COMMUNITY FINANCIAL GROUP, INC.
and
REGISTRAR AND TRANSFER COMPANY
as Rights Agent
SHAREHOLDERS RIGHTS AGREEMENT
Dated as of January 21, 1998
TABLE OF CONTENTS
PAGE
Section 1.Certain Definitions.....................................1
Section 2.Appointment of Rights Agent.............................6
Section 3.Issue of Right Certificates.............................6
Section 4.Form of Right Certificates..............................9
Section 5.Countersignature and Registration.......................9
Section 6.Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates...........................................10
Section 7.Exercise of Rights; Purchase Price; Expiration Date
of Rights..............................................11
Section 8.Cancellation and Destruction of Right Certificates.....13
Section 9.Reservation, Authorization and Registration......... 14
Section 10.Common Shares Record Date.............................15
Section 11.Adjustment of Purchase Price, Number of Shares or
Number of Rights......................................16
Section 12.Certificate of Adjusted Purchase Price or Number
of Shares.............................................27
Section 13.Consolidation, Merger or Sale or Transfer of Assets
or Earning Power......................................28
Section 14.Fractional Rights and Fractional Shares...............29
Section 15.Rights of Action......................................31
Section 16.Agreement of Right Holders............................32
Section 17.Right Certificate Holder Not Deemed a Stockholder.....33
Section 18.Concerning the Rights Agent...........................33
Section 19.Merger or Consolidation or Change of Name of
Rights Agent..........................................34
Section 20.Duties of Rights Agent................................35
Section 21.Change of Rights Agent................................37
Section 22.Issuance of New Right Certificates....................39
Section 23.Redemption and Termination............................39
Section 00.Xxxxxxxx..............................................41
Section 25.Notice of Certain Events..............................43
Section 26.Notices...............................................44
Section 27.Supplements and Amendments............................45
Section 28.Successors............................................46
Section 29.Benefits of this Agreement........................... 46
Section 30.Severability..........................................46
Section 31.Governing Law.........................................46
Section 32.Counterparts..........................................46
Section 33.Descriptive Headings..................................47
Signatures.......................................................47
Exhibit A -Form of Right Certificate
Exhibit B -Summary of Rights to Purchase Common Shares
SHAREHOLDERS RIGHTS AGREEMENT
This Shareholders Rights Agreement (the "Agreement"), is entered
into as of January 21, 1998, between COMMUNITY FINANCIAL GROUP, INC., a
Tennessee corporation (the "Company"), and REGISTRAR AND TRANSFER COMPANY
(the "Rights Agent").
The Board of Directors of the Company has authorized and declared
a dividend of one common share purchase right (a "Right") for each Common
Share (as hereinafter defined) of the Company outstanding on February 5,
1998 (the "Record Date"), each Right representing the right to purchase a
Common Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that becomes
outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1.CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (as hereinafter defined)
who or which, together with all Affiliates and Associates (as hereinafter
defined) of such Person, is the Beneficial Owner (as hereinafter defined) of
15% or more of the Common Shares of the Company then outstanding, but does
not include the Company, any Subsidiary (as hereinafter defined) of the
Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, any entity holding Common Shares for or pursuant to the terms
of any such plan or any Person who or which, together with all Affiliates
and Associates of such Person, has delivered to the Company a notification
that he or it is the Beneficial Owner of 15% or more of the Common Stock of
the Company as of the date of this Agreement until and unless such Person
acquires additional Common Shares of the Company; provided, however, that if
a Person becomes the beneficial owner of 15% or more of the Common Shares of
the Company then outstanding in a transaction which is approved in advance
of its occurrence by a majority of the Company's Board of Directors and by a
majority of Continuing Directors, as hereinafter defined, as being in the
best interests of the Company, such Person shall not be deemed to be an
"Acquiring Person." Notwithstanding the foregoing, no Person shall become
an "Acquiring Person" as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to 15%
or more of the Common Shares of the Company then outstanding; provided,
however, that if a Person becomes the Beneficial Owner of 15% or more of the
Common Shares of the Company then outstanding by reason of share purchases
by the Company and, after such share purchases by the Company, becomes the
Beneficial Owner of any additional Common Shares of the Company, then such
Person shall be deemed to be an "Acquiring Person." Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an
Acquiring Person, as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an "Acquiring
Person" for purposes of this Agreement.
(b) "Affiliate" and "Associate" 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.
(c) 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 beneficially owns, directly or indirectly (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;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering
of securities), or upon the exercise of conversion rights,
exchange rights, rights (other than these Rights), warrants or
options, or otherwise; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or
successor report or schedule); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso
to Section l(c)(ii)(B)) or disposing of any securities of the
Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used with
reference to a Person's Beneficial Ownership of securities of the Company,
means the number of such securities then issued and outstanding plus the
number of such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(d) "Business Day" means any day other than a Saturday, a
Sunday, or a day on which banking institutions in Nashville, Tennessee are
authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date means 5:00 P.M.,
Nashville, Tennessee time, on such date; provided, however, that if such
date is not a Business Day, "Close of Business" means 5:00 P.M., Nashville,
Tennessee time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company,
means the shares of common stock, par value $6.00 per share, of the Company.
"Common Shares," when used with reference to any Person other than the
Company, means the capital stock (or equity interest) with the greatest
voting power of such other Person or, if such other Person is a Subsidiary
of another Person, of the Person or Persons which has the power ultimately
to control or direct the management of the first-mentioned Person.
(g) "Continuing Director" means (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 such Affiliate
or Associate, 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
if such Person's nomination for election or election to the Board is
recommended or approved by a majority of the Continuing Directors.
(h) "Distribution Date" has the meaning set forth in Section 3
hereof.
(i) "Final Expiration Date" has the meaning set forth in Section
7 hereof.
(j) "Person" means any individual, firm, corporation or other
entity, and includes any successor (by merger or otherwise) of such entity.
(k) "Redemption Date" has the meaning set forth in Section 7
hereof.
(l) "Shares Acquisition Date" means the date of the first public
announcement (which, for purposes of this definition, shall include, without
limitation, a report or schedule filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
(m) "Subsidiary" of any Person means any corporation or other
entity of which a majority of the voting power of the voting equity
securities or other equity interest is owned, directly or indirectly, by
such Person.
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 before the
Distribution Date also be the holders of the Common Shares) 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 desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the tenth
day after the Shares Acquisition Date (or, if the tenth day after the Shares
Acquisition Date occurs before the Record Date, the Record Date) or (ii) the
Close of Business on the tenth Business Day (or such later date as may be
determined by action of the Board of Directors before any Person becomes an
Acquiring Person) after the date of the commencement 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 entity holding
Common Shares for or pursuant to the terms of any such plan or any Person
who, or which, together with all Affiliates and Associates of such Person,
has notified the Company that he or it is the Beneficial Owner of 15% or
more of the Common Stock of the Company as of the date of this Agreement
until and unless such Person acquires additional Common Shares) of, or of
the first public announcement of the intention of 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 entity holding Common
Shares for or pursuant to the terms of any such plan or any Person who, or
which, together with all Affiliates and Associates of such Person, has
notified the Company that he or it is the Beneficial Owner of 15% or more of
the Common Stock of the Company as of the date of this Agreement until and
unless such Person acquires additional Common Shares) to commence, a tender
or exchange offer the consummation of which would result in any Person's
becoming the Beneficial Owner of Common Shares aggregating 15% or more of
the then outstanding Common Shares, including any such date which is after
the date of this Agreement and before the issuance of the Rights (the
earlier of such dates being herein referred to as the "Distribution Date"),
the Rights will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Shares. As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records of
the Company, a Right Certificate, in substantially the form of Exhibit A
hereto (a "Right Certificate"), evidencing one Right for each Common Share
so held. As of the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Common
Shares, in substantially the form of Exhibit B hereto (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Record Date, at the address
of such holder shown on the records of the Company. With respect to
certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached thereto. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date), the surrender
for transfer of any certificate for Common Shares outstanding on the Record
Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the
last sentence of this paragraph (c)) after the Record Date but before the
earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed, printed or written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Shareholders
Rights Agreement between Community Financial Group, Inc.
and Registrar and Transfer Company, dated as of January
21, 1998 (the "Shareholders 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 Community Financial Group, Inc.
Under certain circumstances, as set forth in the
Shareholders Rights Agreement, such rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. Community Financial
Group, Inc. will mail to the holder of this certificate
a copy of the Shareholders Rights Agreement without
charge after its receipt of a written request therefor.
Under certain circumstances, as set forth in the
Shareholders Rights Agreement, rights issued to any
Person who becomes an Acquiring Person (as defined in
the Shareholders Rights Agreement) may become null and
void.
With respect to certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented
thereby. If the Company acquires any Common Shares after the Record Date
but before the Distribution Date, any Rights associated with such Common
Shares shall be deemed canceled and retired so that the Company is not
entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates
(and the forms of election to purchase Common Shares and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit A
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company deems
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law, rule or
regulation or with any rule or regulation of any stock exchange on which the
Rights may from time to time be listed or to conform to usage. Subject to
the provisions of Section 24 hereof, the Right Certificates shall entitle
the holders thereof to purchase the number of Common Shares set forth
therein at the price per Common Share set forth therein (the "Purchase
Price"), but the number of such Common Shares and the Purchase Price shall
be subject to adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Company's
President and Chief Executive Officer or any of its Executive or Senior Vice
Presidents shall execute the Right Certificates, either manually or by
facsimile signature, on behalf of the Company and the Secretary or an
Assistant Secretary of the Company shall attest such execution, either
manually or by facsimile signature. The Rights Agent shall manually
countersign the Right Certificates. No Right Certificate shall be valid for
any purpose unless countersigned. In case any officer of the Company who
executed any of the Right Certificates ceases to hold the office in which
capacity he executed before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who
executed such Right Certificates continued to hold such office. Any Right
Certificate may be executed on behalf of the Company by any person who, at
the date of such execution, is authorized hereunder to execute such Right
Certificate, although as of the date of the execution hereof such person was
not so authorized.
Following the Distribution Date, the Rights Agent will keep or
cause to be kept at its principal office books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of Right Certificates, the number of
Rights evidenced by each Right Certificate and the date of each Right
Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
Subject to the provisions of Section 14 hereof, at any time after the Close
of Business on the Distribution Date, and at or before the Close of Business
on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate (other than a Right Certificate representing Rights that
have become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of Common Shares
as the Right Certificate surrendered entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall deliver a written request to
the Rights Agent and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Right Certificate
or Right Certificates as so requested. The Company may require payment of a
sum sufficient to cover any tax or governmental charge imposed in connection
with any transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them and,
at the Company's request, of reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon surrender to
the Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will make and deliver a new Right Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the lost,
stolen, destroyed or mutilated Right Certificate.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole
or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for each Common
Share as to which the Rights are exercised, at or prior to the earliest of
(i) the Close of Business on February 4, 2008 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section 23
hereof (the "Redemption Date"), or (iii) the time at which such Rights are
exchanged as provided in Section 24 hereof.
(b) The purchase price for each Common Share purchasable pursuant
to the exercise of a Right shall initially be Fifty Five and NO/100 Dollars
($55.00), subject to adjustment from time to time as provided in Section 11
or 13 hereof (the "Purchase Price"), and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Common Shares certificates for the number of Common
Shares to be purchased or (B) requisition from the depositary agent
depositary receipts representing such number of Common Shares as are to be
purchased (in which case certificates for the Common Shares represented by
such receipts shall be deposited by the transfer agent with the depositary
agent), (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt, deliver such cash to or upon the order of the registered holder of
such Right Certificate. The Company hereby irrevocably authorizes and
directs its transfer agents and depository agents to comply with requests
made hereunder.
(d) In case the registered holder of any Right Certificate
exercises less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Common Shares
a number of Common Shares that will be sufficient to permit the exercise in
full of all outstanding Rights in accordance with this Section 7.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to take any
action with respect to a registered holder upon any purported exercise as
set forth in this Section 7 unless such registered holder shall have
provided such evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company may
reasonably require.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof, except as
expressly permitted by any of the provisions of this Shareholders Rights
Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall cancel and retire, any other
Right Certificate purchased or acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company or shall, at the written request of the Company,
destroy cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. RESERVATION, AUTHORIZATION AND REGISTRATION.
(a) Following the Shares Acquisition Date, the Company covenants
and agrees that it will cause to be reserved and kept available out of its
then authorized and unissued Common Shares the number of Common Shares that
will be sufficient to permit the exercise in full of all outstanding Rights,
subject to the rights of the Company under Section 11(a)(iii) hereof.
(b) Following the Shares Acquisition Date the Company covenants
and agrees that it will take all such action as may be necessary to ensure
that all Common Shares delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such Common Shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully
paid and non-assessable shares.
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the Distribution Date on
which the consideration to be delivered by the Company upon exercise of the
Rights has been determined 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, as amended (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 the 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 Final Expiration Date.
The Company will also use its best efforts to comply with the securities
laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statements and permit them to become
effective. Upon any suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite registration or qualification in that
jurisdiction shall have been obtained.
(d) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Right Certificates or of any Common Shares upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Right Certificates to a
Person other than, or the issuance or delivery of certificates or depositary
receipts for the Common Shares in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise
or to issue or to deliver any certificates or depositary receipts for the
Common Shares upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Right
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 SHARES RECORD DATE. Each person in whose name
any certificate for Common Shares is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Shares represented thereby on, and such certificate shall be dated as
of, the date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Common Shares transfer books
of the Company are closed, such person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated as of,
the next succeeding Business Day on which the Common Shares transfer books
of the Company are open. Before the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled to any
rights of a holder of Common Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote or to receive
dividends or other distributions and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number of Common 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) If at any time after the date of this Agreement the
Company (A) declares a dividend on the Common Shares payable in Common
Shares, (B) subdivides the outstanding Common Shares, (C) combines the
outstanding Common Shares into a smaller number of Common Shares or (D)
issues any shares of its capital stock in a reclassification of the Common
Shares (including any reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in
effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Common Shares transfer books of
the Company were open, he would have owned upon such exercise and have been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification.
(ii) Subject to Sections 23 and 24 of this Agreement, in the
event any Person becomes an Acquiring Person, each holder of a Right shall
from the Shares Acquisition Date have a right to receive, upon exercise
thereof at a price equal to the then-current Purchase Price multiplied by
the number of Common Shares for which a Right is then exercisable, in
accordance with the terms of this Agreement, such number of Common Shares of
the Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of Common Shares for which a Right is
then exercisable and dividing that product by (y) 50% of the then current
per share market price of the Company's Common Shares (determined pursuant
to Section 11(d) hereof) on the date of the occurrence of such event. In
the event that any Person becomes an Acquiring Person while the Rights are
outstanding, the Company shall take no action which would eliminate or
diminish the benefits intended to be afforded by the Rights, provided that,
the Company's exercise of its power to redeem the Rights pursuant to Section
23 hereof or of any other right or power specifically reserved to it
hereunder shall not be deemed an elimination or diminution of such benefits.
On and after the Shares Acquisition Date, any Rights that are or
were acquired or beneficially owned by any Acquiring Person (or any
Associate or Affiliate of such Acquiring Person) shall be void, and any
holder of such Rights shall thereafter have no right to exercise such Rights
under any provision of this Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the preceding
sentence or by any Associate or Affiliate thereof; no Right Certificate
shall be issued at any time upon the transfer of any Rights to an Acquiring
Person whose Rights would be void pursuant to the preceding sentence or to
any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be canceled.
(iii)Notwithstanding anything in this Agreement to the contrary,
the number of Common Shares required to be issued upon exercise of the
Rights pursuant to subparagraph (ii) of this Section 11(a) shall not exceed
the total number of authorized but unissued Common Shares as of the Record
Date; provided that, if at any time before the end of the Substitution
Period, as hereinafter defined, the total number of authorized but unissued
Common Shares becomes greater than the number of such Common Shares as of
the Record Date, this Agreement may be amended pursuant to Section 27 to
increase the number of Common Shares issuable upon exercise of the Rights
under subparagraph (ii) of this Section 11(a). In the event that the number
of Common Shares which are authorized by the Company's charter but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii) of this Section 11(a)
(without regard to any adjustment in the number of Common Shares issuable
upon such exercise which is required by the first sentence of this
subparagraph (iii)), the Company shall: (A) determine the excess of (x) the
value of the unavailable Common Shares issuable upon the exercise of a Right
over (y) the Purchase Price applicable to such unavailable Common Shares
(such excess, the "Spread"), and (B) make adequate provision to substitute
for such unavailable Common Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) 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
Common Shares (such shares of preferred stock, "common share equivalents"),
(3) debt securities of the Company, (4) other assets, or (5) any combination
of the foregoing, having an aggregate value equal to the Spread, where such
aggregate value has been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company (any of (1)-(5), the
"Substitute Consideration"); provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty days following the Shares Acquisition Date, then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right
and payment of the Purchase Price, Common Shares (to the extent available)
and then, if necessary, cash, in an amount equal to the Spread. If the
Board of Directors determines in good faith that it is likely that
sufficient additional Common Shares could be authorized for issuance upon
full exercise of the Rights, the thirty-day period set forth above may be
extended for not more than ninety additional days during which the Company
may seek shareholder approval for the authorization of such additional
Common Shares (such thirty-day period, as it may be extended, the
"Substitution Period"). If Substitute Consideration is paid on exercise of
the Rights, all outstanding Rights shall receive the same Substitute
Consideration. The Board of Directors may suspend the exercisability of the
Rights until the expiration of the Substitution Period. In the event of any
such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect.
For purposes of this Section 11(a)(iii), the value of the Common Shares
shall be the current per share market price (as determined pursuant to
Section 11(d) hereof) of the Common Shares on the Shares Acquisition Date
and the value of any "common share equivalent" shall be deemed to have the
same value as a Common Share on such date.
(b) If the Company fixes a record date for the issuance of
rights, options or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Shares (or shares having the same rights,
privileges and preferences as the Common Shares ("equivalent shares") or
securities convertible into Common Shares or equivalent shares at a price
per Common Share or equivalent share (or having a conversion price per
share, if a security convertible into Common Shares or equivalent shares)
less than the then current per share market price of the Common Shares (as
defined in Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately before such record date by a fraction,
the numerator of which shall be the number of Common Shares outstanding on
such record date plus the number of Common Shares which the aggregate
offering price of the total number of Common Shares and/or equivalent shares
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of Common
Shares outstanding on such record date plus the number of additional Common
Shares and/or equivalent shares to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). If such subscription price may be paid in part or in whole in
a consideration 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.
Such adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) If the Company fixes a record date for a distribution to all
holders of the Common Shares (including any distribution made in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in Common Shares) or
subscription rights or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Common Shares on such record
date, less the fair market value (as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Common Share and the denominator of
which shall be such current per share market price of the Common Shares.
Such adjustments shall be made successively whenever such a record date is
fixed; and if such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security") for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of the Security for the thirty
(30) consecutive Trading Days (as hereinafter defined) immediately before
such date; provided, however, that if the current per share market price of
the Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or other distribution on such
Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and before the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution or the record date for
such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately adjusted to
take into account ex-dividend trading. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or
admitted to trading or, if the Security is not listed or admitted to trading
on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Security
selected by the Board of Directors of the Company. The term "Trading Day"
shall mean a day on which the principal national securities exchange on
which the security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Common Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Common
Shares are not publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Common Share or of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires
such adjustment or (ii) the date of the expiration of the right to exercise
any Rights.
(f) If as result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised becomes entitled to
receive any shares of capital stock of the Company other than Common Shares,
thereafter the number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time in a manner and
on terms as nearly as practicable equivalent to the provisions with respect
to the Common Shares contained in Section 11(a) through (c), inclusive, and
the provisions of Sections 7, 9, 10 and 13 with respect to the Common Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company after any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company has 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 Common
Shares (calculated to the nearest one-millionth of a Common Share) obtained
by (i) multiplying (x) the number of Common Shares covered by a Right
immediately before this adjustment by (y) the Purchase Price in effect
immediately before 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 substitution for
any adjustment in the number of Common Shares purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of Common Shares for
which a Right was exercisable immediately before such adjustment. Each
Right held of record before 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 before
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, it shall be at least ten (10) days later than
the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders are entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates evidencing all
the Rights to which such holders are entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Regardless of any adjustment or change in the Purchase Price
or the number of Common Shares issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of Common Shares which were expressed in
the initial Right Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record
date of the Common Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Common
Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the Company shall deliver
to such holder a due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as
and to the extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the Common
Shares, issuance wholly for cash of any Common Shares at less than the
current market price, issuance wholly for cash of Common Shares or
securities which by their terms are convertible into or exchangeable for
Common Shares, dividends on Common Shares payable in Common Shares or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Common Shares shall
not be taxable to such stockholders.
(m) If at any time between the date of this Agreement and the
Distribution Date, the Company (i) declares or pays any dividend on the
Common Shares payable in Common Shares or (ii) effects a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then (A) the number of Common Shares
purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of Common Shares so purchasable
immediately before such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (B) each Common Share outstanding immediately after
such event shall have issued with respect to it that number of Rights which
each Common Share outstanding immediately before such event had issued with
respect to it. The adjustments provided for in this Section 11(m) shall be
made successively whenever such a dividend is declared or, if not declared,
paid, or such a subdivision, combination or consolidation is effected.
(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 or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction or a series
of related transactions outside the ordinary course of the Company's
business, 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 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.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 13
hereof, the Company shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS
OR EARNING POWER. If, directly or indirectly, (a) the Company consolidates
with, or merges with and into, any other Person, (b) any Person consolidates
with or merges with and into the Company and the Company is the continuing
or surviving corporation of such merger and, in connection with such merger,
all or part of the Common Shares are changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any other
property or engages in a share exchange with the Company in which all or
part of the Common Shares are changed into or exchanged for stock or other
securities of any other Person or (c) the Company sells or otherwise
transfers (or one or more of its Subsidiaries sells or otherwise transfers),
in one or more transactions, assets or earning power aggregating 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person other than the Company or one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper provision
shall be made so that (i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase Price
multiplied by the number of Common Shares for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Common Shares, such number of Common Shares of such other Person (including
the Company as successor thereto or as the surviving corporation) free and
clear of any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (A) multiplying the then
current Purchase Price by the number of Common Shares for which a Right is
then exercisable and dividing that product by (B) 50% of the then current
per share market price of the Common Shares of such other Person (determined
pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the issuer of such Common
Shares shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of
the Company under this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such issuer; and (iv) such issuer shall take such
steps (including, but not limited to, the reservation of a sufficient number
of its Common Shares in accordance with Section 9 hereof) in connection with
such consummation to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights. The Company shall
not consummate any such consolidation, merger, sale or transfer until the
Company and such issuer have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not enter into any
transaction of the kind referred to in this Section 13 if at the time of
such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish
the benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For purposes of this
Section 14(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately before the date
on which such fractional Rights would otherwise have been issuable. The
closing price for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of
Common Shares upon exercise of the Rights or to distribute certificates
which evidence fractional Common Shares. If the Company elects to issue
fractions of Common Shares such fractions may, at the election of the
Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it; provided,
that such agreement shall provide that the holders of such depositary
receipts have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Common Shares represented by such
depositary receipts. In lieu of fractional Common Shares, the Company shall
pay to the registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Common Share. For purposes of
this Section 14(b), the current market value of a Common Share shall be the
closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately before
the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided above).
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 18 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares), 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 Right Certificate in the manner provided in such Right 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 will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) before the Distribution Date, the Rights are transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied by
a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the
person in whose name the Right Certificate (or, before the Distribution
Date, the associated Common Shares certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Right Certificates or the
associated Common Shares certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company
nor the Rights Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
Person as a result of its inability to perform any of its obligations
hereunder by reason of any preliminary or permanent injunction or any other
order, decree or ruling of a court of competent jurisdiction, 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, that the Company must take reasonable
measures to have any such order, decree or ruling lifted or otherwise
reversed.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Common
Shares 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 Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except
as provided in Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent, and its officers, agents and directors, for, and to hold
them harmless against, any loss, liability, or expense incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent or such indemnified
Persons in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim
of liability in the premises.
The Rights Agent shall be protected by the Company and shall incur
no liability for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this Agreement in reliance upon
any Right Certificate or certificate for the Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice
of counsel as set forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party or any corporation succeeding to the
stock transfer or corporate trust powers of the Rights Agent or any
successor Rights Agent shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions
of Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in
case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been countersigned,
the Rights Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of
the President and Chief Executive Officer, any Executive or Senior Vice
President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights' becoming void pursuant
to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Section 3,
11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by an act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Common Shares to be issued pursuant to this Agreement or
any Right Certificate or as to whether any Common Shares will, when issued,
be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
any one of the President and Chief Executive Officer, any Executive or
Senior Vice President, the Secretary or the Treasurer of the Company, and to
apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement.
(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.
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 Shares by registered or
certified mail and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 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 Shares or Common Shares by registered or certified mail and to
the holders of the Right Certificates by first-class mail. If the Rights
Agent resigns or is removed or otherwise becomes incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company fails
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 Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States
or of any state in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital and surplus
of at least $60,000,000. 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 shall execute
and deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares or Common Shares, and
mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary,
the Company may, at its option, issue new Right Certificates evidencing
Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. REDEMPTION AND TERMINATION.
(a) The Board of Directors of the Company may, at its option, at
any time before the earlier of (i) the Close of Business on the tenth day
following the Shares Acquisition Date and (ii) the Close of Business on the
Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof or, in the discretion of the
Board of Directors, its equivalent in shares of the Company's stock,
determined according to the current per share market price of such shares as
of the date of redemption (such amount, the "Redemption Price"); provided,
however, if at the time the Board of Directors of the Company authorizes
redemption of the Rights (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's becoming an
Acquiring Person, then in either such event there must be Continuing
Directors then in office and such authorization shall require the
concurrence of a majority of such Continuing Directors, Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not
be exercisable following an adjustment made pursuant to Section 11(a)(ii)
prior to the expiration of the Company's right of redemption hereunder.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; provided, however,
that the failure to give, or any defect in, any such notice shall not affect
the validity of such redemption. Within ten (10) days after such action of
the Board of Directors ordering the redemption of the Rights, the Company
shall mail a notice of redemption to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Shares. 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. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof and other
than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
such Subsidiary, or any entity holding Common Shares for or pursuant to the
terms of any such plan or any Person who, or which, together with all
Affiliates and Associates of such Person, has notified the Company that he
or it is the Beneficial Owner of 15% or more of the Common Stock of the
Company as of the date of this Agreement until and unless such Person
acquires additional Common Shares), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive a number of Common Shares
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the holders of
such Rights at their last addresses as they appear upon the registry books
of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there are not sufficient Common Shares
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action as
may be necessary to authorize additional Common Shares for issuance upon
exchange of the Rights.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to
the registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of a whole Common Share.
For the purposes of this paragraph (e), the current market value of a whole
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) If the Company proposes (i) to pay any dividend payable in
stock of any class to the holders of its Common Shares or to make any other
distribution to the holders of its Common Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Common Shares
rights or warrants to subscribe for or to purchase any additional Common
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Common Shares (other
than a reclassification involving only the subdivision of outstanding Common
Shares), (iv) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to, or to engage in a share exchange
with any other Person in which all or part of the Common Shares are changed
into or exchanged for stock or securities of, any other Person, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in
each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares, 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 ten (10) days prior to the record date
for determining holders of the Common Shares for purposes of such action,
and in the case of any such other action, at least ten (10) days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares, whichever shall be the earlier.
(b) If the event set forth in Section 11(a)(ii) hereof occurs,
then the Company shall as soon as practicable thereafter give to each holder
of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Community Financial Group, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: President & CEO
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
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, Xxx Xxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. Before the Distribution
Date, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend any provision of this Agreement without the approval of
any holders of Common Shares. From and after the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period hereunder (which
shortening or lengthening, following the first occurrence of an event set
forth in clauses (i) and (ii) of the first proviso to Section 23(a) hereof,
shall be effective only if there are Continuing Directors and shall require
the concurrence of a majority of such Continuing Directors), or (iv) to
change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person) so long as the duties,
liabilities and indemnification of the Rights Agent are not effected;
provided, however, that this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are
not then redeemable or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and/or
the benefits to, the holders of Rights. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27,
the Rights Agent shall execute such supplement or amendment.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares).
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.
Section 31. GOVERNING LAW. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Tennessee and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.
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 attested, all as of the day and year first above
written.
COMMUNITY FINANCIAL GROUP, INC.
Attest:
By XXXX XXXXXXXX By XXXX XXXXXXXXX
Title: Corporate Secretary Title: President & CEO
REGISTRAR AND TRANSFER COMPANY
Attest:
By XXXXXXX X. TATLER By XXXXXXXX X. XXXXXXX
Title: Vice President Title: Vice President
Assistant Secretary
EXHIBIT A
Form of Right Certificate
Certificate No. R- ____ Rights
NOT EXERCISABLE AFTER FEBRUARY 4, 2008 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $ 0.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE SHAREHOLDERS RIGHTS AGREEMENT.
Right Certificate
COMMUNITY FINANCIAL GROUP, INC.
This certifies that _________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Shareholders Rights Agreement dated as of January 21, 1998 (the
'Shareholders Rights Agreement") between Community Financial Group, Inc., a
Tennessee corporation (the "Company"), and Registrar and Transfer Company
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Shareholders Rights
Agreement) and before 5:00 P.M., Nashville, Tennessee time, on February 4,
2008, at the principal office of the Rights Agent, or at the office of its
successor as Rights Agent, one fully paid, non-assessable share of the
Company's Common Stock ("Common Share"), at a purchase price of $55.00 per
Common Share (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of
Common Shares which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as
of January 21, 1998, based on the Common Shares as constituted at such date.
As provided in the Shareholders Rights Agreement, the Purchase Price and the
number of Common Shares which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Shareholders Rights Agreement,, which terms,
provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Shareholders 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, its officers and directors and the holders of the Right
Certificates. Copies of the Shareholders Rights Agreement are on file at
the principal executive offices of the Company and the principal office of
the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number
of Common Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Shareholders Rights Agreement,
the Rights evidenced by this Certificate (i) may be redeemed by the Company
at a redemption price of $.01 per Right payable in cash or in stock of the
Company or (ii) may be exchanged by the Company in whole or in part for
Common Shares, no par value.
At the Company's option, fractional Common Shares may be issued
upon the exercise of any Right or Rights evidenced hereby which may, at the
election of the Company, be evidenced by depositary receipts. If fractional
Common Shares are not issued, a cash payment will be made in lieu thereof,
as provided in the Shareholders Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the
Shareholders 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 Shareholders Rights
Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Shareholders Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it is countersigned by, the Rights Agent.
WITNESS the facsimile signature of the authorized officers of the
Company.
Dated as of ____________________, ____.
ATTEST: COMMUNITY FINANCIAL GROUP, INC.
By:
Countersigned:
REGISTRAR AND TRANSFER COMPANY
By:
Authorized Signature
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Right
Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ___________________
Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ________________, ____
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Shareholders Rights
Agreement).
Signature
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To COMMUNITY FINANCIAL GROUP, INC.
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Right Certificate to
purchase the Common Shares issuable upon the exercise of such Rights and
requests that certificates for such Common Shares be issued in the name of:
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 Right
Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Shareholders Rights
Agreement).
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner
of the Rights evidenced by this Right Certificate to be an Acquiring Person
or an Affiliate or Associate thereof (as defined in the Shareholders Rights
Agreement) and such Assignment or Election to Purchase will not be honored.
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On January 21, 1998, the board of directors of Commnity Financial
Group, Inc. (the "Company") declared a dividend of one common share purchase
right (a "Right") for each outstanding share of common stock, no par value
(the "Common Shares"), of the Company. The dividend is payable on February
5, 1998 (the "Record Date"), to the shareholders of record on that date.
Each Right entitles the registered holder to purchase from the Company one
share of the Company's Common Stock ("Common Share") at a price of $55.00
per Common Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Shareholders Rights
Agreement (the "Shareholders Rights Agreement") between the Company and
Registrar and Transfer Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding Common Shares without the prior approval of the board of
directors, including a majority of "Continuing Directors," as that term is
defined in the Shareholders Rights Agreement, or (ii) 10 business days (or
such later date as may be determined by action of the board of directors
before such time as any person or group of affiliated persons becomes an
Acquiring Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of
which would result in the beneficial ownership by a person or group of 15%
or more of the outstanding Common Shares (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced, with respect
to any of the Common Share certificates outstanding as of the Record Date,
by such Common Share certificate with a copy of this Summary of Rights
attached thereto.
The Shareholders Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of the Rights), the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the
Shareholders Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer
of any certificates for Common Shares outstanding as of the Record Date,
even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of
record of the Common Shares as of the close of business on the Distribution
Date and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on February 4, 2008 (the "Final Expiration Date"), unless
the Final Expiration Date is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of Common Shares or
other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification
of, the Common Shares, (ii) upon the grant to holders of the Common Shares
of certain rights or warrants to subscribe for or purchase Common Shares at
a price, or securities convertible into Common Shares with a conversion
price, less than the then-current market price of the Common Shares or (iii)
upon the distribution to holders of the Common Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out
of earnings or retained earnings or dividends payable in Common Shares) or
of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the
Common Shares payable in Common Shares or subdivisions, consolidations or
combinations of the Common Shares occurring, in any such case, before the
Distribution Date.
If the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the
then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction will
have a market value of two times the exercise price of the Right. In the
event that any person or group of affiliated or associated persons becomes
an Acquiring Person, proper provision shall be made so that each holder of a
Right, other than Rights beneficially owned by the Acquiring Person (which
will thereafter be void), will from the date of the first public
announcement of the Acquiring Person's acquisition have the right to receive
upon exercise that number of Common Shares having a market value of two
times the exercise price of the Right or, if there is an insufficient number
of authorized and unissued Common Shares to allow the full exercise of the
Rights, a package of other securities or property of the Company and/or cash
which the board of directors determines with the advice of an investment
banking firm to be equivalent to such number of Common Shares.
At any time after any Person becomes an Acquiring Person and
before the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the board of directors of the Company may
exchange the Rights (other than Rights owned by such person or group which
will have become void), in whole or in part, at an exchange ratio of one
Common Share, per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least
1% in such Purchase Price. At the Company's option, fractional Common
Shares may be issued which may, at the election of the Company, be evidenced
by depositary receipts. If fractional Common Shares are not issued, an
adjustment in cash will be made in lieu thereof based on the market price of
the Common Shares on the last trading day before the date of exercise.
At any time before the close of business ten days after the date
of the first public announcement of the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of
the outstanding Common Shares, the board of directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"), payable in cash or in shares of the Company's
stock. If, however, there is an Acquiring Person at the time, a majority of
Continuing Directors must concur in the redemption of the Rights. The
redemption of the Rights may be made effective at such time on such basis
with such conditions as the board of directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the board of directors
of the Company without the consent of the holders of the Rights, including
an amendment to lower certain thresholds described above to not less than
the greater of (i) the sum of .001% plus the largest percentage of the
outstanding Common Shares then known to the Company to be beneficially owned
by any person or group of affiliated or associated persons and (ii) 10%,
except that from and after such time as there is an Acquiring Person no such
amendment may adversely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation,
the right to vote or to receive dividends.
A copy of the Shareholders Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated ________________, 1998. A copy of the
Shareholders Rights Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Shareholders Rights
Agreement, which is hereby incorporated herein by reference.
