UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event
reported) July 24, 2003 (July 23, 2003)
CB BANCSHARES, INC.
(Exact name of Registrant as Specified in Charter)
Hawaii 0-12396 99-0197163
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
201 Merchant Street, Honolulu, Hawaii 96813
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (808) 535-2500
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events and Regulation FD Disclosure
a) New Rights Agreement
On July 23, 2003, the Board of Directors of CB Bancshares, Inc. (the
"Company") declared a dividend distribution of one Right for each outstanding
share of Company Common Stock to stockholders of record at the close of
business on August 4, 2003 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $1.00 per share (the "Series A Preferred Stock") at a
Purchase Price of $225.00 per Unit, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (as amended, restated,
renewed or extended from time to time, the "Rights Agreement") between the
Company and City Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified in
the Rights Agreement, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 days following a
public announcement by the Company that a person or group of affiliated or
associated persons (an "Acquiring Person") on or after the record date
beneficially owns 15% or more of the outstanding shares of Common Stock (the
"Stock Acquisition Date") or (ii) 10 business days (or such later date as the
Board shall determine) following the commencement of a tender offer or
exchange offer that would result in a person or group becoming an Acquiring
Person. Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such
Common Stock certificates, (ii) new Common Stock certificates issued after the
Record Date will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence
of a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock
will be issued.
The Rights are not exercisable until the Distribution Date and will
expire at 5:00 P.M. (Honolulu, Hawaii time) on August 4, 2013, unless such
date is extended or the Rights are earlier redeemed or exchanged by the
Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights. Except as otherwise
determined by the Board of Directors, only shares of Common Stock issued prior
to the Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, each holder
of a Right will thereafter have the right to receive, upon exercise, Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following such time as any Person
becomes an Acquiring Person, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void. However, Rights are not
exercisable following such time as any Person becomes an Acquiring Person
until such time as the Rights are no longer redeemable by the Company as set
forth below.
For example, at an exercise price of $225.00 per Right, each Right
not owned by an Acquiring Person (or by certain related parties) following
such time as any Person becomes an Acquiring Person would entitle its holder
to purchase $450.00 worth of Common Stock (or other consideration, as noted
above) for $225.00. Assuming that the Common Stock had a per share value of
$62.44 at such time, the holder of each valid Right would be entitled to
purchase 7.2 shares of Common Stock for $225.00.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company engages in a merger or other business combination transaction
in which the Company is not the surviving corporation, (ii) the Company
engages in a merger or other business combination transaction in which the
Company is the surviving corporation and the Common Stock of the Company is
changed or exchanged, or (iii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights which have
previously been voided as set forth above) shall thereafter have the right to
receive, upon exercise, common stock of the acquiring company having a value
equal to two times the exercise price of the Right. The events set forth in
this paragraph and in the second preceding paragraph are referred to as the
"Triggering Events."
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person or group of fifty percent (50%) or more of the
outstanding Common Stock, the Board may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in part, at
an exchange ratio of one share of Common Stock, or one one-hundredth of a
share of Preferred Stock (or of a share of a class or series of the Company's
preferred stock having equivalent rights, preferences and privileges), per
Right (subject to adjustment).
The Purchase Price payable, and the number of Units of Preferred
Stock or other securities or property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the
event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred
Stock are granted certain rights or warrants to subscribe for Preferred Stock
or convertible securities at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment
in cash will be made based on the market price of the Preferred Stock on the
last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01
per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors). Under certain circumstances set forth
in the Rights Agreement, the decision to redeem will require the concurrence
of a majority of the Continuing Directors. Immediately upon the action of the
Board of Directors ordering redemption of the Rights with, where required, the
concurrence of the Continuing Directors, the Rights will terminate and the
only right of the holders of Rights will be to receive the $.01 redemption
price.
The term "Continuing Directors" means any member of the Board of
Directors of the Company who was a member of the Board prior to the date of
the Rights Agreement, and any person who is subsequently elected to the Board
if such person is recommended or approved by a majority of the continuing
Directors, but shall not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company or in the event of the
redemption of the Rights as set forth above.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by
the Board in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights, or to shorten or lengthen
any time period under the Rights Agreement. Under certain circumstances set
forth in the Rights Agreement, the decision to amend will require the
concurrence of a majority of Continuing Directors. The foregoing
notwithstanding, no amendment may be made at such time as the Rights are not
redeemable.
The text of the Rights Agreement is set forth as Exhibit 99.1 and is
incorporated herein by reference.
b) 1989 Rights Agreement
CB Bancshares' existing rights agreement, dated as of March 16, 1989,
as amended (the "1989 Rights Agreement") will remain in place and the
associated rights (the "Old Rights") will remain outstanding. Concurrent with
its adoption of the Rights Agreement, the Board of Directors amended the 1989
Rights Agreement so that the Old Rights will be exercisable only if a person
or group acquires beneficial ownership of 20% or more of the Company's common
stock prior to the close of business on August 4, 2003, or commences a tender
or exchange offer on or prior to July 23, 2003, which, if completed, would
result in such person or group beneficially owning 30% or more of the
Company's common stock.
The text of the amendment to the 1989 Rights Agreement is set forth
as Exhibit 99.2 and is incorporated herein by reference.
c) Amendment of Bylaws.
On July 23, 2003, the Board also approved amendments to the Company's
Bylaws. Such Bylaw amendments are attached hereto as Exhibit 3.1 and are
incorporated herein by reference.
Item 7. Financial Statements and Exhibits
b) Exhibits
3.1 Amendments to the Company's Bylaws adopted on July 23,
2003.
99.1 Rights Agreement, dated as of July 23, 2003 by and
between CB Bancshares, Inc. and City Bank, as Rights
Agent, including the form of Certificate of
Designation, Preferences and Rights of Series A Junior
Participating Preferred Stock attached as Exhibit A
thereto and the form of Rights Certificate attached as
Exhibit B thereto
99.2 Amendment No. 6 to Rights Agreement, dated July 23,
2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned
hereunto duly authorized.
Date: July 24, 2003 CB BANCSHARES, INC.
By: /s/ Dean K. Hirata
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Dean K. Hirata
Senior Vice President and
Chief Financial Officer
(principal financial officer)
EXHIBIT 3.1
CB BANCSHARES, INC.
BOARD OF DIRECTORS RESOLUTIONS
AMENDMENTS TO BYLAWS
Amendments to By-laws
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company to amend the Bylaws of the Company as set forth
below.
NOW, THEREFORE, BE IT RESOLVED, that the following paragraph be added
at the end of Section 2 of Article II:
Any such request for a special meeting shall state the purpose or
purposes of the proposed meeting. Upon a request from a stockholder
or stockholders of the Company entitled to call a special meeting,
the Board of Directors shall determine a place and time for such
meeting, which time shall be not less than thirty (30) nor more than
one hundred and twenty (120) days after the receipt and determination
of the validity of such request, and a record date for the
determination of stockholders entitled to vote at such meeting.
Following such receipt and determination, notice shall be delivered
to the stockholders entitled to vote at such meeting in the manner
set forth in Section 3 of this Article II that a meeting will be held
at the time and place so determined. Business transacted at any
special meeting of stockholders shall be confined to the matters
stated in the notice of the meeting.
; and further
RESOLVED, that the third paragraph of Section 11, Article III, be
deleted in its entirety; and further
RESOLVED, that a new Section 8 be, and hereby is, added to Article II
to read in its entirety as follows:
SECTION 8. Nomination of Directors. Only persons who are
nominated in accordance with the following procedures shall be
eligible for election as directors of the Corporation, except as may
be otherwise provided in the Articles of Incorporation with respect
to the right of holders of preferred stock of the Corporation to
nominate and elect a specified number of directors in certain
circumstances. Nominations of persons for election to the Board of
Directors may be made at any annual meeting of stockholders (a) by or
at the direction of the Board of Directors (or any duly authorized
committee thereof) or (b) by any stockholder of the Corporation (i)
who is a stockholder of record on the date of the giving of the
notice provided for in this Section 8 and on the record date for the
determination of stockholders entitled to vote at such meeting and
(ii) who complies with the notice procedures set forth in this
Section 8.
In addition to any other applicable requirements, for a nomination to
be made by a stockholder, such stockholder must have given timely
notice thereof in proper written form to the Secretary of the
Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than ninety (90) days nor more
than one-hundred twenty (120) days prior to the anniversary date of
the immediately preceding annual meeting of stockholders; provided,
however, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely
must be so received not later than the close of business on the tenth
(10th) day following the day on which notice of the date of the
annual meeting was mailed or public disclosure of the date of the
annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary
must set forth (a) as to each person whom the stockholder proposes to
nominate for election as a director (i) the name, age, business
address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class or series and
number of shares of capital stock of the Corporation which are owned
beneficially or of record by the person and (iv) any other
information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made
in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the
class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such
stockholder, (iii) a description of all arrangements or
understandings between such stockholder and each proposed nominee and
any other person or persons (including their names) pursuant to which
the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or
by proxy at the meeting to nominate the persons named in its notice
and (v) any other information relating to such stockholder that would
be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act and
the rules and regulations promulgated thereunder. Such notice must be
accompanied by a written consent of each proposed nominee to being
named as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set
forth in this Section 8. If the Chairman of the meeting determines
that a nomination was not made in accordance with the foregoing
procedures, the Chairman shall declare to the meeting that the
nomination was defective and such defective nomination shall be
disregarded.
; and further
RESOLVED, that a new Section 9 be, and hereby is, added to Article II
to read in its entirety as follows:
SECTION 9. Nature of Business at Annual Meetings of
Stockholders. No business may be transacted at an annual meeting of
stockholders, other than business that is either (a) specified in the
notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors (or any duly authorized committee
thereof), (b) otherwise properly brought before the annual meeting by
or at the direction of the Board of Directors (or any duly authorized
committee thereof) or (c) otherwise properly brought before the
annual meeting by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice
provided for in this Section 9 and on the record date for the
determination of stockholders entitled to vote at such annual meeting
and (ii) who complies with the notice procedures set forth in this
Section 9.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written
form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than ninety (90) days nor more
than one-hundred twenty (120) days prior to the anniversary date of
the immediately preceding annual meeting of stockholders; provided,
however, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after such
anniversary date, notice by the stockholder in order to be timely
must be so received not later than the close of business on the tenth
(10th) day following the day on which notice of the date of the
annual meeting was mailed or public disclosure of the date of the
annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary
must set forth as to each matter such stockholder proposes to bring
before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and
record address of such stockholder, (iii) the class or series and
number of shares of capital stock of the Corporation which are owned
beneficially or of record by such stockholder, (iv) a description of
all arrangements or understandings between such stockholder and any
other person or persons (including their names) in connection with
the proposal of such business by such stockholder and any material
interest of such stockholder in such business and (v) a
representation that such stockholder intends to appear in person or
by proxy at the annual meeting to bring such business before the
meeting. In addition, notwithstanding anything in this Section 9,
Article II to the contrary, a stockholder intending to nominate one
or more persons for election as a Director at an annual meeting must
comply with Section 8, Article II of these By-laws for such
nomination or nominations to be properly brought before such meeting.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with
the procedures set forth in this Section 9, provided, however, that,
once business has been properly brought before the annual meeting in
accordance with such procedures, nothing in this Section 9 shall be
deemed to preclude discussion by any stockholder of any such
business. If the Chairman of an annual meeting determines that
business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare
to the meeting that the business was not properly brought before the
meeting and such business shall not be transacted.
EXHIBIT 99.1
CB BANCSHARES, INC.
and
CITY BANK,
Rights Agent
Rights Agreement
Dated as of July 23, 2003
TABLE OF CONTENTS
Page
Section 1. Certain Definitions......................................................1
Section 2. Appointment of Rights Agent..............................................7
Section 3. Issuance of Rights Certificates..........................................7
Section 4. Form of Rights Certificates..............................................9
Section 5. Countersignature and Registration.......................................10
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates............................................................11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights..................................................................12
Section 8. Cancellation and Destruction of Rights Certificates.....................15
Section 9. Reservation and Availability of Capital Stock...........................15
Section 10. Preferred Stock Record Date.............................................17
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights..............................................17
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.................................31
Section 15. Rights of Action........................................................32
Section 16. Agreement of Rights Holders.............................................33
i
Section 17. Rights Certificate Holder Not Deemed a Stockholder......................33
Section 18. Concerning the Rights Agent.............................................34
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. ................................................38
Section 22. Issuance of New Rights Certificates.....................................39
Section 23. Redemption and Termination..............................................39
Section 24. Exchange................................................................40
Section 25. Notice of Certain Events................................................42
Section 26. Notices. ...............................................................43
Section 27. Supplements and Amendments..............................................44
Section 28. Successors..............................................................44
Section 29. Determinations and Actions by the Board of Directors,
etc.....................................................................45
Section 30. Benefits of this Agreement..............................................45
Section 31. Severability............................................................45
Section 32. Governing Law...........................................................46
Section 33. Counterparts............................................................46
Section 34. Descriptive Headings....................................................46
ii
EXHIBITS
Exhibit A -- Form of Certificate of Designation, Preferences and Rights
Exhibit B -- Form of Rights Certificates
Exhibit C -- Form of Summary of Rights
iii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of July 23, 2003 (the "Agree
ment"), between CB Bancshares, Inc., a Hawaii corporation (the "Company"), and
City Bank, a Hawaii banking corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on July 23, 2003 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and declared a
dividend distribution of one Right (as hereinafter defined) for each share of
common stock, par value $1.00 per share, of the Company (the "Common Stock")
outstanding at the close of business on August 4, 2003 (the "Record Date"),
and has authorized the issuance of one Right (as such number may hereinafter
be adjusted pursuant to the provisions of Section 11(p) hereof) for each share
of Common Stock of the Company issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and the
Distribution Date (as hereinafter defined), each Right initially representing
the right to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock of the Company (the "Preferred Stock") having
the rights, powers and preferences set forth in the form of Certificate of
Designation, Preferences and Rights attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall be,
on or after the close of business on August 4, 2003, the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company (including the Company Employee Stock
Ownership Plan), or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the
terms of any such plan, or (iv) any Person who becomes the Beneficial Owner of
fifteen percent (15%) or more of the shares of
1
Common Stock then outstanding as a result of a reduction in the number of
shares of Common Stock outstanding due to the repurchase of shares of Common
Stock by the Company unless and until such Person, after becoming aware that
such Person has become the Beneficial Owner of fifteen percent (15%) or more
of the then outstand ing shares of Common Stock, acquires beneficial ownership
of additional shares of Common Stock representing one percent (1%) or more of
the shares of Common Stock then outstanding.
(b) "Act" shall mean the Securities Act of 1933, as
amended.
(c) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, owns or
has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing)
or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities ten dered 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) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event (as
hereinafter defined), or (C) securities issuable upon exercise of
Rights from and after the occur rence of a Triggering Event which
Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date (as
hereinafter defined) or pursuant to Section 3(a) or Section 22 hereof
(the "Original Rights") or pursuant to Section 11(i) or Section 11(p)
hereof in connection with an adjustment made with respect to any
Original Rights;
2
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the
right to vote or dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or under standing, whether or not in writing;
provided, however, that a Person shall not be deemed the "Beneficial
Owner" of, or to "beneficially own," any security under this
subparagraph (ii) as a result of an agreement, arrangement or
understanding (whether or not in writing) to vote such security if
such agreement, arrangement or understand ing: (A) arises solely from
a revocable proxy (as such term is defined in Regulation 14A under
the Exchange Act) given in response to a public proxy solicitation
made pursuant to, and in accordance with, the applicable provisions
of the General Rules and Regulations under the Exchange Act,
including the disclosure requirements of Schedule 14A thereunder, and
(B) is not also then reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or succes sor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (d))
or disposing of any voting securities of the Company; provided,
however, that nothing in this paragraph (d) shall cause a Person
engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "bene ficially own," any securities
acquired or which such Person has the right to acquire through such
Person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of
such acquisition.
Notwithstanding anything to the contrary in this paragraph (d), Central
Pacific Financial Corp. ("Central Pacific") shall not be deemed to be the
Beneficial Owner of any shares of Common Stock represented by any of the
agency designations deliv ered by Central Pacific to the Company on May 13,
2003 or the agency designation delivered by Central Pacific to the Company on
May 20, 2003, solely by virtue of having obtained such agency designation,
unless and until such agency designation
3
shall have been delivered directly or indirectly by or on behalf of Central
Pacific (or any Affiliate or Associate thereof) to the Company for a valid and
effective purpose in accordance with Hawaii law and in accordance with the
Company's articles of incorporation and bylaws at any time prior to the
revocation or termination of such agency designation.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of Hawaii
are authorized or obligated by law or executive order to close.
(f) "Close of business" on any given date shall
mean 5:00 P.M., Honolulu, Hawaii time, on such date; provided, however, that
if such date is not a Business Day, it shall mean 5:00 P.M., Honolulu, Hawaii
time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the common stock, par
value $1.00 per share, of the Company, except that "Common Stock" when used
with reference to any Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or the equity securities
or other equity interests having power to control or direct the management, of
such Person.
(h) "Common Stock Equivalents" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(i) "Continuing Director" shall mean (i) any member
of the Board of Directors of the Company, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any 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, 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,
if such Person's nomination for election or election to the Board is
recommended or approved by a majority of the Continuing Directors.
(j) "Current Market Price" shall have the meaning
set forth in Section 11(d)(i) hereof.
(k) "Current Value" shall have the meaning set
forth in Section 11(a)(iii) hereof.
4
(l) "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.
(m) "Equivalent Preferred Stock" shall have the
meaning set forth in Section 11(b) hereof.
(n) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(o) "Exchange Ratio" shall have the meaning set
forth in Section 24(a) hereof.
(p) "Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(q) "Final Expiration Date" shall have the meaning
set forth in Section 7(a) hereof.
(r) "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, limited liability
partnership, trust, syndicate or other entity and includes, without
limitation, an unincorporated group of persons who, by formal or informal
agreement or arrangement (whether or not in writing), have embarked on a
common purpose or act.
(s) "Preferred Stock" shall mean shares of Series A
Junior Participating Preferred Stock, par value $1.00 per share, of the
Company, and, to the extent that there is not a sufficient number of shares of
Series A Junior Participating Preferred Stock authorized to permit the full
exercise of the Rights, any other series of preferred stock of the Company
designated for such purpose containing terms substantially similar to the
terms of the Series A Junior Participating Preferred Stock.
(t) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(u) "Purchase Price" shall have the meaning set
forth in Section 4(a) hereof.
(v) "Record Date" shall have the meaning set forth
in the preamble of this Agreement.
5
(w) "Rights" shall have the meaning set forth in
the preamble of this Agreement.
(x) "Rights Agent" shall have the meaning set forth
in the parties clause at the beginning of this Agreement.
(y) "Rights Certificate" shall have the meaning set
forth in Section 3(a) hereof.
(z) "Rights Dividend Declaration Date" shall have
the meaning set forth in the preamble of this Agreement.
(bb) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) hereof.
(cc) "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of Section 13(a) hereof.
(dd) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ee) "Stock Acquisition Date" shall mean the first
date of public announcement by the Company that an Acquiring Person has become
such.
(ff) "Subsidiary" shall mean, with reference to any
Person, any corporation or other entity of which an amount of voting
securities (or other ownership interests having ordinary voting power)
sufficient to elect at least a majority of the directors (or other persons
performing similar functions) of such corporation or other entity is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(gg) "Substitution Period" shall have the meaning
set forth in Section 11(a)(iii) hereof.
(hh) "Summary of Rights" shall have the meaning set
forth in Section 3(b) hereof.
(ii) "Trading Day" shall have the meaning set forth
in Section 11(d)(i) hereof.
6
(jj) "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the holders of
the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common Stock) in accordance with
the terms and condi tions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-rights agents
as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of (i) the close of business
on the tenth day after the Stock Acquisition Date (or, if the tenth day after
the Stock Acquisition Date occurs before the Record Date, the close of
business on the Record Date), or (ii) the close of business on the tenth
Business Day (or such later date as the Board shall determine) after the date
that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any benefit plan of the Company (includ ing the
Company Employee Stock Ownership Plan) or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by the Com pany for
or pursuant to the terms of any such plan) is first published or sent or given
within the meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would become an
Acquiring Person (the earlier of (i) and (ii) being herein referred to as the
"Distribu tion Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraphs (b) and (c) of this Section 3) by the certificates
for the Common Stock registered in the names of the holders of the Common
Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certifi cates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage-prepaid mail, to each record holder of the
Common Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more right
certificates, substan tially in the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in
the number of Rights per share of Common Stock has been made pursuant to
Section 11(i) or Section 11(p) hereof, at the time of distribution of the
Rights Certificates, the Company shall not be required to issue
7
Rights Certificates evidencing fractional rights, but may, in lieu thereof,
make the necessary and appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) The Company will make available, as promptly as
practicable following the Record Date, a copy of a Summary of Rights,
substantially in the form attached as Exhibit C (the "Summary of Rights") to
any holder of Rights who may so request from time to time prior to the
Expiration Date. As set forth in paragraph (a) above, with respect to
certificates for the Common Stock outstanding as of the Record Date, or issued
subsequent to the Record Date, unless and until the Distribution Date shall
occur, the Rights will be evidenced by such certificates for the Common Stock
and the registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of the Distribution Date
or the Expiration Date, the transfer of any certificates representing shares
of Com mon Stock in respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with such shares of Common
Stock.
(c) Rights shall be issued in respect of all shares
of Common Stock which are issued (whether originally issued or from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date, and to the extent provided in
Section 22 hereof, in respect of shares of Common Stock issued after the
Distribution Date and prior to the Expiration Date. Certificates representing
such shares of Common Stock shall also be deemed to be certificates for
Rights, and shall, as promptly as practicable following the Record Date, bear
the following legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement between
CB Bancshares, Inc. (the "Company") and the Rights Agent thereunder
(the "Rights Agent"), dated as of July 23, 2003, as the same may be
amended, restated, renewed or extended from time to time (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge,
8
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
beneficially owned by, any Person who is, was or becomes an Acquir
ing Person or any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may become null
and void.
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certifi cates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form attached hereto as Exhibit B and may
have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required
to comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regula tion of any stock exchange on which the
Rights may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of one
one-hundredths of a share of Preferred Stock as shall be set forth therein at
the price set forth therein (such exercise price per one one-hundredth of a
share, as adjusted from time to time hereunder, the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to
Section 3(a), Section 11(i) or Section 22 hereof that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of
9
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrange ment or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company, in its sole discretion, has determined is part of a
plan, arrangement or understanding (whether or not in writing) which has as a
primary purpose or effect the avoidance of the provisions of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or were benefi
cially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certifi
cate and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its Chief Executive
Officer, its President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by an authorized signatory of the Rights
Agent, either manually or by facsimile signature, and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such
officer of the Company before countersignature by an authorized signatory of
the Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certifi cates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign
10
such Rights Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights
Agent will keep, or cause to be kept, at its principal office or offices
designated as the appropri ate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses
of the respective holders of the Rights Certifi cates, the number of Rights
evidenced on its face by each of the Rights Certificates and the date of each
of the Rights Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b),
Section 7(e) and Section 14 hereof, at any time after the close of business on
the Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates (other than Rights
Certificates representing Rights that may have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Rights Certificate or Certificates, entitling the registered holder to
purchase a like number of one one-hundredths of a share of Preferred Stock
(or, following the occurrence of a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitles such holder (or former
holder in the case of a transfer) to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certifi cates to be transferred,
split up, combined or exchanged, with the forms of assign ment and certificate
contained therein duly executed, at the principal office or offices of the
Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered
holder shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 14 hereof and Section 24 hereof, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment from a holder of a Rights Certificate of a sum sufficient to
11
cover any tax or governmental charge that may be imposed in connection with
any transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate, if mutilated, the Company will, subject to Sections
4(b), 7(e), 14 and 24, execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or muti
lated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Subject to Section 7(e) hereof, at any time
after the Distribution Date the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii), Section 23 and Section 24(a) hereof) in
whole or in part upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate contained therein duly executed, to
the Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price with respect to the total number of one one-hundredths of a share of
Preferred Stock (or following the occurrence of a Triggering Event, Com mon
Stock, other securities, cash or other assets, as the case may be) as to which
such surrendered Rights are then exercisable, at or prior to the earlier of
(i) 5:00 P.M., Honolulu, Hawaii time, on August 4, 2013 (such date, as it may
be extended by the Board, the "Final Expiration Date"), or (ii) the time at
which all of the Rights are redeemed or exchanged as provided in Section 23 or
Section 24 hereof, respectively (the earlier of (i) and (ii) being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each one one-hundredth
of a share of Preferred Stock pursuant to the exercise of a Right shall
initially be $225.00, shall be subject to adjustment from time to time as
provided in Section 11 and Section 13(a) hereof and shall be payable in
accordance with paragraph (c) below.
12
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each Right
so exercised, of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii) hereof) per one one-hundredth of a share of Preferred Stock
(or Common Stock, other securities, cash or other assets, as the case may be)
to be purchased as set forth below and an amount equal to any applicable
transfer tax, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the shares
of Preferred Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the total number of one one-hundredths
of a share of Preferred Stock to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a share of Preferred Stock
as are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent
with the depositary agent), and the Company will direct the depositary agent
to comply with such request, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or depositary
receipts, cause the same to be delivered to or, upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such
Rights Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or by
certified bank check or bank draft payable to the order of the Company. In the
event that the Company is obligated to issue other securities (including
Common Stock) of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require prior to the occurrence of a Triggering
Event that, upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate,
13
registered in such name or names as may be designated by such holder, subject
to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to
the contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continu ing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the Board of
Directors of the Company in its sole discretion has determined is part of a
plan, arrangement or understanding (whether or not in writing) which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become
null and void without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of Rights
Certifi cates or any other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or any of its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of a Rights
Certificate upon the occurrence of any purported assignment or exercise as set
forth in this Section 7 unless such registered holder shall have (i) completed
and signed the certificate contained in the form of assignment or election to
purchase set forth on the reverse side of the Rights Certificate surrendered
for such assignment or exercise, and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reason ably request.
14
Section 8. Cancellation and Destruction of Rights
Certificates.
All Rights Certificates surrendered for the purpose of
exercise, transfer, split-up, combination or exchange shall, if surrendered to
the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent,
shall be cancelled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and unissued
shares of Preferred Stock (and, following the occurrence of a Triggering
Event, out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares held in its treasury),
the number of shares of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities, as the case may be)
that, as provided in this Agreement including Section 11(a)(iii) hereof, will
be sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and,
follow ing the occurrence of a Triggering Event, Common Stock and/or other
securities, as the case may be) issuable and deliverable upon the exercise of
the Rights may be listed on any national securities exchange or quoted on the
Nasdaq National Market, the Company shall use its reasonable best efforts to
cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon official notice
of issuance or quoted on the Nasdaq National Market, as the case may be, upon
their exercise.
(c) The Company shall use its reasonable best
efforts to (i) file, as soon as practicable following the earliest date after
the first occurrence of a Section 11(a)(ii) Event on which the consideration
to be delivered by the Company upon exercise of the Rights has been determined
in accordance with Section
15
11(a)(iii) hereof, a registration statement on an appropriate form under the
Act, with respect to the Common Stock or other securities purchasable upon
exercise of the Rights, (ii) cause such registration statement to become
effective as soon as practica ble after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the
date of the expiration of the Rights. The Company will also take such action
as may be appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(c), the exercisability of the Rights in order to
prepare and file such registra tion statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. In addition, if the Company shall determine
that a registration statement is required following the Distribution Date, the
Company similarly may temporarily suspend the exercisability of the Rights
until such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, or the exercise thereof shall
not be permitted under applicable law, or a registration statement shall not
have been declared effective.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all one one-hundredths
of a share of Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities, as the case may be) delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that
it will pay when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for a number of one one-hundredths
of a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of one one-hundredths
16
of a share of Preferred Stock (or Common Stock and/or other securities, as the
case may be) in a name other than that of the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise, or to issue or
deliver any certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
in a name other than that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in
whose name any certificate for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the case may be)
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such fractional shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) represented thereby
on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which
the Preferred Stock (or Common Stock and/or other securities, as the case may
be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evi denced thereby, the holder of a Rights Certificate shall not be entitled
to any rights of a stockholder of the Company with respect to any shares for
which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of shares,
or fractions thereof, purchasable upon exercise of each Right and the number
of Rights outstanding are subject to adjustment from time to time as provided
in this Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide
or split the outstanding Preferred Stock, (C) combine or consolidate
the outstand ing Preferred Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of
the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in
this Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivi sion, split, combination,
consolidation or reclassification, and the number and kind of shares
of Preferred Stock (or other capital stock, as the case may be),
issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of shares of Preferred Stock or capital
stock, as the case may be, which, if such Right had been exercised
immediately prior to such date (whether or not such Right was then
exercisable) and at a time when the transfer books for the Preferred
Stock (or other capital stock, as the case may be) of the Company
were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, split,
combination, consolidation or reclassification. If an event occurs
which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person becomes an Ac
quiring Person, unless the event causing such Person to become an
Acquiring Person is a transaction set forth in Section 13(a) hereof
then, promptly following the occurrence of such event, proper provi
sion shall be made so that each holder of a Right (except as provided
below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of
one one-hundredths of a share of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the
then number of one one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the first occur
rence of a Section 11(a)(ii) Event (whether or not such Right was
then issued or exercisable), and (y) dividing that product (which,
following
17
such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined pursuant to
Section 11(d) hereof) per share of Common Stock on the date of such
first occur rence (such number of shares, the "Adjustment Shares").
(iii) In the event that (I) the number of
shares of Common Stock which is authorized by the Company's
articles of incorporation, as amended, but which are 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), or (II) the Board of Directors otherwise shall
determine to do so in its sole discretion, the Company, acting by
resolution of the Board, shall (A) determine the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value"), and (B) with respect to each Right (subject to Section 7(e)
hereof), make adequate provision to substitute for the Adjustment
Shares, upon the exercise of such Right and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of preferred stock,
such as the Preferred Stock, which the Board has deemed to have
essentially the same value or economic rights as shares of Common
Stock (such shares of preferred stock being referred to as "Common
Stock Equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value, where such aggregate value has been
determined by the Board based upon the advice of a nationally
recognized investment banking firm selected by the Board; provided,
however, that if, under the circumstances set forth in clause (I)
above, the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days following
the later of (x) the first occurrence of a Section 11(a)(ii) Event
and (y) the date on which the Company's right of redemption pursuant
to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the Spread.
For purposes of the preceding sentence, the term "Spread" shall mean
the excess of (i) the Current Value over (ii) the
18
Purchase Price. If the Board determines in good faith that it is
likely that sufficient additional shares of Common Stock could be
autho rized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is herein called
the "Substitution Pe riod"). To the extent that action is to be taken
pursuant to the first and/or third sentences of this Section
11(a)(iii), the Company (1) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding
Rights, and (2) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek such
shareholder approval for such authoriza tion of additional shares
and/or to decide the appropriate form of distribution to be made
pursuant to such first sentence and to deter mine the value thereof.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time
as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of each Adjustment Share shall be the
Current Market Price per share of the Common Stock on the Section
11(a)(ii) Trigger Date and the per share or per unit value of any
Common Stock Equivalent shall be deemed to equal the Current Market
Price per share of the Common Stock on such date. Notwithstanding the
foregoing provisions of this subpara graph (iii), in the event that,
pursuant to this subparagraph (iii), upon the exercise of the Rights
the Company shall be required to deliver value in any form other than
shares of capital stock, such value shall be delivered only to the
extent and at the time that, if required, the approval by appropriate
financial regulatory authorities with supervi sory jurisdiction over
the Company or its financial institution Subsid iaries of such
delivery of such value shall have been obtained.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock (or
shares having the same rights, privileges and preferences as the shares of
Preferred Stock ("Equivalent Preferred Stock")) or securities convertible into
Preferred Stock or Equivalent Preferred Stock
19
at a price per share of Preferred Stock or per share of Equivalent Preferred
Stock (or having a conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price (as determined pursuant to Section 11(d) hereof) per share of Preferred
Stock on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record
date, plus the number of shares of Preferred Stock which the aggregate
subscription or offering price of the total number of shares of Preferred
Stock and/or Equivalent Preferred Stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be
the number of shares of Preferred Stock outstanding on such record date, plus
the number of additional shares of Preferred Stock and/or Equivalent Preferred
Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid by delivery of consideration, part or all
of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the Rights.
Shares of Preferred Stock owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed,
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for
a distribu tion to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation), of evidences of indebtedness, cash
(other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable in Preferred
Stock, but including any dividend payable in stock other than Preferred Stock)
or of 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 immedi ately prior
to such record date by a fraction, the numerator of which shall be the Current
Market Price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date, less the fair market value (as determined
in good faith by the Board of Directors of the Company, whose determination
shall be
20
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Pre ferred Stock, and the denominator of which shall
be such Current Market Price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution
is not so made, the Purchase Price shall be adjusted to be the Purchase Price
which would have been in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of
such Common Stock for the thirty (30) consecutive Trading Days
immediately prior to such date, and for purposes of computations made
pursuant to Section 11(a)(iii) hereof, the Current Market Price per
share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Com mon Stock for the
ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price
per share of the Common Stock is determined during a period following
the announcement by the issuer of such Common Stock of (A) a dividend
or distribution on such Common Stock payable in shares of such Common
Stock or securities convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and the ex-dividend date for
such dividend or distribution, or the record date for such
subdivision, consolidation, combination, reverse stock split or
reclassification shall not have occurred prior to the commence ment
of the requisite thirty (30) Trading Day or ten (10) Trading Day
period, as set forth above, then, and in each such case, the Current
Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transac tion
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system or as quoted by the Nasdaq National Market with
respect to securities listed or admitted to trading on another
national securities exchange or quoted by the Nasdaq
21
National Market, respectively, or if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange
or quoted by the Nasdaq National Market, 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 Nasdaq Stock Market
or such other quotation system then in use, or, if on any such date
the shares of Common Stock are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock
selected by the Board. If on any such date the Common Stock is not
publicly held and is not so listed, admitted to trading or quoted,
and no market maker is making a market in the Common Stock, Current
Market Price shall mean the fair value of such shares on such date as
determined in good faith by the Board, which determination shall be
described in a state ment filed with the Rights Agent and shall be
conclusive for all purposes. The term "Trading Day" shall mean a day
on which the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading is open for
the transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation
here under, the Current Market Price per share of Preferred Stock
shall be determined in the same manner as set forth above for the
Common Stock in clause (i) of this Section 11(d) (other than the
penultimate sentence thereof). If the Current Market Price per share
of Preferred Stock cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or listed or admitted
to trading or quoted in a manner described in clause (i) of this
Section 11(d), the Current Market Price per share of Preferred Stock
shall be conclu sively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied by the
Current Market Price per share of the Common Stock. If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or
admitted to trading or quoted, Current Market Price per share of the
Preferred Stock shall mean the fair value per share as determined in
good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the Current Market
Price of one
22
one-hundredth of a share of Preferred Stock shall be equal to the
Current Market Price of one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease in the Purchase Price of
at least one percent (1%); provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest
ten-thousandth of a share of Common Stock or other share or one-millionth of a
share of Preferred Stock, as the case may be. Notwith standing the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three (3) years from the date
of the transaction which mandates such adjustment, or (ii) the Expiration
Date.
(f) If as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of capital
stock other than Preferred Stock, thereafter the number of such other shares
so receivable upon exercise of any Right and the Purchase Price thereof shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and
(m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Preferred Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subse quent to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a share of Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immedi ately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-hundredths of a share of Preferred Stock (calculated to
the nearest one-millionth) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so
23
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of Rights, in lieu
of any adjustment in the number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right pursuant to Section 11(h)
hereof. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercis able for the number of one one-hundredths of a share
of Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth of a Right) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number
of Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announce ment. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practica ble, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates evidencing all
the Rights to which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase Price
per one one-hundredth of a share and the number of one one-hundredth of a
share which were expressed in the initial Rights Certificates issued
hereunder.
24
(k) Before taking any action that would cause an
adjust ment reducing the Purchase Price below the then stated value, if any,
of the number of one one-hundredths of a share of Preferred Stock issuable
upon exercise of the Rights, the Company shall use reasonable best efforts to
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue, fully paid
and nonassessable, such number of one one-hundredths of a share of Preferred
Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised
after such record date of the number of one one-hundredths of a share of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of one one-hundredths of
a share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional
or otherwise) or securities upon the occurrence of the event requiring such
adjustment.
(m) Anything in this Section 11 to the contrary
notwith standing, the Company shall be entitled to make such adjustments in
the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that in its good faith judgment the
Board of Directors of the Company shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any shares of Preferred Stock at less than the
Current Market Price, (iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are convertible into or exchange able
for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets
25
or earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o) hereof),
if (x) at the time of or immediately after such consolidation, merger, sale or
transfer there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger,
sale or transfer, the shareholders of the Person who consti tutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(o) The Company covenants and agrees that, after
the Distribution Date, it will not, except as permitted by Section 23 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwith standing, in the event that the Company shall at any time after the
Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare or pay a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock,
or (iii) combine or consolidate the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to
the Distribution Date (or issued or deliv ered on or after the Distribution
Date pursuant to Section 22), shall be proportion ately adjusted so that the
number of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiply ing the
number of Rights associated with each share of Common Stock immediately prior
to such event by a fraction the numerator of which shall be the total number
of shares of Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or Section
13 hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred
26
Stock and the Common Stock, a copy of such certificate, and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of
a Rights Certifi cate in accordance with Section 25 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) In the event that, on or after the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person or Persons (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), and the Company shall not be the continuing or surviving corporation
of such consolidation or merger, (y) any Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company shall be
the continuing or surviving corporation of such consolida tion or merger, or
(z) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole and calculated on the basis of the Company's most recent regularly
prepared financial statements) to any Person or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o) hereof), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as
provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable shares of Common Stock
of the Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a share of Preferred
Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
number of such one one-hundredths of a share for which a Right was exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence of a
Section 11(a)(ii) Event), and (2) dividing that product (which, following the
first occurrence of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of the
Current Market Price (determined
27
pursuant to Section 11(d)(i) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (iv) such Principal
Party shall take such steps (including, but not limited to, the reservation of
a sufficient number of shares of its Common Stock) in connection with the
consum mation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect with respect to events occurring at any time following
the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction
described in clause (x) or (y) of the first sentence of Section
13(a), the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted, changed or
exchanged in such merger or consolidation, or if no securities are so
issued, the Person that is the other party to such merger or
consolidation; and
(ii) in the case of any transaction
described in clause (z) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over
the preceding twelve (12) month period registered under Section 12 of
the Exchange Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and
(2) if the Common Stock of such Person is not and has not been so
registered and such Person is a Subsidiary, directly or indirectly,
of more than one Person, the Common Stocks of two or more of which
are and have been so registered, "Principal Party" shall refer to
which ever of such Persons is the issuer of the Common Stock having
the greatest aggregate market value.
28
(c) The Company shall not consummate any such
Section 13 Event unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal Party
shall have executed and deliv ered to the Rights Agent a supplemental
agreement confirming that the requirements of Section 13(a) and Section 13(b)
hereof shall promptly be performed in accordance with their terms and further
providing that, as soon as practicable after the date of any such Section 13
Event, the Principal Party will
(i) prepare and file a registration
statement under the Act, with respect to the Rights and the
securities purchas able upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(ii) take all such other action as may be
neces sary to enable the Principal Party to issue the securities
purchasable upon exercise of the Rights, including but not limited to
the registra tion or qualification of such securities under all
requisite securities laws of jurisdictions of the various states and
the listing of such securities on such exchanges and trading markets as
may be necessary or appropriate; and
(iii) deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
29
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided in
Section 11(i) and Section 11(p) hereof, or to distribute Rights Certificates
which evidence fractional Rights. In lieu of any such fractional Rights, there
shall be paid to the registered holders of the Rights Certificates with regard
to which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise
issuable. The closing price of the Rights for any Trading 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 or the Nasdaq National Market with respect to securities
listed on another national securities exchange or quoted by the Nasdaq
National Market, respectively, or if the Rights are not listed or admitted to
trading on any national securities exchange or quoted by the Nasdaq National
Market, 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
Nasdaq Stock Market or such other quotation 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 deter mined in good faith
by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue
fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock which
may, at the option of the Com pany, be evidenced by depositary receipts) upon
exercise of the Rights or to distrib ute certificates which evidence
fractional shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of
the current market
30
value of one one-hundredth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one one-hundredth of a share of
Preferred Stock shall be one one-hundredth of the closing price of a share of
Preferred Stock or, if unavailable, the appropriate alternative price (in each
case, as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event,
the Company shall not be required to issue fractions of shares of Common Stock
upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one (1) share of Common
Stock. For purposes of this Section 14(c), the current market value of one
share of Common Stock shall be the closing price of one share of Common Stock
(or, if unavailable, the appropriate alternative price (in each case, as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of that
Right expressly waives such holder's right to receive any fractional Rights or
any fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, other than rights of action vested in the Rights
Agent pursuant to Section 18 hereof, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
such holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certifi cate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual
or threatened violations of the obligations hereunder of any Person subject to
this Agreement.
31
Section 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of shares of Common
Stock;
(b) after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights Agent
if surrendered at the principal office or offices of the Rights Agent
designated for such purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and certificates
contained therein duly executed;
(c) subject to Section 6(a) and Section 7(f)
hereof, the Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) hereof, shall be required to be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to
the contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunc tion or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, that the Company must use its reasonable best efforts to have any
such order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of the
number of one one-hundredths of a share of Preferred Stock or any other
securities of the Company which may at any time be issuable upon the exercise
of the Rights represented
32
thereby, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Rights
Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from
time to time, on demand of the Rights Agent, reimbursement for its reasonable
expenses and counsel fees and disbursements and other disbursements incurred
in the administra tion and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or omitted
by it in connection with its administration of this Agreement in reliance upon
any Rights Certificate or certificate for Common Stock or for other securities
of the Company, or any instru ment of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the
33
corporate trust, stock transfer or other shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto; but only if such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. If at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been counter signed but not delivered, any such
successor Rights Agent may adopt the countersig nature of a predecessor Rights
Agent and deliver such Rights Certificates so counter signed; and in case at
that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and
in all such cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent
shall be changed and at such time any of the Rights Certificates shall have
been counter signed but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall
not have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person and the determination of Current Market Price) be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be
34
conclusively proved and established by a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President, any Vice President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates, nor shall it be required to verify
the same (except as to its countersigna ture on such Rights Certificates), but
all such statements and recitals are and shall be deemed to have been made by
the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Rights Agent) or
in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition con tained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11, Section 13, Section 23 or Section 24
hereof or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any such adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock
to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock or Preferred Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reason ably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
35
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the Chief Executive Officer, the
President, any Vice Presi dent, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(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 Com pany or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection and continued
employment thereof.
(j) No provision of this Agreement shall require
the Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder (other
than internal costs incurred by the Rights Agent in providing services to the
Company in the ordinary course of its business as Rights Agent) or in the
exercise of its rights if there shall be reason able grounds for believing
that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to purchase, as the
case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer without
first consulting with the Company.
36
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and
to each transfer agent of the Common Stock and Preferred Stock, by registered
or certified mail, and, if such resignation occurs after the Distribution
Date, to the registered holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and, if
such removal occurs after the Distribution Date, to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapac itated Rights Agent or by the holder of
a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a legal business
entity organized and doing business under the laws of the United States or of
any state of the United States, in good standing, which is authorized under
such laws to exercise corporate trust powers and is subject to supervision or
examination by a federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an Affiliate of a legal business entity described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and shall execute and
deliver any further assurance, conveyance, act or deed necessary for that
purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and, if
such appointment occurs after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resigna tion or removal of
the Rights Agent or the appointment of the successor Rights Agent, as the case
may be.
37
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind
or class of shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemption or expiration of
the Rights, the Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, granted or awarded as of the Distribution Date, or upon
the exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a signifi cant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination.
(a) Subject to paragraph (c) of this Section 23,
the Board of Directors of the Company may, at its option, at any time prior to
the earlier of (i) the close of business on the tenth day following the Stock
Acquisition Date (or, if the Stock Acquisition Date shall have occurred prior
to the Record Date, the close of business on the tenth day following the
Record Date), or (ii) the Final Expiration Date, direct the Company to, and if
directed, the Company shall redeem all but not less than all of 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 (such redemption price
being hereinafter referred to as the "Redemption Price"). Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section 11(a)(ii) Event until such
time as the Company's right of redemption hereunder has expired. The Company
may, at its option, pay the Redemption Price in cash, shares of Common Stock
(based on the Current Market Price, as defined in Section 11(d)(i) hereof, of
the Common Stock at the time of
38
redemption) or any other form of consideration deemed appropriate by the Board
of Directors.
(b) Immediately upon the action of the Board of
Directors of the Company directing the Company to make the redemption of the
Rights, evidence of which shall have been filed with the Rights Agent, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemp tion Price for each Right so held. Promptly
after the action of the Board of Directors directing the Company to make the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstand ing Rights by mailing
such notice to each such holder at such holder's last address as it appears
upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Stock. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be
made.
(c) Notwithstanding anything to the contrary
contained herein, if the Board of Directors of the Company authorizes
redemption of the Rights in either of the circumstances set forth in clauses
(i) and (ii) below, then there must be Continuing Directors then in office and
such authorization shall require the concur rence of a majority of such
Continuing Directors: (i) such authorization occurs on or after the time a
Person becomes an Acquiring Person, or (ii) such authorization occurs on or
after the date of a change (resulting from a proxy or consent solicitation) in
a majority of the directors of the Company in office at the commencement of
such solicitation if any Person who is a participant in such solicitation has
stated (or, if upon the commencement of such solicitation, a majority of the
Board of Directors of the Company has determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take, or may
consider taking, any action which would result in such Person becoming an
Acquiring Person or which would cause the occurrence of a Triggering Event.
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
7(e) hereof) for Com mon Stock at an exchange ratio of one share of Common
Stock per Right, appropri ately adjusted to reflect any stock split, stock
dividend or similar transaction occur ring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors of the Company 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 (including the Company Employee Stock Ownership
Plan), or any entity holding Common Stock for or pursuant to the terms of any
such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
subsection (a) of this Section 24 and without any further action and without
any notice, the right to exercise such Rights shall terminate and the only
right thereafter of a holder of such Rights shall be to receive that number of
shares of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, how ever, 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 Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24,
the Company, at its option, may substitute Preferred Stock (or Equivalent
Preferred Stock, as such term is defined in paragraph (b) of Section 11
hereof) for Common Stock exchangeable for Rights, at the initial rate of one
one-hundredth of a share of Preferred Stock (or Equivalent Preferred Stock)
for each share of Common Stock, as appropriately adjusted to reflect stock
splits, stock dividends and other similar transactions after the date hereof.
(d) In the event that the number of shares of
Common Stock which are authorized by the Company's Articles of Incorporation,
as amended, but which are not outstanding or reserved for issuance for
purposes other than upon
39
exercise of the Rights is not sufficient to permit any exchange of Rights as
contem plated in accordance with this Section 24, the Board shall take all
such action as may be necessary to authorize additional shares of Common Stock
for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue
fractions of shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such fractional shares
of Common Stock, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the purposes of
this subsection (e), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock (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) In case the Company shall propose, at any time
after the Distribution Date, (i) to pay any dividend payable in stock of any
class to the holders of Preferred Stock or to make any other distribution to
the holders of Preferred Stock (other than a regular periodic cash dividend
out of earnings or retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Preferred Stock or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision or split of outstanding shares of Preferred
Stock), or (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsid iaries to effect any sale or other transfer),
in one transaction or a series of related transactions, of 50% or more of the
assets or earning power of the Company and/or its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of which complies with
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation,
40
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date is
to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least twenty (20) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the shares of Preferred
Stock, which ever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall
occur, then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 26 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in
the preceding paragraph to Preferred Stock shall be deemed thereafter to refer
to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Rights Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent by the Company) as follows:
CB Bancshares, Inc.
201 Merchant Street
Honolulu, Hawaii 96813
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Rights Agent with the Company) as follows:
City Bank
201 Merchant Street
Honolulu, Hawaii 96813
Attention: President
41
Notices or demands authorized by this Agreement to be given
or made by the Company or the Rights Agent to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder of any
certificate representing shares of Common Stock) shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. (a) Prior to the
Distribution Date, and subject to the provisions of Section 27(b) hereof, the
Com pany and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement (including, without limitation, any
extension of the period in which the Rights may be redeemed, any increase in
the Purchase Price and any extension of the Final Expiration Date) without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date, and subject to the provisions of Section
27(b) hereof, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any
holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder, 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
Certificates (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person). 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. Notwith standing anything herein to the
contrary, this Agreement may not be amended (other than pursuant to clauses
(i) or (ii) of the second sentence of this Section 27(a)) at a time when the
Rights are not redeemable.
(b) Notwithstanding anything contained herein to
the contrary, following the earlier of the time that any Person becomes an
Acquiring Person or the effective time of a change in a majority of the
directors of the Company as described in Section 23(c)(ii), this Agreement may
be amended or supplemented only if there are Continuing Directors and only if
a majority of such Continuing Directors concur with such amendment or
supplement.
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.
42
Section 29. Determinations and Actions by the Board of
Directors. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of deter mining the particular percentage of such outstanding shares
of Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. The Board of Directors of the Company
(with, where specifically provided for herein, the concurrence of the
Continuing Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including a determination to redeem
or not redeem the Rights or to amend this Agreement). All such actions,
calculations, interpretations and determi nations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board, any of the
directors on the Board, or the Continuing Directors to any liability to the
holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwith standing anything in this
Agreement to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
43
unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the close of business on the tenth Business Day following the
date of such determination by the Board of Directors. Without limiting the
foregoing, if any provision of this Agree ment requiring a specific group of
directors to act is held by any court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such determina tion shall then
be made by the Board of Directors of the Company in accordance with applicable
law and the Company's Articles of Incorporation, as amended, and By-laws, as
amended.
Section 32. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Hawaii and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.
44
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
Attest: CB BANCSHARES, INC.
By /s/ Caryn S. Morita By /s/ Ronald K. Migita
------------------------ -----------------------------
Name: Caryn S. Morita Name: Ronald K. Migita
Title: Secretary Title: President and Chief
Executive Officer
Attest: CITY BANK
By /s/ Caryn S. Morita By /s/ Warren Y. Kunimoto
------------------------- ------------------------------
Name: Caryn S. Morita Name: Warren Y. Kunimoto
Title: Secretary Title: Executive Vice President
45
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A PREFERRED STOCK
of
CB BANCSHARES, INC.
Pursuant to Section 414-72 of the Hawaii Business
Corporation Act
We, Ronald K. Migita, Chief Executive Officer, and Caryn S.
Morita, Secretary, of CB Bancshares, Inc., the undersigned officers of CB
Bancshares, Inc., a corporation organized and existing under the Hawaii
Business Corporation Act, in accordance with the provisions of Section 414-72
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Articles of Incorporation, as amended, of the said
Corporation, the said Board of Directors on July 23, 2003, adopted the
following resolution creating a series of 100,000 shares of Preferred Stock
designated as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Articles of Incorporation, as amended, a series of Preferred Stock of the
Corporation be and it hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 100,000.
Section 2. Dividends and Distributions.
1
(A) Subject to the rights of the holders of any shares of
any series of Preferred Stock ranking prior and superior to the shares of
Series A Junior Participat ing Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred Stock, in
preference to the holders of Common Stock, par value $1.00 per share (the
"Common Stock"), of the Corporation, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash
on the first day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $10.91 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstand ing shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Junior Participating Preferred Stock.
In the event the Corporation shall at any time after July 23, 2003 (the
"Rights Declaration Date") declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denomi nator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Junior Participating Preferred Stock as provided in Paragraph
(A) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $10.91 per share on the Series A
2
Junior Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Junior Participating Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Participating Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the shares of
Series A Junior Participating Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall
be allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Junior Participating Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 30 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to 100 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstand ing
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
3
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Junior Participating Preferred Stock
and the holders of shares of Common Stock shall vote together as one
class on all matters submitted to a vote of stockholders of the
Corporation.
(C) (i) If at any time dividends on any Series A Junior
Partici pating Preferred Stock shall be in arrears in an amount equal
to six (6) quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a
"default period") which shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and
for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been
de clared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the
Series A Junior Participating Preferred Stock) with dividends in
arrears in an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right to
elect two (2) directors.
(ii) During any default period, such voting right
of the holders of Series A Junior Participating Preferred Stock may
be exercised initially at a special meeting called pursuant to
subpara graph (iii) of this Section 3(C) or at any annual meeting of
stockhold ers, and thereafter at annual meetings of stockholders,
provided that such voting right shall not be exercised unless the
holders of ten percent (10%) in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise
by the holders of Preferred Stock of such voting right. At any
meeting at which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period, they shall
have the right, voting as a class, to elect directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to
two (2) directors or, if such right is exercised at an annual
meeting, to elect two (2) directors. If the number which may be so
elected at any special meeting does not amount to the required
number, the holders of the Preferred Stock shall have the right to
make such increase in the number of directors as shall be necessary
to permit the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their right to
elect directors in any default period and during the continuance of
such period, the number of directors shall not be
4
increased or decreased except by vote of the holders of Preferred
Stock as herein provided or pursuant to the rights of any equity
securi ties ranking senior to or pari passu with the Series A Junior
Participat ing Preferred Stock.
(iii) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their
right to elect directors, the Board of Directors may order, or any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of a
special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice-President or the
Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled to
vote pursuant to this Paragraph (C)(iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such notice
to him at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than
20 days and not later than 60 days after such order or request or in
default of the calling of such meeting within 60 days after such
order or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred Stock
outstanding. Notwithstanding the provisions of this Paragraph
(C)(iii), no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the next
annual meeting of the stockholders.
(iv) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if applicable,
shall continue to be entitled to elect the whole number of directors
until the holders of Preferred Stock shall have exercised their right
to elect two (2) directors voting as a class, after the exercise of
which right (x) the directors so elected by the holders of Preferred
Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default
period, and (y) any vacancy in the Board of Directors may (except as
provided in Paragraph (C)(ii) of this Section 3) be filled by vote of
a majority of the remaining directors theretofore elected by the
holders of the class of stock which elected the director whose office
shall have become vacant. References in this Paragraph (C) to
directors elected by the holders of a particular class of stock shall
include directors elected by
5
such directors to fill vacancies as provided in clause (y) of the
forego ing sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Preferred Stock as a class to
elect directors shall cease, (y) the term of any directors elected by
the holders of Preferred Stock as a class shall terminate, and (z)
the number of directors shall be such number as may be provided for
in the articles of incorporation or by-laws irrespective of any
increase made pursuant to the provisions of Paragraph (C)(ii) of this
Section 3 (such number being subject, however, to change thereafter
in any manner provided by law or in the articles of incorporation or
by-laws). Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may be
filled by a major ity of the remaining directors.
(D) Except as set forth herein, or as otherwise provided by
law, holders of Series A Junior Participating Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Participating Preferred Stock outstanding shall have been paid
in full, the Corporation shall not
(i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either as to
divi dends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on, or make
any other distributions on, any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior Participating Preferred
Stock and all such parity stock on which dividends are payable or in
arrears in
6
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding
up) with the Series A Junior Participating Preferred Stock, provided
that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (either as to dividends or
upon dissolu tion, liquidation or winding up) to the Series A Junior
Participating Preferred Stock; or
(iv) redeem or purchase or otherwise
acquire for consideration any shares of Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of
Directors, after con sideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corpora tion to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unis sued shares of Preferred Stock and may be reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred
Stock shall have received an amount equal to $100 per
7
share of Series A Participating Preferred Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series
A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth
in subparagraph (C) below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to
the holders of such parity shares in proportion to their respec tive
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date declare any dividend on Common Stock payable in shares
of Common Stock or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by multiplying
such Adjustment Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the
8
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any time
after the Rights Declaration Date declare or pay any dividend on the Common
Stock payable in shares of Common Stock or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect
to the exchange or change of shares of Series A Junior Participating Preferred
Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denomi nator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior
Participat ing Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the Corporation's
Preferred Stock as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
Section 10. Amendment. At any time when any shares of Series
A Junior Participating Preferred Stock are outstanding, neither the Articles
of Incorpo ration nor this Certificate of Designation shall be amended in any
manner which would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series A Junior Participating
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in propor tion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
9
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this ____ day of July, 2003.
_____________________
Chief Executive Officer
Attest:
Secretary
10
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER AUGUST 4, 2013, SUBJECT TO EARLIER REDEMPTION OR
EXPIRATION PURSUANT TO THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO RE
DEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREE MENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFI
CIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILI ATE OR ASSOCIATE OF ANY SUCH
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PER SON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Rights Certificate
CB BANCSHARES, INC.
This certifies that ______________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles
--------
* The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
1
the owner thereof, subject to the terms, provisions and conditions of the
Rights Agreement, dated as of July 23, 2003 (the "Rights Agreement"), between
CB Bancshares, Inc., a Hawaii corporation (the "Company"), and City Bank, a
Hawaii banking corporation (the "Rights Agent"), to purchase from the Company
at any time prior to 5:00 P.M. (Honolulu, Hawaii time) on August 4, 2013
(unless such date is extended prior thereto by the Board of Directors) at the
office or offices of the Rights Agent or its successors as Rights Agent,
designated for such purpose, one one-hundredth of a fully paid, non-assessable
share of Series A Junior Participating Preferred Stock (the "Preferred Stock")
of the Company, at a purchase price of $225.00 per one one-hundredth of a
share (the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
completed and executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of July 23, 2003, based on the Preferred Stock as
constituted at such date. The Company reserves the right to require prior to
the occurrence of a Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.
As more fully set forth in the Rights Agreement, from and
after the first occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate of any such Acquiring Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate
or Affiliate, or (iii) under certain circumstances speci fied in the Rights
Agreement, a transferee of such Acquiring Person (or of any such Affiliate or
Associate who becomes a transferee prior to or concurrently with such
Acquiring Person becoming such), such Rights shall become null and void
without any further action, and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securities, which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of
2
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Com pany and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights Agreement. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one one-hundredths
of a share of Preferred Stock as the Rights evidenced by the Rights
Certificate or Rights Certificates surrendered shall have entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certifi cate
or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evi denced by this Certificate may be redeemed by the Company at its
option at a redemption price of $.01 per Right at any time prior to the
earlier of the close of business on (i) the tenth day following the Stock
Acquisition Date (as such time period may be extended pursuant to the Rights
Agreement), and (ii) the Final Expiration Date. Under certain circumstances
set forth in the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Continuing Directors. In addition, under
certain circumstances following the Stock Acquisition Date, the Rights may be
exchanged, in whole or in part, for shares of the Common Stock, or shares of
preferred stock of the Company having essentially the same value or economic
rights as such shares. Immediately upon the action of the Board of Directors
of the Company authorizing any such exchange, and without any further action
or any notice, the Rights (other than Rights which are not subject to such
exchange) will terminate and the Rights will only enable holders to receive
the shares issuable upon such exchange.
If the Company so determines, no fractional shares of
Preferred Stock will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement. The Company, at its
election, may require that a number of Rights be exercised so that only whole
shares of Preferred Stock would be issued.
3
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder
of shares of Preferred Stock or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give consent to or withhold
consent from any corporate action, or, to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement),
or to receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
4
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of _________ __,
ATTEST: CB BANCSHARES, INC.
______________________________ By_______________________
Secretary Title:
Countersigned:
CITY BANK
By ______________________________
Authorized Signature
5
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights
Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest herein,
and does hereby irrevocably constitute and appoint __________________
Attorney, to transfer the within Rights Certificate on the books of the within
named Company, with full power of substitution.
Dated: __________________,__
______________________________
Signature
Signature Medallion Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and trans ferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agree ment);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or subsequently became
an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: _______________, __
______________________________
Signature
Signature Medallion Guaranteed:
NOTICE
The signature(s) to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights repre
sented by the Rights Certificate.)
To CB BANCSHARES, INC.:
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other Person which may be issuable
or such other assets which may be deliverable upon the exercise of the Rights)
and requests that certificates for such shares or securities be issued in the
name of and delivered to:
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
Please insert social security
or other identifying number:_____________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate for the balance
of such Rights shall be registered in the name of and delivered to:
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
Please insert social security
or other identifying number:____________________
Dated: _______________, __
______________________________
Signature
Signature Medallion Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agree ment);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced
by this Rights Certificate from any Person who is, was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ______________,__ ______________________________
Signature
Signature Medallion Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or
any change whatsoever.
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On July 23, 2003, the Board of Directors of CB Bancshares,
Inc. (the "Company") declared a dividend distribution of one Right for each
outstanding share of Company Common Stock to stockholders of record at the
close of business on August 4, 2003 (the "Record Date"). Each Right entitles
the registered holder to purchase from the Company a unit consisting of one
one-hundredth of a share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $1.00 per share (the "Series A Preferred Stock") at a
Purchase Price of $225.00 per Unit, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agree ment (as amended,
restated, renewed or extended from time to time, the "Rights Agreement")
between the Company and City Bank, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. Subject to certain exceptions specified in
the Rights Agreement, the Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 days following a
public announcement by the Company that a person or group of affiliated or
associated persons (an "Acquiring Person") on or after the record date
beneficially owns 15% or more of the outstanding shares of Common Stock (the
"Stock Acquisition Date") or (ii) 10 business days (or such later date as the
Board shall determine) following the commencement of a tender offer or
exchange offer that would result in a person or group becoming an Acquiring
Person. Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such
Common Stock certifi cates, (ii) new Common Stock certificates issued after
the Record Date will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence
of a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock
will be issued.
The Rights are not exercisable until the Distribution Date
and will expire at 5:00 P.M. (Honolulu, Hawaii time) on August 4, 2013, unless
such date is
1
extended or the Rights are earlier redeemed or exchanged by the Company as
described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights. Except as otherwise
determined by the Board of Directors, only shares of Common Stock issued prior
to the Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, each
holder of a Right will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the exercise price of the
Right. Notwithstanding any of the foregoing, following such time as any Person
becomes an Acquiring Person, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void. However, Rights are not
exercisable following such time as any Person becomes an Acquiring Person
until such time as the Rights are no longer redeemable by the Company as set
forth below.
For example, at an exercise price of $225.00 per Right, each
Right not owned by an Acquiring Person (or by certain related parties)
following such time as any Person becomes an Acquiring Person would entitle
its holder to purchase $450.00 worth of Common Stock (or other consideration,
as noted above) for $225.00. Assuming that the Common Stock had a per share
value of $62.44 at such time, the holder of each valid Right would be entitled
to purchase 7.2 shares of Common Stock for $225.00.
In the event that, at any time following the Stock
Acquisition Date, (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation,
(ii) the Company engages in a merger or other business combination transaction
in which the Company is the surviving corporation and the Common Stock of the
Company is changed or exchanged, or (iii) 50% or more of the Company's assets
or earning power is sold or transferred, each holder of a Right (except Rights
which have previously been voided as set forth above) shall thereafter have
the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right. The events
set forth in this paragraph and in the second preceding paragraph are referred
to as the "Triggering Events."
2
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person or group of fifty percent (50%) or more of the
outstanding Common Stock, the Board may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in part, at
an exchange ratio of one share of Common Stock, or one one-hundredth of a
share of Preferred Stock (or of a share of a class or series of the Company's
preferred stock having equivalent rights, preferences and privileges), per
Right (subject to adjustment).
The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock divi dend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred
Stock are granted certain rights or warrants to subscribe for Preferred Stock
or convertible securities at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends) or of subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Stock on the last trading date prior to the date of exercise.
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price
of $.01 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors). Under certain circumstances set forth
in the Rights Agree ment, the decision to redeem will require the concurrence
of a majority of the Continuing Directors. Immediately upon the action of the
Board of Directors ordering redemption of the Rights with, where required, the
concurrence of the Continuing Directors, the Rights will terminate and the
only right of the holders of Rights will be to receive the $.01 redemption
price.
The term "Continuing Directors" means any member of the
Board of Directors of the Company who was a member of the Board prior to the
date of the Rights Agreement, and any person who is subsequently elected to
the Board if such person is recommended or approved by a majority of the
continuing Directors, but shall not include an Acquiring Person, or an
affiliate or associate of an Acquiring Person, or any representative of the
foregoing entities.
3
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends. While the distribution
of the Rights will not be taxable to stockholders or to the Company,
stockholders may, depending upon the circum stances, recognize taxable income
in the event that the Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the acquiring company or
in the event of the redemption of the Rights as set forth above.
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended
by the Board in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights, or to shorten or lengthen
any time period under the Rights Agreement. Under certain circumstances set
forth in the Rights Agreement, the decision to amend will require the
concurrence of a majority of Continuing Directors. The foregoing
notwithstanding, no amendment may be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Current Report on Form
8-K dated July 24, 2003. A copy of the Rights Agreement is available free of
charge from the Rights Agent. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorpo rated herein by reference.
4
EXHIBIT 99.2
AMENDMENT NO. 6 TO RIGHTS AGREEMENT
This Amendment No. 6 to Rights Agreement (this "Amendment") is
entered into as of this 23rd day of July, 2003, by and between CB Bancshares,
Inc., a Hawaii corporation (the "Company") and City Bank, a Hawaii-chartered
bank (the "Rights Agent"), and further amends the Rights Agreement dated as of
March 16, 1989, as amended, between the Company and the Rights Agent (the
"Rights Agreement"). Capitalized terms used in this Amendment without
definition shall have the meanings given to them in the Rights Agreement.
WHEREAS, pursuant to Section 10.2 of the Rights Agreement, a
majority of the Disinterested Directors of the Company may amend any provision
of the Rights Agreement, without the approval of any holders of Rights.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth in the Rights Agreement and this Amendment, the
parties hereto intending to be legally bound hereby agree as follows:
1. Section 1.1(a) of the Rights Agreement is hereby amended and restated
to read in its entirety as follows:
(a) "Acquiring Person" shall mean any Person (as defined
herein) which, together with all Affiliates and Associates (as
defined herein) of such Person, shall be, at any time prior to the
Close of Business on August 4, 2003, the Beneficial Owner (as defined
herein) of twenty percent (20%) or more of the Shares then
outstanding, but shall not include the Company, any Subsidiary (as
defined herein) of the Company, or any employee benefit plan of the
Company, including the Company Employee Stock Ownership Plan, or of
any Subsidiary of the Company, or any entity holding Shares for or
pursuant to the terms of any such plan; provided, however, that no
Person who is not an Acquiring Person shall become an Acquiring
Person solely by virtue of a reduction in the number of Shares
outstanding, unless subsequent to such reduction, such Person shall
acquire additional Shares.
2. Section 3.1(a) of the Rights Agreement is hereby amended and restated
to read in its entirety as follows:
(a) Until the earlier of (i) the Close of Business on the
twentieth day after the Share Acquisition Date (or, if the twentieth
day after the Share Acquisition Date occurs before the Record Date,
the Close of Business on the Record Date), or (ii) the Close of
Business on the twentieth day (or such later date as may be
determined by action of the Board of Directors prior to such time as
any person becomes an Acquiring Person) after the date (which date
shall be not later than July 23, 2003) that a tender or exchange
offer by any Person (other than the Company, any Subsidiary, parent
of holding company of the Company in existence as of the date of this
Agreement or organized thereafter at the direction of the
Disinterested Directors of the Company, any employee benefit plan of
the Company, including the Company Employee Stock Ownership Plan, or
of any Subsidiary of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would be
the Beneficial Owner of Shares of Common Stock representing thirty
percent (30%) or more of the issued and outstanding Shares (the
earlier of (i) and (ii) being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced by the certificates for
Shares registered in the names of the holders of the Shares (which
certificates shall be deemed also to be certificates for the Rights)
and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying
Shares (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of
the Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one
or more Right Certificates evidencing one Right for each Share so
held, subject to adjustment as provided herein. As of and after the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
3. The term "Agreement" as used in the Rights Agreement shall be deemed
to refer to the Rights Agreement, as amended hereby. Except as set
forth herein, the Rights Agreement shall remain in full force and
effect and shall be otherwise unaffected hereby. In the event of any
conflict or inconsistency between the provisions of this Amendment on
the one hand and the Rights Agreement on the other hand, with respect
to the matters set forth herein or contemplated hereby, the
provisions of this Amendment shall govern such conflict or
inconsistency.
4. This Amendment may be executed in any number of counterparts, and
each of such counterparts shall for all purposes be deemed an
original, but all such counterparts shall together constitute but one
and the same agreement.
5. This Amendment shall be deemed to be a contract made under the laws
of the State of Hawaii and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within such State.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 6 to Rights Agreement effective as of the date first written above.
CB BANCSHARES, INC.
By: Ronald K. Migita
-------------------------------
Name: Ronald K. Migita
Title: President and
Chief Executive Officer
Attest:
/s/ Caryn S. Morita
-------------------------
Name: Caryn S. Morita CITY BANK, as Rights Agent
By: /s/ Warren Y. Kunimoto
-------------------------------
Name: Warren Y. Kunimoto
Title: Executive Vice President
Attest:
/s/ Caryn S. Morita
--------------------------
Name: Caryn S. Morita