of Common Stock
then
outstanding.
(m)
“Equivalent common stock” shall have the meaning set forth in Section
11(b).
(n)
“Expiration Date” and “Final Expiration Date” shall have the meanings set forth
in Section 7(a).
(o)
“Person” shall mean any individual, firm, corporation, partnership or other
entity.
(p)
“Principal Party” shall have the meaning set forth in Section
13(b).
(q)
“Purchase Price” shall have the meaning set forth in Section 4, as the same may
be adjusted from time to time pursuant to the provisions of this
Agreement.
(r)
“Record Date” shall have the meaning set forth in the “BACKGROUND” section of
this Agreement.
(s)
“Redemption Price” shall have the meaning set forth in Section 23.
(t)
“Rights Dividend Declaration Date” shall have the meaning set forth in the
“BACKGROUND” section of this Agreement.
(u)
“Section 11(a)(ii) Event” shall mean any event described in Section 11(a)(ii)
(A), (B) or (C) hereof.
(v)
“Section 13 Event” shall mean any event described in clauses (w), (x), (y) or
(z) of Section 13(a) hereof.
(w)
“Spread” shall have the meaning set forth in Section
11(a)(iii).
(x)
“Stock Acquisition Date” shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation,
a
report filed pursuant to Section 13(d) under the Exchange Act) by the Company
or
an Acquiring Person that a Person has become an Acquiring Person.
(y)
“Subsidiary” shall mean, with reference to any Person, any corporation or other
entity of which an amount of voting securities sufficient to elect a majority
of
the directors or Persons having similar authority of such corporation or other
entity is beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(z)
“Substitution Period” shall have the meaning set forth in Section
11(a)(iii).
(aa)
“Trading Day” shall have the meaning set forth in Section 11(d).
(bb)
“Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.
Section
2. Appointment of Rights Agent.
The
Company hereby appoints the Rights Agent to act as agent for the Company and
the
holders of the Rights (who, in accordance with Section 3 hereof, shall prior
to
the Distribution Date also be holders of Common Stock) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents
as
it may deem necessary or appropriate.
Section
3. Issuance of Rights Certificates.
(a)
Until
the Distribution Date, (i) the Rights will be evidenced (subject to the
provisions of paragraph (b), (c) and (d) of this Section 3) by the Common Stock
registered in the names of the holders of the Common Stock whether or not now
or
hereinafter held in certificated or uncertificated form (which certificates
for
Common Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and (ii) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock (including
a transfer to the Company). As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, postage prepaid mail, to each such
record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more right certificates, in substantially the form of Exhibit
A
hereto (or as appropriate transaction advices evidencing the Rights if the
Common Stock is held in uncertificated form, (the “Rights Certificates”),
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an adjustment in the number
of
Rights per share of Common Stock has been made pursuant to Section 11(i) hereof,
at the time of distribution of the Rights Certificates the Company shall make
the necessary and appropriate rounding adjustments (in accordance with Section
14(a) hereof) so that Rights Certificates representing only whole numbers of
Rights are distributed and cash is paid in lieu of any fractional Rights. As
of
and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b)
As
promptly as practicable following the Rights Dividend Declaration Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit B (the “Summary of Rights”), by first-class, postage
prepaid mail, to each record holder of Common Stock as of the close of business
on that day, at the address of such holder shown on the records of the Company.
With respect to certificates for the Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock (or transaction advices if Common Stock is
held in uncertificated form) and the registered holders of such Common Stock
shall also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date (as such term is defined in
Section 7 hereof), the transfer of any certificates or transaction advices
representing shares of Common Stock in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with such shares
of
Common Stock.
(c)
Rights shall be issued in respect of all shares of Common Stock which are issued
after the Record Date but prior to the earlier of the Distribution Date or
the
Expiration Date (including the issuance of Common Stock pursuant to the exercise
of rights under the Company’s benefit plans), unless the Board of Directors
provides to the contrary by resolution adopted at or before the time of the
issuance. Certificates representing such shares of subsequently issued Common
Stock shall also be deemed to be certificates for Rights.
(d)
Any
certificates issued by the Company after the Record Date that represent shares
of Common Stock in respect of which rights have been issued shall bear the
following legend:
This
certificate also evidences and entitles the holder hereof to certain Rights
as
set forth in the Rights Agreement between Union National Financial Corporation
(the “Company”) and Registrar and Transfer Company (the “Rights Agent”) dated as
of August 27, 2007 (the “Rights Agreement”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the principal
offices of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will
no
longer be evidenced by this certificate. The Company will mail to the holder
of
this certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights issued
to,
or held by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void, and the transfer of such Rights
may
be deemed to be restricted.
With
respect to such certificates containing the foregoing legend, until the earlier
of (i) the Distribution Date or (ii) the Expiration Date, the Rights associated
with the Common Stock represented by such certificates shall be evidenced by
such certificates alone and registered holders of Common Stock shall also be
the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificates.
Section
4. Form of Rights Certificates.
(a)
The
Rights Certificates (and the forms of election to purchase and of assignment
to
be printed on the reverse thereof) shall each be substantially in the form
set
forth in Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as
the
Company may deem appropriate and as are not inconsistent with the provisions
of
this Agreement, or as may be required to comply with any applicable law or
with
any rule or regulation made pursuant thereto or with any rule or regulation
of
the NASD, the Financial Industry Regulatory Authority, or any stock exchange
on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date (or
in
the case of Rights issued in respect of Common Stock issued by the Company
after
the Record Date, as of the date of issuance of such Common Stock), shall note
the date of issuance, and on their face shall entitle the holders thereof to
purchase such number of shares of Common Stock as shall be set forth therein
at
the price set forth therein (such exercise price per share being referred to
herein as the “Purchase Price”), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof
shall
be subject to adjustment as provided herein.
(b)
Any
Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate ) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or
to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section
6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of
any
other Rights Certificate referred to in this sentence, shall bear (to the extent
feasible) the following legend:
The
Rights represented by this Rights Certificate are or were beneficially owned
by
a Person who was or became an Acquiring Person or an Affiliate or Associate
of
an Acquiring Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section 7(e) of such
Agreement, and the transfer of such Rights may be deemed to be
restricted.
Section
5. Countersignature and Registration.
(a)
The
Rights Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its President or any Executive Vice President or Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company’s seal or a facsimile thereof which shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by a facsimile
signature. The Rights Certificates shall be countersigned by an authorized
signatory of the Rights Agent but it shall not be necessary for the same
signatory to countersign all of the Rights Certificates issued hereunder. The
Rights Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Rights Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company;
and
any Rights Certificates may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Rights Certificate, shall
be a
proper officer of the Company to sign such Rights Certificate, although at
the
date of the execution of this Rights Agreement any such person was not such
an
officer.
(b)
Following the Distribution Date, the Rights Agent will keep or cause to be
kept,
at its principal office or offices designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates and the date of each of the Rights Certificates.
Section
6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a)
Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof,
at any time after the close of business on the Distribution Date, and at or
prior to the close of business on the Expiration Date, any Rights Certificate
or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of shares of Common Stock (or, following a Triggering Event,
other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitle such holder (or former holder in the
case of transfer) to purchase. Any registered holder desiring to transfer,
split
up, combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take
any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate
or
Rights Certificates, as the case may be, as so requested. The Company may
require payment from the holder of the Rights of a sum sufficient to cover
any
tax or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b)
Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights Agent
of
all reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Rights Certificate if mutilated, the Company
will
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a)
Subject to Section 7(e) and the last sentence of Section 23(a) hereof, the
registered holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without limitation,
the
restrictions on exercise set forth in Section 9(c), Section 11(a)(iii) and
Section 12(a) hereof) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to
the
Rights Agent at the principal office or offices of the Rights Agent designated
for such purpose, together with payment of the aggregate Purchase Price with
respect to the total number of shares of Common Stock (or other shares,
securities or property, as the case may be) as to which such surrendered Rights
are then exercisable, at or prior to the earlier of (i) the close of business
on
September 15, 2010 (the “Final Expiration Date”), or (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the earlier of (i) and
(ii) being herein referred to as the “Expiration Date”).
(b)
The
Purchase Price for each share of Common Stock pursuant to the exercise of a
Right shall initially be $50.00 and shall be subject to adjustment from time
to
time as provided in Section 11 hereof and shall be payable in accordance with
paragraph (c) below.
(c)
Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate on the reverse side thereof duly
executed, accompanied by payment, with respect to each Right so exercised,
of
the Purchase Price per share of Common Stock (or other shares, securities or
property, as the case may be) to be purchased as set forth below and an amount
equal to any applicable transfer tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly, (i)(A) requisition from any transfer agent
of
the shares of Common Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number of shares
of
Common Stock to be purchased and the Company hereby irrevocably authorizes
its
transfer agent to comply with all such requests, or (B), if the Company shall
have elected to deposit the total number of shares of Common Stock issuable
upon
exercise of the Rights hereunder with a depositary agent, requisition from
the
depositary agent depositary receipts representing such number of shares of
Common Stock as are to be purchased (in which case certificates for the shares
of Common Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the depositary
agent to comply with such request, (ii) requisition from the Company the amount
of cash, if any, to be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may
be
designated by such holder, and (iv) after receipt thereof, deliver such cash,
if
any, to or upon the order of the registered holder of such Rights Certificate.
The payment of the Purchase Price (as such amount may be reduced (including
to
zero) pursuant to Section 11(a)(iii) hereof) may be made in any combination
of
(x) cash or certified bank check or bank draft payable to the order of the
Company, or (y) delivery of a certificate or certificates (with appropriate
stock power executed in blank attached thereto) for whole numbers of shares
of
Common Stock, which shall be credited at their current market price (as
determined pursuant to Section 11(d) hereof). If the Company receives payment
from any holder of Rights in a number of whole shares of Common Stock with
a
current market price (as determined pursuant to Section 11(d) hereof) that
exceeds the Purchase Price due from such holder, the Company may, at its
election, (i) accept only such whole number of shares with a current market
price (as determined pursuant to Section 11(d) hereof) that is less than the
Purchase Price and require that the balance of the Purchase Price be paid under
clause (x), above, or (ii) make a cash refund of the difference between the
current market price (as determined pursuant to Section 11(d) hereof) of the
whole number of shares received and the Purchase Price due from such holder.
In
the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate.
(d)
In
case the registered holder of any Rights Certificate shall exercise less than
all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e)
Notwithstanding anything in this Agreement to the contrary, from and after
the
first occurrence of a Section 11(a)(ii) Event, (i) any Rights beneficially
owned
by an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii)
any Rights transferred by an Acquiring Person (or any such Associate or
Affiliate) after the Acquiring Person becomes such, or (iii) any Rights
transferred by an Acquiring Person (or any such Associate or Affiliate) prior
to
or concurrently with the Acquiring Person becoming such and if the transferee
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has 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 ensure
that the provisions of this Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with respect to
an
Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f)
Notwithstanding anything in this Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to undertake any action with respect
to
a registered holder of a Rights Certificate upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have
(i) completed and signed the certificate contained in the form of election
to
purchase set forth on the reverse side of the Rights Certificate surrendered
for
such exercise and (ii) provided such additional evidence of the identity of
the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section
8. Cancellation and Destruction of Rights Certificates.
All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted
by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel
and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section
9. Reservation and Availability of Capital Stock.
(a)
The
Company covenants and agrees that prior to the occurrence of a Triggering Event
it will cause to be reserved and kept available out of its authorized and
unissued shares of Common Stock, the number of shares of Common Stock that,
except as provided in Section 11 (a)(iii) hereof and without consideration
of
the adjustments under Section 11(a)(ii), will be sufficient to permit the
exercise in full of all outstanding Rights. The Company covenants and agrees
that following the occurrence of a Triggering Event it will cause to be reserved
and kept available out of its authorized and unissued shares of Common Stock
and/or other securities, the number of shares of Common Stock and/or other
securities that, except as provided in Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding
Rights.
(b)
Reserved.
(c)
The
Company shall use its best efforts to (i) file, as soon as practicable following
the earliest date after the first occurrence of a Section 11(a)(ii) Event on
which the consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11(a)(iii) hereof, or
as
soon as is required by law following the Distribution Date, as the case may
be,
a registration statement under the Securities Act of 1933 (the “Act”), with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective
as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the date of the
expiration of the Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or “blue sky”
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare, file and
achieve effectiveness of such registration statements. Upon any such suspension,
the Company shall notify the Rights Agent and issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended,
as
well as a public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained.
(d)
The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Common Stock and/or other securities delivered
upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares of Common Stock (subject to payment of the Purchase Price), be duly
and
validly authorized and issued and fully paid and nonassessable.
(e)
The
Company further covenants and agrees that it will pay when due and payable
any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Rights Certificates and of any
certificates for shares of Common Stock and/or other securities, as the case
may
be, upon the exercise of Rights. The Company shall not, however, be required
(i)
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the issuance or
delivery of Common Stock and/or other securities, as the case may be, in respect
of a name other than that of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or, (ii) to issue or deliver any
certificates for Common Stock and/or other securities, as the case may be,
in a
name other than that of the registered holder upon the exercise of any Rights
until such tax shall have been paid (any such tax being payable by the holder
of
such Rights Certificate at the time of surrender) or until it has been
established to the Company’s satisfaction that no such tax is due.
Section
10. Common Stock Record Date.
Each
person in whose name any certificate for shares of Common Stock and/or other
securities, as the case may be, is issued upon the exercise of Rights shall
for
all purposes be deemed to have become the holder of record of such shares
represented thereby on, and such certificate shall be dated, the date upon
which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which
the
applicable stock transfer books of the Company are closed, such Person shall
be
deemed to have become the record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next succeeding Business Day on
which the applicable stock transfer books of the Company are open. Prior to
the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a shareholder of the Company with respect
to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions
or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section
11. Adjustment of Purchase Price, Number and Kind of Shares and Number of
Rights.
The
Purchase Price, the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)
(i)
In the event the Company shall at any time after the date of this Agreement
(A)
declare a dividend on the Common Stock payable in shares of Common Stock, (B)
subdivide or split the outstanding Common Stock, (C) combine the outstanding
Common Stock into a smaller number of shares, or (D) issue any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price
in
effect at the time of the record date for such dividend or at the time of the
effective date of such subdivision, combination or reclassification, and/or
the
number and kind of shares of Common Stock or capital stock, as the case may
be,
issuable on such date, shall be proportionately adjusted so that the holder
of
any Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of shares
of
Common Stock or capital stock, as the case may be, which, if such Right had
been
exercised immediately prior to such date and at a time when the Common Stock
transfer books of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in the case of a
dividend on the Common Stock payable in shares of Common Stock as referenced
in
clause (A) of this Section
11(a)(i), where the record date of such dividend is prior to the Distribution
Date and where each share of Common Stock issued pursuant to such dividend
is
issued Rights under Section 3(c) hereof, then in such case the Purchase Price
shall be reduced (and no other adjustment shall be made pursuant to this Section
11(a)(i)) on the record date of such dividend to a number which is equal to
the
result obtained by multiplying the Purchase Price then in effect by a fraction,
the numerator of which is the number of Rights outstanding prior to such
dividend and the denominator of which is the number of Rights outstanding
immediately following such dividend. If an event occurs which would require
an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.
(ii)
In
the event:
(A)
any
Acquiring Person or any Associate or Affiliate of any Acquiring Person, at
any
time after the Distribution Date directly or indirectly, (1) shall merge into
the Company or otherwise combine with the Company and the Company shall be
the
continuing or surviving corporation of such merger or combination and the Common
Stock of the Company shall remain outstanding and unchanged, (2) shall effect
a
statutory share exchange with the Company, after which the Company is not a
Subsidiary of any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, (3) shall, in one or more transactions, other than in
connection with the exercise of Rights or the exercise or conversion of
securities exercisable or convertible into capital stock of the Company or
any
of its Subsidiaries, transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of any class of
capital stock of the Company or any of its Subsidiaries or for securities
exercisable for or convertible into shares of any class of capital stock of
the
Company or any of its Subsidiaries or otherwise obtain from the Company or
any
of its Subsidiaries, with or without consideration, any additional shares of
any
class of capital stock of the Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class of capital stock of
the
Company or any of its Subsidiaries (other than as part of a pro rata
distribution to all holders of Common Shares), (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise dispose (in one or more
transactions), to, from, with or of, as the case may be, the Company or any
of
its Subsidiaries, assets, including securities, on terms and conditions less
favorable to the Company than the Company would be able to obtain in
arm’s-length negotiation with an unaffiliated third party, (5) shall receive any
compensation from the Company or any of the Company’s Subsidiaries other than
compensation for services as a director or for full-time employment as a regular
employee, in either case at rates in accordance with the Company’s (or its
Subsidiaries’) past practices, or (6) shall receive the benefit, directly or
indirectly (except proportionately as a shareholder), of any loans, advances,
guarantees, pledges, or other financial assistance or any tax credits or other
tax advantage provided by the Company or any of its Subsidiaries,
or
(B)
any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant
to
the terms of any such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Distribution Date, become the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
other than pursuant to any transaction set forth in Section 13(a) hereof,
or
(C)
during such time as there is an Acquiring Person, there shall be any
reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the Company
with any of its Subsidiaries or any other transaction or series of transactions
involving the Company or any subsidiary of the Company (whether or not with
or
into or otherwise involving an Acquiring Person) which has the effect, directly
or indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities or of securities
exercisable for or convertible into securities of the Company or any of its
Subsidiaries that is directly or indirectly owned by any Acquiring Person or
any
Associate or Affiliate of any Acquiring Person, then within five (5) Business
Days after the date of the occurrence of a Section 11(a)(ii)(B) Event and
promptly following the occurrence of any Section 11 (a)(ii)(A) or (C) Event,
proper provision shall he made by the Company so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter have
the
right to receive, upon exercise thereof at the then current Purchase Price
in
accordance with the terms of this Agreement, in lieu of the number of shares
of
Common Stock for which the Rights were theretofore exercisable, such number
of
shares of Common Stock of the Company as shall equal the result obtained by
(x)
multiplying the then current Purchase Price by the then number of shares of
Common Stock for which a Right was exercisable immediately prior to the first
occurrence of Section 11(a)(ii) Event and dividing that product (which,
following such first occurrence, shall thereafter be referred to as the
“Purchase Price” for each Right and for all purposes of this Agreement) by (y)
50% of the current market price (determined pursuant to Section 11(d) hereof)
per share of Common Stock on the date of such first occurrence (such number
of
shares, the “Adjustment Shares”).
(iii)
In
the event that the number of shares of Common Stock which are authorized by
the
Company’s articles of incorporation but not outstanding or reserved for issuance
for purposes other than upon exercise of the Rights are not sufficient to permit
the exercise in full of the Rights in accordance with the foregoing subparagraph
(ii) of this Section 11(a), and subject to such limitations as are necessary
to
prevent a default under any agreement for money borrowed as presently
constituted to which the Company is a party and subject to any limitations
contained in Section 1551 of the Pennsylvania Business Corporation Law of 1988,
as amended, or any similar successor provision thereof, the Company shall:
(A)
determine the excess of (1) the value of the Adjustment Shares issuable upon
the
exercise of a Right (the “Current Value”) over (2) the Purchase Price (such
excess, the “Spread”), and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3)
Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board
of
Directors of the Company has deemed to have the same value as shares of Common
Stock (such shares of preferred stock, “common stock equivalents”)), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of an investment banking firm selected by the Board of
Directors of the Company; provided, however if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within thirty
(30) days following the first occurrence of a Section 11(a)(ii) Event, then
the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which in the
aggregate is equal in value to the Spread. If the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth above may be
extended to the extent necessary, but not more than ninety (90) days following
the first occurrence of a Section 11(a)(ii) Event, in order that the Company
may
seek shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the “Substitution Period”). To the extent that
the Company determines that some action need be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercise of the Rights until
the expiration of the Substitution Period in order to seek any authorization
of
additional shares and/or to decide the appropriate form of distribution to
be
made pursuant to such first sentence and to determine the value thereof. In
the
event of any such suspension, the Company shall issue a public announcement
stating that the exercise of the Rights has been temporarily suspended, as
well
as a public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iii), the value of the Common Stock shall
be
the current market price (as determined pursuant to Section 11(d) hereof) per
share of the Common Stock on the date of the first occurrence of a Section
11(a)(ii) Event and the value of any “common stock equivalent” shall be deemed
to have the same value as the Common Stock on such date.
(b)
In
case the Company shall fix a record date for the issuance of rights, options
or
warrants to all holders of Common Stock entitling them to subscribe for or
purchase (for a period expiring within forty-five (45) calendar days after
such
record date) Common Stock (or shares having the same rights, privileges and
preferences as the shares of Common Stock (“equivalent common stock”)) or
securities convertible into Common Stock or equivalent common stock at a price
per share of Common Stock or per share of equivalent common stock (or having
a
conversion price per share, if a security convertible into Common Stock or
equivalent common stock) less than the current market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on such record
date,
the Purchase Price to be in effect after such record date shall be determined
by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Common
Stock outstanding on such record date, plus the number of shares of Common
Stock
which the aggregate offering price of the total number of shares of Common
Stock
and/or equivalent common stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Common Stock outstanding on such record date, plus the number
of
additional shares of Common Stock and/or equivalent common stock to be offered
for subscription or purchase (or into which the convertible securities so to
be
offered are initially convertible). In case such subscription price may be
paid
by delivery of consideration part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith
by
the Board of Directors of the Company, whose determination shall be described
in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent
and the holders of the Rights. Shares of Common Stock owned by or held for
the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such
a
record date is fixed, and in the event that such rights or warrants are not
so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c)
In
case the Company shall fix a record date for a distribution to all holders
of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation)
or
evidence of indebtedness, cash (other than a regular quarterly cash dividend
out
of the earnings or retained earnings of the Company), assets (other than a
dividend payable in Common Stock, but including any dividend payable in stock
other than Common Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the cash, assets or evidences of indebtedness so to
be
distributed or of such subscription rights or warrants applicable to a share
of
Common Stock and the denominator of which shall be such current market price
(as
determined pursuant to Section 11(d) hereof) per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed,
and
in the event that such distribution is not so made, the Purchase Price shall
be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d)
For
the purpose of any computation hereunder, other than computations made pursuant
to Section 11(a)(iii) hereof, the “current market price” per share of Common
Stock on any date shall be deemed to be the average of the daily closing prices
per share of such Common Stock for the thirty (30) consecutive Trading Days
(as
such term is hereinafter defined) immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the
“current market price” per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common Stock for
the ten (10) consecutive Trading Days immediately following such date; provided,
however, that in the event that the current market price per share of the Common
Stock is determined during a period following the announcement by the issuer
of
such Common Stock of (A) a dividend or distribution on such Common Stock payable
in shares of such Common Stock or securities convertible into shares of such
Common stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and
in
each such case, the “current market price” shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such
day,
the average of the closing bid and asked prices, regular way, in either case
furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in the Common Stock, the fair value of such shares
on
such date as determined in good faith by the Board of Directors of the Company
shall be used. The term “Trading Day” shall mean a day on which the principal
market in which the shares of Common Stock are listed or admitted to trading
is
open for the transaction of business or, if the shares of Common Stock are
not
so admitted, a Business Day. If the Common Stock is not publicly held or not
so
listed or traded, “current market price” per share shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(e)
Anything herein to the contrary notwithstanding, no adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required
to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or other share,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which mandates
such adjustment, or (ii) the Expiration Date.
(f)
If as
a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled
to
receive any shares of capital stock other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Right and/or
the
Purchase Price thereof shall be subject to adjustment from time to time in
a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Section 11(a), (b), (c), (e), (g),
(h),
(i), (j), (k),
and
(m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect
to
the Common Stock shall apply on like terms to any such other
shares.
(g)
All
Rights first issued by the Company subsequent to any adjustments made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted
Purchase Price, the number of shares of Common Stock purchasable from time
to
time hereunder upon exercise of the Rights, all subject to further adjustment
as
provided herein.
(h)
Unless the Company shall have exercised its election as provided in Section
11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11 (b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right
to
purchase, at the adjusted Purchase Price, that number of shares of Common Stock
(calculated to the nearest ten-thousandth) obtained by (i) multiplying (x)
the
number of shares covered by a Right immediately prior to this adjustment, by
(y)
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i)
The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of
shares of Common Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of shares of Common Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one-ten -thousandth) obtained by dividing
the
Purchase Price in effect immediately prior to adjustment of Purchase Price
by
the Purchase Price in effect immediately after adjustment of the Purchase Price.
The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may
be
the date on which the Purchase Price is adjusted or any day thereafter, but,
if
the Rights Certificates have been issued, shall be at least ten (10) days later
than the-date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed
to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment and upon surrender thereof, if required by
the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public
announcement.
(j)
Irrespective of any adjustment or change in the Purchase Price or the number
of
shares of Common Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder.
(k)
Before taking any action that would cause an adjustment reducing the Purchase
Price below the then stated or par value, if any, of the number of shares of
Common Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in
order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock at such adjusted Purchase Price.
(l)
In
any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event,
the
Company may elect to defer until the occurrence of such event the issuance
to
the holder of any Right exercised after such record date the shares of Common
Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of shares of Common Stock and
other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holders’ right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m)
Anything in this Section 11 to the contrary notwithstanding, the Company shall
be entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that
in
its good faith judgment the Board of Directors of the Company shall determine
to
be advisable in order that any (i) consolidation or subdivision of the Common
Stock, (ii) issuance wholly for cash of any shares of Common Stock at less
than
the current market price, (iii) issuance wholly for cash of shares of Common
Stock or securities which by their terms are convertible into or exchangeable
for shares of Common Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Common Stock shall not be taxable to such
shareholders.
(n)
The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person, (ii) merge with or
into any other Person, (iii) effect a statutory share exchange with any Person,
or (iv) sell or transfer (or permit any Subsidiary to sell or transfer), in
one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its
Subsidiaries (taken as a whole) to any other Person or Persons, if at the time
of or immediately after such consolidation, merger, statutory share exchange
or
sale there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights.
(o)
The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23 or Section 26 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
Section
12. Certificate of Adjusted Purchase Price or Number of
Shares.
Whenever
an adjustment is made as provided in Section 11 and Section 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Common Stock,
a
copy of such certificate, and (c) mail a brief summary thereof to each holder
of
a Rights Certificate (or, if prior to the Distribution Date, to each holder
of a
certificate representing share of Common Stock) in accordance with Section
25
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a)
In
the event that, following the Stock Acquisition Date, directly or indirectly,
(w) the Company shall consolidate with, or merge with and into, any other
Person, and the Company shall not be the continuing or surviving corporation
of
such consolidation or merger, (x) any Person shall consolidate with, or merge
with or into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (y) the Company shall be a party to a
statutory share exchange with any other Person after which the Company is a
Subsidiary of any other Person, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its
Subsidiaries (taken as a whole) to any Person or Persons, then, and in each
such
case, proper provisions shall be made so that: (i)
each
holder of a Right, except as provided in Section 7(e) hereof, shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such number
of
validly authorized and issued, fully paid, nonassessable and freely tradeable
shares of Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of shares of Common
Stock for which a Right is exercisable immediately prior to the first occurrence
of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior
to
the first occurrence of a Section 13 Event, multiplying the number of such
shares for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of Section 13 Event, shall be referred to as
the
“Purchase Price” for each Right and for all purposes of this Agreement) by (2)
50% of the current market price (determined pursuant to Section 11(d) hereof)
per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term “Company” shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its capital
stock) in connection with the consummation of any such transaction as may be
necessary to ensure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its shares of capital stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) hereof shall be of no effect following the first occurrence
of any Section 13 Event.
(b)
“Principal Party” shall mean (i) in the case of any transaction described in
clause (w), (x) or (y) of the first sentence of Section 13(a), the Person that
is the issuer of any securities into which shares of Common Stock of the Company
are converted in such merger, consolidation or statutory share exchange, and
if
no securities are so issued, the Person that is the other party to such merger
or consolidation; and (ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions; provided, however, that in any
such case, (1) if the capital stock of such Person is not at such time and
has
not been continuously over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the capital stock of which is and has been so
registered, “Principal Party” shall refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the capital stocks of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the
capital stock having the greatest aggregate market value.
(c)
The
Company shall not consummate any such consolidation, merger, statutory share
exchange, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its capital stock which have not been issued
or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date
of
any consolidation, merger, statutory share exchange or sale of assets mentioned
in paragraph (a) of this Section 13, the Principal Party will:
(i)
prepare and file a registration statement under the Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing
and
(B) remain effective (with a prospectus at all times meeting the requirements
of
the Act) until the Expiration Date; and
(ii)
will
deliver to holders of the Rights historical consolidated financial statements
for the Principal Party and each of its Affiliates which comply in all respects
with the requirements for registration on Form 10 under the Exchange
Act.
The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or statutory share exchanges or sales or other transfers. In
the
event that a Section 13 Event shall occur at any time after the occurrence
of a
Section 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall after the occurrence of a Section 13 Event be exercisable in the manner
described in Section 13(a).
Section
14. Fractional Rights and Fractional Shares.
(a)
The
Company shall not be required to issue fractions of Rights or to distribute
Rights Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a
whole
Right. For purposes of this Section 14(a), the current market value of a whole
Right shall be the closing bid price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the system then
in
use or, if on any such date the Rights are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors
of
the Company. If on any such date no such market maker is making a market in
the
Rights the fair value of the Rights on such date as determined in good faith
by
the Board of Directors of the Company shall be used.
(b)
The
Company shall not be required to issue fractions of shares of Common Stock
upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same
fraction of the current market value of one share of Common Stock. For purposes
of this Section 14(b), the current market value of one share of Common Stock
shall be the closing price of a share of Common Stock (as determined pursuant
to
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 Rights expressly waives his right
to
receive any fractional Rights or any fractional shares upon exercise of a Right,
except as permitted by this Section 14.
Section
15. Rights of Action.
All
rights of action in respect of this Agreement are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock in respect of which Rights
have
been issued); and any registered holder of any Rights Certificate (or, prior
to
the Distribution Date, of such 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 such Common Stock), may, in his own behalf and for his
own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this
Agreement.
Section
16. Agreement of Rights Holders.
Every
holder of a Right by accepting the same consents and agrees with the Company
and
the Rights Agent and with every other holder of a Right that:
(a)
prior
to the Distribution Date, the Rights will be transferable only in connection
with the transfer of Common Stock;
(b)
after
the Distribution Date, the Rights Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the principal office or
offices of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c)
any
restriction on transfer deemed to be imposed by this Agreement is valid and
enforceable against the holder and any transferee of the holder in accordance
with Section 1529 of the Pennsylvania Business Corporation Law of 1988, as
amended, or any successor provision; and
(d)
subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights
Agent may deem and treat the person in whose name a Rights Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the
contrary.
(e)
notwithstanding anything in this Agreement to the contrary, neither the Company
nor the Rights Agent shall have any liability to any holder of a Right or other
Person as a result of its inability to perform any of its obligations under
this
Agreement by reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as
possible.
Section
17. Rights Certificate Holder Not Deemed a Shareholder.
No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Common Stock
or any other securities of the Company which may at any time be issuable on
the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a shareholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section
18. Concerning the Rights Agent.
(a)
The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, including attorney fees, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement.
(b)
The
Rights Agent shall be protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, instruction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or
Persons.
Section
19. Merger or Consolidation or Change of Name of Rights
Agent.
(a)
Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agents or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment
as a
successor Rights Agent under the provisions of Section 21 hereof. In case at
the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Rights Certificates shall have been countersigned but
not
delivered, any such successor Rights Agent may adopt the countersignature of
a
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
(b)
In
case at any time the name of the Rights Agent shall be changed and at such
time
any of the Rights Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and
in
all such cases such Rights Certificates shall have the full force provided
in
the Rights Certificates and in this Agreement.
Section
20. Duties of Rights Agent.
The
Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound.
(a)
The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b)
Whenever in the performance of its duties under this Agreement the Rights Agent
shall deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
“current market price”) be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other evidence
in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman
of
the Board, the President, any Executive Vice President or Senior Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall
be
full authorization to the Rights Agent for any action taken or suffered in
good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c)
The
Rights Agent shall be liable hereunder only for its own negligence, bad faith
or
willful misconduct.
(d)
The
Rights Agent shall not be liable for or by reason of any of the statements
of
fact or recitals contained in this Agreement or in the Rights Certificates
or be
required to verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall be deemed
to
have been made by the Company only.
(e)
The
Rights Agent shall not be under any responsibility in respect of the validity
of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible
for
any adjustment required under the provisions of Section 11 or Section 13 hereof
or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any shares
of Common Stock or other securities will, when so issued, be validly authorized
and issued, fully paid and nonassessable.
(f)
The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the provisions
of this Agreement.
(g)
The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from the Chairman of the
Board, the President, any Executive Vice President or Senior Vice President,
the
Secretary, any Assistant Secretary, the Treasurer or any Assistant 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 to be taken by it in good faith in accordance with instructions of
any
such officer. At any time the Rights Agent may apply to the Company for written
instructions with respect to any matter arising in connection with the Rights
Agent’s duties and obligations arising under this Agreement. Such application by
the Rights Agent for written instructions from the Company may, at the option
of
the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent with respect to its duties or obligations under
this
Agreement and the date on and/or after which such action shall be taken and
the
Rights Agent shall not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after the date specified
therein (which date shall be not less than one business day after the Company
receives such application, without the Company’s consent) unless, prior to
taking or initiating any such action, the Rights Agent has received written
instructions in response to such application specifying the action to be taken
or omitted.
(h)
Unless otherwise prohibited by law, the Rights Agent and any shareholder,
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 obtain a pecuniary interest
in any transaction in which the Company may be interested, or contract with
or
lend money to the Company or otherwise act as fully and freely as though it
were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i)
The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its attorneys
or agents, and the Rights Agent shall not be answerable or accountable for
any
act, default, neglect or misconduct of any such attorneys or agents or for
any
loss to the Company resulting from any such act, default, neglect or misconduct;
provided, however, that reasonable care was exercised in the selection and
continued employment thereof.
(j)
No
provision of this Agreement shall require the Rights Agent to expend or risk
its
own funds or otherwise incur any financial liability in the performance of
any
of its duties hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(k)
If,
with respect to any Right Certificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to the form of assignment or
form
of election to purchase, as the case may be, has either not been completed
or
indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
Agent
shall not take any further action with respect to such requested exercise of
transfer without first consulting with the Company.
Section
21. Change of Rights Agent.
The
Rights Agent or any successor Rights Agent may resign and be discharged from
its
duties under this Agreement upon thirty (30) days notice in writing mailed
to
the Company, and to each transfer agent of the Common Stock, by registered
or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent upon thirty (30) days’ notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder
of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United States or of the Commonwealth of Pennsylvania
(or
of any other state of the United States so long as such corporation is
authorized to do business in the Commonwealth of Pennsylvania if such
authorization is required in order to fulfill its responsibilities under this
Agreement), in good standing, in the Commonwealth of Pennsylvania, is authorized
under such laws to exercise corporate trust powers and is subject to supervision
or examination by federal or state authority and has, at the time of its
appointment as Rights Agent, a combined capital and surplus of at least
$15,000,000. After appointment, the successor Rights Agent shall be vested
with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent
of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may
be.
Section
22. Issuance of New Rights Certificates.
Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights
in
such form as may be approved by its Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made
in
accordance with the provisions of this Agreement. In addition, the Company
may,
if deemed necessary or appropriate by the Board of Directors of the Company,
issue Rights Certificates representing the appropriate number of Rights in
connection with the issuance or sale of shares of Common Stock following the
Distribution Date.
Section
23. Redemption and Termination.
(a)
The
Board of Directors of the Company may, at its option, at any time prior to
the
earlier of (i) the close of business on the tenth Business Day following the
Stock Acquisition Date (or such later date as may be determined by action of
the
Company’s Board of Directors and publicly announced by the Company), or (ii) the
Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.001 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”); provided, however, if the
Board of Directors of the Company authorizes redemption of the Rights in either
of the circumstances set forth in clauses (i) and (ii) below, then there must
be
at least five (5) Continuing Directors then in office and such authorization
shall require the concurrence of a majority of such Continuing Directors: (i)
such authorization occurs on or after the time a Person becomes an Acquiring
Person, or (ii) such authorization occurs on or after the date of a change
(resulting from a proxy or consent solicitation) in a majority of the directors
in office at the commencement of such solicitation if any Person who is a
participant in such solicitation has stated (or, if upon the commencement of
such solicitation, a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event; provided further, however, that if, following
the occurrence of a Stock Acquisition Date and following the expiration of
the
right of redemption hereunder but prior to any Triggering Event, (i) a Person
who is an Acquiring Person shall have transferred or otherwise disposed of
a
number of shares of Common Stock in one transaction or series of transactions,
not directly or indirectly involving the Company or any of its Subsidiaries,
such that such Person is thereafter a Beneficial Owner of 10% or less of the
outstanding shares of Common Stock, and (ii) there are no other Persons,
immediately following the occurrence of the event described in clause (i),
who
are Acquiring Persons, then the right of redemption shall be reinstated and
thereafter be subject to the provisions of this Section 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not
be
exercisable (i) after the first occurrence of a Section 11(a)(ii) Event until
such time as the Company’s right of redemption hereunder has expired, or (ii)
during the period in which the Company’s right of redemption shall have been
reinstated under Section 30 hereof.
(b)
Immediately upon the action of the Board of Directors of the Company ordering
the redemption of the Rights, evidence of which shall have been filed with
the
Rights Agent and without any further action and without any notice, the right
to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held.
Promptly after the action of the Board of Directors ordering the redemption
of
the Rights, the Company shall give notice of such redemption to the Rights
Agent
and the holders of the then outstanding Rights by mailing such notice to all
such holders at each holder’s last address as it appears upon the registry books
of the Rights Agent or, prior to the Distribution Date, on the registry books
of
the Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made.
Section
24. Notice of Certain Events.
(a)
In
case the Company shall take action, at any time after the Distribution Date,
(i)
to pay any dividend payable in stock of any class to the holders of Common
Stock
or to take any other distribution to the holders of Common Stock (other than
a
regular quarterly cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Common Stock rights or warrants
to
subscribe for or to purchase any additional shares of Common Stock or shares
of
stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock), or (iv)
to effect any consolidation or merger into or with any other Person, or to
effect a statutory share exchange with any Person, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale
or other transfer), in one transaction or a series of related transactions,
of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date
of participation therein by the holders of the shares of Common Stock, if any
such date is to be fixed, and such notice shall be so given in the case of
any
action covered by clause (i) or (ii) above at least twenty (20) days prior
to
the record date for determining holders of the shares of Common Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or
the
date of participation therein by the holders of the shares of Common Stock
whichever shall be the earlier.
(b)
In
case any of the events set forth in Section 11(a)(ii) hereof shall occur, then,
in any such case, (i) the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 25 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding paragraph
to
Common Stock shall be deemed thereafter to refer to other securities, if
appropriate.
Section
25. Notices.
Notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent)
as
follows:
UNION
NATIONAL FINANCIAL CORPORATION
000
Xxxxxx Xxxx
Xxxxxxxxx,
XX 00000
Attention:
Corporate Secretary
Subject
to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
is
filed in writing with the Company) as follows:
REGISTRAR
AND TRANSFER COMPANY
00
Xxxxxxxx Xxxxx
Xxxxxxxx,
XX 00000-0000
Notices
or demands authorized by this Agreement to be given or made by the Company
or
the Rights Agent to the holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates representing shares of Common
Stock) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on
the
registry books of the Company.
Section
26. Supplements and Amendments.
Prior
to
the Distribution Date and subject to the next-to-last sentence of this Section
26, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of
any
holders of certificates representing shares of Common Stock. From and after
the
Distribution Date and subject to the next-to-last sentence of this Section
26,
the Company and the Rights Agent shall, if the Company so directs, supplement
or
amend this Agreement without the approval of any holders of Rights Certificates
in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, or (iii) to change or supplement the provisions hereunder
in
any manner which the Company may deem necessary or desirable and which shall
not
materially adversely affect the interests of the holders of Rights Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person); provided, that this Agreement may not be supplemented or amended to
lengthen, pursuant to this sentence, a time period relating to when the Rights
may be redeemed. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, 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 (1) that
changes the Redemption Price, the Final Expiration Date or the Purchase Price,
or (2) that reduces the number of shares of Common Stock for which a Right
is
exercisable. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Stock.
Section
27. Successors.
All
the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section
28. Determinations and Actions by the Board of Directors,
etc.
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. The Board of Directors of the Company (and, where specifically
provided for herein, the Continuing Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company (or, where specifically
provided for herein, the Continuing Directors), 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 decisions and determinations deemed necessary
or
advisable for the administration of this Agreement (including without limitation
a decision to redeem or not redeem the Rights or to amend the Agreement and
a
determination of whether or not a person is or was an Acquiring Person or
beneficially owns a certain percentage of stock of the Company). All such
actions, calculations, interpretations, decisions and determinations (including,
for purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board (or, where specifically provided for herein,
by the Continuing Directors) in good faith, shall (x) be final, conclusive
and
binding on the Company, the Rights Agent, the holders of the Rights Certificates
and all other parties, and (y) not subject the Board or the Continuing Directors
to any liability to the holders of the Rights.
Section
29. Benefits of this Agreement.
Nothing
in this Agreement shall he construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common Stock)
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to
the
Distribution Date, registered holders of the Common Stock).
Section
30. Severability.
If
any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that notwithstanding anything in
this Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth business day following the
date
of such determination by the Board of Directors.
Section
31. Governing Law.
This
Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the Commonwealth of Pennsylvania
and for all purposes shall be governed by and construed in accordance with
the
laws of such Commonwealth applicable to contracts made and to be performed
entirely within such Commonwealth.
Section
32. Counterparts.
This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section
33. Descriptive Headings.
Descriptive
headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of
the
provisions hereof.
IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and attested, all as of the
day and year first above written.
|
UNION
NATIONAL FINANCIAL
CORPORATION |
||
|
Attest:
/s/ Xxxxxx X.
Xxxxxxx
|
By: |
/s/
Xxxx X. Xxxxxx
|
|
[Name]
|
Xxxx
X. Xxxxxx
|
|
|
[Title]
|
Chairman,
President and Chief Executive Officer
|
|
|
REGISTRAR
AND TRANSFER
COMPANY
|
||
|
Attest:
/s/ Xxxx Xxxx
Xxxxxxx
|
By: |
/s/
Xxxxxxx X. Tatler
|
|
Xxxx Xxxx Xxxxxxx
|
Xxxxxxx
P. Tatler
|
|
|
Executive Vice President and
Assistant
Secretary |
Vice
President
|
|
EXHIBIT
A
[Form
of
Rights Certificate]
Certificate
No. Rights
NOT
EXERCISABLE AFTER SEPTEMBER 15, 2010 OR EARLIER IF REDEEMED BY THE COMPANY.
THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM
IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN
SECTION 7(e) OF SUCH AGREEMENT.]
Rights
Certificate
UNION
NATIONAL FINANCIAL CORPORATION
This
certifies that , or registered assigns, is the registered owner of the number
of
Rights set forth above, each of which entitles the owner thereof, subject to
the
terms, provisions and conditions of the Rights Agreement, dated as of August
27,
2007 (the “Rights Agreement”), between Union National Financial Corporation, a
Pennsylvania corporation (the “Company”), and Registrar and Transfer Company, a
New Jersey Corporation (the “Rights Agent”), to purchase from the Company at any
time prior to 5:00 P.M. (Lancaster, Pennsylvania time) on September 15, 2010
at
the office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one fully paid, non-assessable share of Common
Stock, par value $0.25 per share (the “Common Stock”) of the Company, at a
purchase price of $50.00 per share (the “Purchase Price”), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase
and
related Certificate duly executed. The Purchase Price shall be paid, at the
election of the holder, in cash or shares of Common Stock of the Company having
an equivalent value. The number of Rights evidenced by this Rights Certificate
(and the number -of shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth above, are the
number
and Purchase Price as of August 27, 2007, based on the Common Stock as
constituted at such date.
Upon
the
occurrence of a Triggering Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement), (ii)
a
transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under
certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person, or an Affiliate
or
Associate of an Acquiring Person, such Rights shall become null and void and
no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Triggering Event and the transfer of such rights may
be
deemed to be restricted.
This
Rights Certificate is subject to all of the terms, provisions and conditions
of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability
of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of
the
Rights Agent and are also available upon written request to the Rights
Agent.
This
Rights Certificate, with or without other Rights Certificates, upon surrender
at
the principal office or offices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-halves of a share of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject
to certain rights of extension and the other provisions of the Rights Agreement,
the Rights evidenced by this Certificate may be redeemed by the Company at
its
option at a redemption price of $0.001 per Right at any time prior to the
earlier of the close of business on (i) the tenth business day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), and (ii) the Final Expiration Date. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem shall
require the concurrence of a majority of the Continuing Directors. After the
expiration of the redemption period, the Company’s right of redemption may be
reinstated if an Acquiring Person reduces his
beneficial ownership to 10% or less of the outstanding shares of Common Stock
in
a transaction or series of transactions not involving the
Company.
No
fractional shares of Common Stock will be issued upon the exercise of any Right
or Rights evidenced hereby, but in lieu thereof a cash payment will be made,
as
provided in the Rights Agreement.
No
holder
of this Rights Certificate shall be entitled to vote or receive dividends or
be
deemed for any purpose the holder of shares of Common Stock or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or
upon any matter submitted to shareholders at any meeting thereof, or to give
or
withhold consent to any corporate action, or, to receive notice of meetings
or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Rights Agent.
WITNESS
the
facsimile signature of the proper officers of the Company and its facsimile
corporate seal.
Dated
as
of _____________________________
|
UNION
NATIONAL FINANCIAL
CORPORATION
|
||
|
Attest:
__________________________
|
By:
________________________________
|
|
|
[Name]
|
Xxxx X. Xxxxxx
|
|
|
[Title]
|
Chairman, President and Chief Executive Officer
|
|
|
Countersigned:
|
By:
________________________________
|
|
|
Authorized Signature
|
FORM
OF ASSIGNMENT
(To
be
executed by the registered holder if such holder desires to transfer the Rights
Certificate.)
FOR
VALUE RECEIVED
___________________________________________________________________________________________________
hereby
sells, assigns and transfers unto (please print name and address of transferee)
this Rights Certificate, together with all
right,
title and interest therein, and does hereby irrevocably constitute and appoint
_____________________________ Attorney, to transfer the within
_____________________ Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated:
________________________
______________________________
Signature
Signature
Guaranteed: ___________________________________________________
Certificate
The
undersigned hereby certifies by checking the appropriate boxes
that:
(1)
this
Rights Certificate [ ] is [ ] is not being sold, assigned and transferred by
or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant
to
the Rights Agreement);
(2)
after
due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did
not
acquire the Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated:
________________________
__________________________________________
Signature
Signature
Guaranteed: ___________________________________________________
NOTICE
The
signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or
enlargement or any change whatsoever.
FORM
OF ELECTION TO PURCHASE
(To
be
executed if holder desires to exercise Rights represented by the Rights
Certificate)
To:
UNION NATIONAL FINANCIAL CORPORATION
The
undersigned hereby irrevocably elects to exercise Rights represented by this
Rights Certificate to purchase the shares of Common Stock issuable upon the
exercise of the Rights (or such other securities of the Company or of any other
person which may be issuable upon the exercise of the Rights) and requests
that
certificates for such shares be issued in the name of and delivered
to:
Please
insert social security or other identifying number:
_______________________________
_____________________________________________________________________________
(Please
Print Name and Address)
If
such
number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall
be
registered in the name of and delivered to:
Please
insert social security or other identifying number:
_______________________________
_____________________________________________________________________________
(Please
Print Name and Address)
Dated:
________________________________ Signature:
______________________________
Certificate
The
undersigned hereby certifies by checking the appropriate boxes
that:
(1)
the
Rights evidenced by this Rights Certificate [ ] are [ ] are not being exercised
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate
or
Associate of any such Acquiring Person (as such terms are defined pursuant
to
the Rights Agreement); and
(2)
after
due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did
not
acquire the Rights evidenced by this Rights Certificate from any Person who
is,
was or became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated:
________________________________ Signature:
______________________________
Signature
Guaranteed:
__________________________________________________________
NOTICE
The
signature to the foregoing Election to Purchase and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
EXHIBIT
B
UNION
NATIONAL FINANCIAL CORPORATION
SUMMARY
OF RIGHTS
Distribution
and Transfer of Rights; Rights Certificate.
On
August 27, 2007, the Board of Directors of Union National Financial Corporation
declared a distribution of one Right for each outstanding share of common stock
of the Company to be distributed on September 15, 2007 to shareholders of record
at the close of business on September 10, 2007 (the “Record Date”). Prior to a
Distribution Date referred to below, the Rights will be evidenced by and trade
with the certificates for the Common Stock.
Distribution
Date.
A
“Distribution Date” will occur upon the earlier of:
|
·
|
10
business days (or such later date as may be determined by the Company’s
Board of Directors and publicly announced by the Company) following
a
public announcement that a person or a group of affiliated or associated
persons (an “Acquiring Person”) has acquired beneficial ownership of 15%
or more of the outstanding shares of Common Stock (the “Stock Acquisition
Date”), or
|
|
·
|
10
business days (or such later date as may be determined by the Company’s
Board of Directors and publicly announced by the Company) following
the
commencement of a tender offer or exchange offer that would result
in a
person or group beneficially owning 15% or more of the outstanding
shares
of Common Stock.
|
After
a
Distribution Date, the Company will mail Rights certificates to the Company’s
shareholders and the Rights will separate from the Common Stock.
Triggering
Events – Union National Financial Corporation Common
Stock.
Each
Right entitles the registered holder to purchase, from the Company, one share
of
Common Stock at a price of $50.00 per share (the “Purchase Price”), subject to
certain adjustments. In the event that, at any time following the Distribution
Date and before the Rights are redeemed by the Board of Directors,
|
·
|
an
Acquiring Person merges into the Company and the Company is the surviving
corporation,
|
|
·
|
an
Acquiring Person effects a statutory share
exchange,
|
|
·
|
an
Acquiring Person transfers any assets to the Company in exchange
for
shares of stock or securities convertible for shares of
stock,
|
|
·
|
an
Acquiring Person enters into a transaction involving the Company
at
conditions less favorable than an arm’s length
negotiation,
|
|
·
|
any
Person becomes the beneficial owner of 15% or more of common
stock,
|
then
the
Rights Agreement provides that each holder of a Right may exercise the Right
and
receive Common Stock of the Company having a value equal to twice the exercise
price of the Right.
For
example, at an exercise price of $50.00 per right, each right not owned by
an
Acquiring Person (or by certain related parties) following an event set forth
in
the preceding paragraph, would entitle its holder to purchase $100.00 worth
of
Common Stock for $50.00.
Triggering
Events – Acquired Company Common Stock.
In the
event that, at any time following the Stock Acquisition Date,
|
·
|
the
Company is acquired in a merger or consolidation in which the Company
is
not the surviving corporation,
|
|
·
|
the
Company engages in a merger or other business combination transaction
with
another person in which the Company is the surviving corporation,
but in
which its Common Stock is changed or exchanged,
or
|
|
·
|
50%
or more of the Company’s assets or earning power is sold or
transferred,
|
the
Rights Agreement provides that proper provision shall be made so that each
holder of a Right shall thereafter have the right to receive, upon exercise
of
the Right, Common Stock or other consideration of the acquiring Company having
a
value equal to twice the exercise price of the Right.
Rights
of Acquiring Person – Null and Void.
Notwithstanding any of the foregoing, following the occurrence of a Distribution
Date, any Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person shall
immediately become null and void.
Redemption
of the Rights.
At any
time, until ten days following the Stock Acquisition Date (or such later date
as
may be determined by action of the Company’s Board of Directors and publicly
announced by the Company) the Company may redeem the Rights in whole, but not
in
part, at a price of $0.001 per Right (the “Redemption Price”); provided,
however, that if the Board of Directors of the Company authorizes redemption
of
the Rights in either of the circumstances set forth in clauses (i) and (ii)
below, then there must be at least five Continuing Directors in office and
the
authorization requires the concurrence of a majority of Continuing
Directors:
|
(i)
|
the
authorization occurs on or after the time a person or group acquires
beneficial ownership of 15% or more of the outstanding Common Stock,
or
|
|
(ii)
|
the
authorization occurs on or after the date of a change in a majority
of the
directors resulting from a proxy solicitation, if the solicitor (or
any
participant in the solicitation) indicates an intention to become
an
Acquiring Person or to cause a Triggering
Event.
|
Afterwards,
the Company’s right of redemption may be reinstated if an Acquiring Person
reduces his beneficial ownership to 10% or less of the outstanding shares of
Common Stock in a transaction or series of transactions not involving the
Company and there is then no other Acquiring Person.
Expiration
of the Rights.
The
Rights expire on the earliest of (a) September 15, 2010 or (b) exchange or
redemption of the Rights as described above.
Amendment
of Terms of Rights.
The
terms of the Rights and the Rights Agreement may be amended without the consent
of the Rights holders on or prior to the Distribution Date; thereafter, the
terms of the Rights Agreement may be amended without consent of the Rights
holders only in certain circumstances.
Voting
Rights.
Rights
will not have any voting rights.
Taxes.
The
Rights distribution should not be taxable for federal income tax purposes.
However, following an event which renders the Rights exercisable or upon
redemption of the Rights, shareholders may recognize taxable
income.
Right
of Shareholders upon Redemption.
Immediately upon the action of the Board of Directors
of the Company ordering redemption of the Rights, with, if required, the
concurrence of the Continuing Directors, the Rights will terminate and the
holders will receive the Redemption Price.
The
foregoing is a summary of certain principal terms of the Rights Agreement only
and is qualified in its entirety by reference to the Rights Agreement dated
as
of August 27, 2007 between the Company and Registrar and Transfer Company as
Rights Agent (the “Rights Agreement”). The Rights Agreement may be amended from
time to time. A copy of the Rights Agreement was filed with the Securities
and
Exchange Commission as an Exhibit on Form 8-K on August __, 2007. A copy of
the
Rights Agreement is available free of charge from the Company.
