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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
February 9, 1998
Date of Report (Date of earliest event reported)
Shenandoah Telecommunications Company
(Exact name of registrant as specified in its charter)
Virginia 0-9881 54-1162807
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
P.O. Box 459, Edinburg, Virginia 22824
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(540) 984-4141
Not applicable
(Former name or former address, if changed since last report)
Exhibit Index on Page 8
Total Number of Pages: 8
Item 5. Other Events.
On February 9, 1998, the Board of Directors of
Shenandoah Telecommunications Company (the "Company") declared a
dividend distribution of one Right for each outstanding share of
common stock (the "Common Stock") of the Company. The
distribution is payable to shareholders of record on February 20,
1998. Each Right, when exercisable, entitles the registered
holder to purchase from the Company one-half (1/2) of a share of
Common Stock at a price of Forty Dollars ($40.00) per one-half
(1/2) of a share (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and
Crestar Bank as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all
certificates representing shares of Common Stock then
outstanding, and no separate certificates evidencing the Rights
will be distributed. The Rights will separate from the Common
Stock and a distribution of Rights Certificates will occur upon
the earlier to occur of (i) ten (10) days following a public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date")
or (ii) ten (10) business days (or such later date as the
Continuing Directors (as defined below) may determine) following
the commencement of a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by
a person of 15% or more of the outstanding shares of Common Stock
(the earlier of such dates being called the "Distribution Date").
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates, and will be
transferred with and only with the Common Stock certificates,
(ii) new Common Stock certificates issued after February 20,
1998, upon transfer or new issuance of the Common Stock will
contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on February 8,
2008, unless earlier redeemed or exchanged by the Company as
described below. The Rights will not be exercisable by a holder
in any jurisdiction where the requisite qualification to the
issuance to such holder, or the exercise by such holder, of the
Rights has not been obtained or is not obtainable.
As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("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 evidence
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 the beneficial owner
of 15% or more of the then outstanding shares of Common Stock
(except pursuant to an offer for all outstanding shares of Common
Stock which the Outside Directors (as defined below) determine to
be fair to and otherwise in the best interests of the Company and
its shareholders), each holder of a Right will, after the end of
a redemption period referred to below, have the right to exercise
the Right by purchasing, for an amount equal to the Purchase
Price, Common Stock (or, in certain circumstances, cash, property
or other securities of the Company) having a value equal to two
(2) times such amount. Notwithstanding any of the foregoing,
following the occurrence of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void. However, Rights are
not exercisable following the occurrence of the events set forth
above until such time as the Rights are no longer redeemable by
the Company as set forth below.
For example, at a Purchase Price of Forty Dollars
($40.00) per Right, each Right not owned by an Acquiring Person
(or by certain related parties) following an event set forth in
the preceding paragraph would entitle its holder to purchase
Eighty Dollars ($80.00) worth of Common Stock (or other
consideration, as noted above) for Forty Dollars ($40.00).
Assuming that the Common Stock had a per share value of Twenty
Dollars ($20.00) at such time, the holder of each valid Right
would be entitled to purchase four (4) shares of Common Stock for
Forty Dollars ($40.00).
In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation (other than a merger which follows
an offer described in the second preceding paragraph), or
(ii) fifty percent (50%) or more of the Company's assets or
earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as set forth
above) shall, after the expiration of the redemption period
referred to below, have the right to receive, upon exercise,
common stock of the acquiring company having a value equal to two
(2) times the Purchase Price of the Right (e.g., common stock of
the acquiring company having a value of Eighty Dollars ($80.00)
for the Forty Dollars ($40.00) Purchase Price).
At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person, the Board of
Directors of the Company 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 per Right (subject to adjustment).
The Purchase Price payable, and the number of shares of
Common 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 Common
Stock (ii) upon the grant to holders of the Common Stock of
certain rights or warrants to subscribe for Common Stock or
convertible securities at less than the current market price of
the Common Stock or (iii) upon the distribution to holders of the
Common Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least one percent (1%) in such Purchase Price.
The Company is not required to issue fractional shares and in
lieu thereof, an adjustment in cash will be made based on the
market price of the Common Stock on the last trading date prior
to the date of exercise.
In general, the Board of Directors of the Company, may
cause the Company to redeem the Rights in whole, but not in part,
at any time during the period commencing on February 9, 1998, and
ending on the tenth (10th) day following the Stock Acquisition
Date, as such period may be extended or shortened by the Board of
Directors (the "Redemption Period") at a price of $.005 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 the Rights will require the concurrence of a majority of
the Continuing Directors. After the Redemption Period has
expired, the Company's right of redemption may be reinstated
(with the concurrence of the Continuing Directors) if an
Acquiring Person reduces his beneficial ownership to ten percent
(10%) or less of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the Company
and there are no other Acquiring Persons. Immediately upon the
action of the Board of Directors of the Company 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 $.005
redemption price.
The term "Continuing Director" means any member of the
Board of Directors of the Company who was a member of the Board
of Directors 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. The term "Outside
Directors" means "Continuing Directors" who are not officers of
the Company.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights will not be
subject to federal taxation to shareholders or to the Company,
shareholders 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 as set forth above.
Other than those provisions relating to the principal
economic terms of the Rights (other than an increase in the
Purchase Price), 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, defect or inconsistency or to make
changes which do not adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement;
provided however, no amendment to adjust the time period
governing redemption may be made at such time as the Rights are
not redeemable.
As of February 20, 1998, there were 3,755,760
shares of Common Stock issued and outstanding. Each share of
Common Stock outstanding on such date will receive one Right.
The Rights have certain anti-takeover effects. The
Rights will cause substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by
the Board of Directors. The Rights, however, should not deter
any prospective offeror willing to negotiate in good faith
with the Board of Directors. Nor should the Rights interfere
with any merger or other business combination approved by the
Board of Directors.
The Rights Agreement between the Company and the
Rights Agent specifying the terms of the Rights, which
includes as Exhibit B the form of Rights Certificate, is
attached hereto as Exhibit 1 and is incorporated herein by
reference. The press release announcing the declaration of
the Rights dividend and a form of letter to the Company's
stockholders relating to the adoption of the Rights Plan are
attached hereto as Exhibits 2 and 3, respectively, and are
incorporated herein in their entireties by reference. The
foregoing description of the Rights does not purport to be
complete and is qualified in its entirety by reference to such
Exhibits.
Item 7. Financial Statements and Exhibits.
1. Rights Agreement dated as of February 9, 1998
between the Company and Crestar Bank.
2. Press Release dated February 11, 1998.
3. Form of letter to Company's Stockholders.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this
Report to be signed on its behalf by the undersigned thereunto
duly authorized.
SHENANDOAH TELECOMMUNICATIONS
COMPANY
Date: February 26 1998 By: /s/ Christopher E. French
Christopher E. French
President
EXHIBIT INDEX
Exhibit No. Description Page
1 Rights Agreement, dated 9
as of February 9, 1998, between
the Company and Crestar Bank
2 Press Release dated as of
February 11, 1998
3 Form of letter to Company's
Stockholders.
EXHIBIT NO. 1
SHENANDOAH TELECOMMUNICATIONS COMPANY
and
CRESTAR BANK
as Rights Agent
RIGHTS AGREEMENT
DATED as of February 9, 1998
TABLE OF CONTENTS
Page
Section 1. Certain Definitions. 1
Section 2. Appointment of Rights Agent. 6
Section 3. Issue of Rights Certificates. 6
Section 4. Form of Rights Certificates. 8
Section 5. Countersignature and Registration. 9
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates. 10
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. 11
Section 8. Cancellation and Destruction of Rights
Certificates. 13
Section 9. Reservation and Availability of Capital
Stock. 13
Section 10. Common Stock Record Date. 15
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. 15
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares. 24
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. 24
Section 14. Fractional Rights and Fractional Shares. 27
Section 15. Rights of Action. 28
Section 16. Agreement of Rights Holders. 28
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. 29
Section 18. Duties of Rights Agent. 30
Section 19. Compensation and Indemnification of the
Rights Agent. 32
Section 20. Merger or Consolidation or Change of Name
of Rights Agent. 33
Section 21. Change of Rights Agent. 34
Section 22. Issuance of New Rights Certificates. 35
Section 23. Redemption. 35
Section 24. Exchange. 36
Section 25. Notice of Certain Events. 37
Section 26. Notices. 38
Section 27. Supplements and Amendments. 39
Section 28. Successors. 40
Section 29. Determinations and Actions by the Board, etc. 40
Section 30. Benefits of this Agreement. 41
Section 31. Severability. 41
Section 32. Governing Law. 41
Section 33. Counterparts. 41
Section 34. Descriptive Headings. 42
RIGHTS AGREEMENT
Rights Agreement, dated as of February 9, 1998 (the
"Agreement"), between Shenandoah Telecommunications Company, a
Virginia corporation (the "Company"), and Crestar Bank, a
Virginia banking institution (the "Rights Agent").
WHEREAS, on February 9, 1998 (the "Rights Dividend
Declaration Date"), the Board of Directors of the Company
authorized and declared a dividend of one Right for each share of
Common Stock (as hereinafter defined) of the Company outstanding
at the Close of Business (as defined herein) on the Record Date
(as defined herein), and has authorized the issuance of one Right
with respect to 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-half (1/2) of a share of Common Stock of the
Company upon the terms and subject to the conditions hereinafter
set forth.
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 (as such
term is hereinafter defined) who or which, together with
all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined)
of 15% or more of the shares of Common Stock then
outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, or (iii) any
employee benefit plan of the Company or any Subsidiary
of the Company, or any Person or entity holding shares
of Common Stock for or pursuant to the terms of any such
plan to the extent, and only to the extent, of such
shares so held. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result
of an acquisition of shares of Common Stock by the
Company which, by reducing the number of shares of
Common Stock outstanding, increases the proportionate
number of shares of Common Stock beneficially owned by
such Person to 15% or more of the shares of Common Stock
of the Company then outstanding; provided, however, that
if a Person shall become the Beneficial Owner of 15% or
more of the Common Stock of the Company then outstanding
by reason of share purchases by the Company and shall,
after such share purchases by the Company, become the
Beneficial Owner of any additional shares of Common
Stock of the Company, then such Person shall be deemed
to be an "Acquiring Person" if such Person is then the
Beneficial Owner of 15% or more of the Common Stock then
outstanding. Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring
Person", as defined pursuant to the foregoing provisions
of this paragraph (a), has become such inadvertently,
and such Person divests as promptly as practicable a
sufficient number of shares of Common Stock so that such
Person would no longer be an "Acquiring Person", then
such Person shall not be deemed an "Acquiring Person"
for any purposes of this Agreement unless and until such
Person shall again become an "Acquiring Person".
(b) "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.
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any
securities:
(i) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in
writing), or upon the exercise of conversion
rights, exchange rights, other rights (other than
these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to
"beneficially own", (A) securities tendered
pursuant to a tender or exchange offer made by or
on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered
securities are accepted for purchase or exchange;
or (B) securities issuable upon exercise of Rights
at any time prior to the occurrence of a Triggering
Event; or (C) securities issuable upon exercise of
Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such
Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with
respect to any Original Rights;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the
"Beneficial Owner" of, or to beneficially own, any
security under this subparagraph (ii) as a result
of an agreement, arrangement or understanding to
vote such security if such agreement, arrangement
or understanding: (A) arises solely from a
revocable proxy given in response to a public proxy
or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange
Act, and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such
Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or
understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (c))
or disposing of any voting securities of the
Company.
provided, however, that nothing in this paragraph (c)
shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a
firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
(d) "Board" shall mean the Board of Directors of the
Company.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions
in the Commonwealth of Virginia 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., Richmond, Virginia, time, on such date;
provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Richmond, Virginia, time,
on the next succeeding Business Day.
(g) "Common Stock" when used with reference to the
Company shall mean the shares of common stock of the
Company. "Common Stock" when used with reference to any
Person other than the Company shall mean the class of
capital stock with the greatest aggregate voting power,
or the class of equity securities or other equity
interests having power to control or direct the
management, of such Person.
(h) "Company" shall mean Shenandoah Telecommunications
Company, a Virginia corporation.
(i) "Continuing Director" shall mean (i) any 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
any Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board as of 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) "Distribution Date" shall mean 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, if such tenth
Business Day occurs before the Record Date, the Close of
Business on the Record Date), or such specified or
unspecified later date on or after the Record Date as
may be determined by action of a majority of the
Continuing Directors, after the date that a tender or
exchange offer by any Person (other than the Company,
any Subsidiary of the Company or any employee benefit
plan of the Company or of any Subsidiary of the Company
or any Person or entity holding shares of Common Stock
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 15% or more of
the outstanding shares of Common Stock.
(k) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, as in effect on the date of
this Agreement.
(l) "Exchange Date" shall have the meaning set forth in
Section 7(a) hereof.
(m) "Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(n) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(o) "Outside Directors" shall mean the Continuing
Directors who are not officers of the Company.
(p) "Person" shall mean any individual, firm,
corporation, partnership or other entity, and shall
include any successor (by merger or otherwise) of such
entity.
(q) "Principal Party" shall have the meaning set forth
in Section 13(b) hereof.
(r) "Purchase Price" shall have the meaning set forth
in Section 4(a) and 11(a)(ii) hereof.
(s) "Record Date" shall mean the close of business on
February 20, 1998.
(t) "Redemption Period" shall have the meaning set
forth in Section 23(a) hereof.
(u) "Rights Agent" shall mean Crestar Bank.
(v) "Rights Certificate" shall have the meaning set
forth in Section 3 hereof.
(w) "Rights Dividend Declaration Date" shall mean the
Close of Business on February 9, 1998.
(x) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) hereof.
(y) "Section 13 Event" shall mean any event described
in clauses (w), (x), (y) or (z) of Section 13(a) hereof.
(z) "Securities Act" shall mean the Securities Act of
1933, as amended, and as in effect on the date of this
Agreement.
(aa) "Stock Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) by
the Company or an Acquiring Person that an Acquiring
Person has become such.
(bb) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the
voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such
Person, or is otherwise controlled by such Person.
(cc) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution
Date also be the holders of the Common Stock) in accordance with
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time
appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Rights Certificates.
(a) As promptly as practicable following the Record
Date, the Company will send or deliver a copy of a Summary of
Rights to Purchase Common Stock, in substantially the form
attached hereto as Exhibit A (the "Summary of Rights"), to each
record holder of Common Stock as of the Close of Business on the
Record Date at the address of such holder shown on the records of
the Company. With respect to certificates for shares of Common
Stock outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for the
Common Stock and the registered holders of the Common Stock shall
also be the registered holders of the associated Rights. Until
the Distribution Date (or the earlier Expiration Date or Final
Expiration Date), the transfer of any certificate representing
shares of Common Stock in respect of which Rights have been
issued shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented thereby.
(b) Rights shall be issued in respect of all shares of
Common Stock 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 or the
Final Expiration Date. Rights shall also be issued to the extent
provided in Section 22 in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's
treasury) 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
bear the following legend (in addition to any other legends that
may be required):
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights
Agreement between Shenandoah Telecommunications Company
(the "Company") and Crestar Bank (the "Rights Agent")
dated as of February 9, 1998 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the
principal executive offices of the Company. Under
certain 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 after
receipt of a written request therefor.
Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on
behalf of such Person or by any subsequent holder, may
become null and void. The Rights shall not be
exercisable, and shall be void so long as held, by a
holder in any jurisdiction where the requisite
qualification of the issuance to such holder, or the
exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be
obtainable.
With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or
(ii) the Expiration Date, the Rights associated with the Common
Stock represented by such certificates shall be evidenced by such
certificates alone and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Stock
represented thereby.
(c) Until the Distribution Date (i) the Rights will be
evidenced (subject to the provisions of paragraph (a) of this
Section 3) by the certificates for Common Stock registered in the
names of the holders thereof (which certificates for Common Stock
shall also be deemed to be Rights Certificates) and not by
separate Rights Certificates, and (ii) the Rights will be
transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer to the
Company).
(d) 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 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, a rights
certificate, in substantially the form of Exhibit B hereto (the
"Rights Certificate"), 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(p) hereof,
at the time of distribution of the Rights Certificates, the
Company shall make 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 Right 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 be substantially the same as Exhibit B hereto and
may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever issued,
shall be dated as of the Record Date, and on their face shall
entitle the holders thereof to purchase such number of shares of
Common Stock as shall be set forth therein at the price set forth
therein (such exercise price per one-half (1/2) of a share, the
"Purchase Price"), but the amount and type of securities
purchasable upon 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(d) or Section 22 hereof that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person; (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such; or
(iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives
such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement
or understanding regarding the transferred Rights or (B) a
transfer which a majority of the Continuing Directors has
determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the following
legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and
void in the circumstances specified in Section 7(e) of
such Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its President or a Vice President either
manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by
the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by
the Company with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificate may be signed
on behalf of the Company by any person who, at the actual date of
the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although
at the date of the execution of this Rights Agreement any such
person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration
and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective
holders of the Rights Certificates, 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 earlier of the Expiration Date or Final
Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock (or following a
Triggering Event, other securities, cash, or other assets, as the
case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Rights Certificate
shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the principal
office of the Rights Agent. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof
as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the person entitled thereto a
Rights Certificate or Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange
of 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, at the Company's request,
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for counter
signature and delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein including,
without limitation, the restrictions on exercisability set forth
in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in
whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for
each share of Common Stock (or other securities, cash or other
assets, as the case may be) as to which the Rights are exercised,
at or prior to the earlier of (i) the close of business on
February 8, 2008 (the "Final Expiration Date"), (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof,
(iii) the time at which such Rights are exchanged (the "Exchange
Date") as provided in Section 24 hereof, or (iv) the time at
which the Rights expire pursuant to Section 13(d) hereof (the
earliest of (i), (ii), (iii) and (iv) being herein referred to as
the "Expiration Date").
(b) The Purchase Price for each one-half (1/2) of a
share of Common Stock pursuant to the exercise of a Right shall
initially be $40.00, and shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof and shall be
payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect
to each Right so exercised, of the Purchase Price per one-half
(1/2) of a share of Common Stock (or other securities, cash or
other assets, as the case may be) to be purchased and an amount
equal to any applicable transfer tax in cash, or by certified
check, cashier's check or bank draft payable to the order of the
Company, the Rights Agent shall, subject to Section 18(j) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of
the shares of Common Stock (or make available, if the Rights
Agent is the transfer agent) certificates for the total number of
shares of Common Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the
total number of shares of Common Stock issuable upon exercise of
the Rights hereunder with a depository agent, requisition from
the depository agent depository receipts representing such number
of shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common Stock represented by such
receipts shall be deposited by the transfer agent with the
depository agent) and the Company will direct the depository to
comply with such request, (ii) requisition from the Company the
amount of cash, if any, to be paid in lieu of issuance of
fractional shares in accordance with Section 14, (iii) promptly
after receipt of such certificates or depository 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, promptly deliver such cash, if any, to or upon the order
of the registered holder of such Rights Certificate. 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
securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, 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 such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which a majority of the
Continuing Directors has determined is part of a plan,
arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and
void without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or
its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates.
All Rights Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as
expressly permitted by any 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 canceled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such
canceled 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 Common Stock (and following the occurrence of
a Triggering Event, shares of its authorized and unissued shares
of Common Stock and/or other securities), the number of shares of
Common Stock (and following the occurrence of a Triggering Event,
shares of Common Stock and/or other securities) that, as provided
in this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Common Stock issuable
upon the exercise of Rights may be listed on any national
securities exchange, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable,
all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to
(i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which
the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with this Agreement,
a registration statement under the Securities Act with respect to
the Common Stock or other securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such
securities, and (B) the Expiration Date. 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 registration
statement and permit it to become effective. In addition, if the
Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily
suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Upon any
suspension of exercisability of Rights referred to in this
Section 9(c), the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall
not be exercisable and shall be void so long as held by a holder
in any jurisdiction where the requisite qualification to the
issuance to such holder, or the exercise by such holder, of the
Rights in such jurisdiction shall not have been obtained or be
obtainable, or the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been
declared effective.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of
Common Stock 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 non-assessable.
(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 or of any
certificates for a number of shares of Common Stock 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 certificates for a number of
shares of Common Stock in a name other than that of, the
registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates
for a number of shares of Common Stock in a name other than that
of the registered holder upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction
that no such tax is due.
Section 10. Common Stock Record Date.
Each person in whose name any certificate for a number
of shares of Common Stock (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 Common Stock (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 any
applicable transfer taxes) was made; provided, however, that if
the date of such surrender and payment is a date upon which the
Common Stock (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 Common Stock (or other
securities as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any
rights of a stockholder of the Company with respect to shares for
which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not
be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights.
The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this
Section 11.
(a)(i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Common Stock payable in shares of Common Stock, (B) subdivide the
outstanding Common Stock, (C) combine the outstanding Common
Stock into a smaller number of shares or (D) issue any shares of
its capital stock in a reclassification of the Common Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Common
Stock or the number and kind of shares of capital stock issuable
on such date, as the case may be, shall be proportionately
adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the aggregate
adjusted Purchase Price then in effect necessary to exercise a
Right in full, the aggregate number and kind of shares of Common
Stock or the number and kind of shares of capital stock, as the
case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Common Stock (or other
capital stock, as the case may be) transfer books of the Company
were open, he would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision,
combination, or reclassification. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 of this
Agreement, in the event that any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan), alone or together with
its Affiliates and Associates, shall, at any time after the
Rights Dividend Declaration Date, become an Acquiring Person,
unless the event causing such Person to become an Acquiring
Person is a transaction set forth in Section 13(a) hereof, or is
an acquisition of shares of Common Stock pursuant to a cash
tender offer made pursuant to Section 14(d) of the Exchange Act
for all outstanding shares of Common Stock (other than shares of
Common Stock beneficially owned by the Person making the offer or
by its Affiliates or Associates) at a price and on terms
determined by at least a majority of the Outside Directors, after
receiving advice from one or more investment banking firms, to be
(a) at a price which is fair to shareholders (taking into account
all factors which such members of the Board deem relevant
including, without limitation, prices which could reasonably be
achieved if the Company or its assets were sold on an orderly
basis designed to realize maximum value) and (b) otherwise in the
best interests of the Company and its shareholders, proper
provision shall be made so that promptly following the Redemption
Period (as defined in Section 23(a)), 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 and
payment of an amount equal to the then current Purchase Price in
accordance with the terms of this Agreement, 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 half shares of Common Stock for which a Right
was or would have been exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, whether or not such
Right was then exercisable, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred to
as the "Purchase Price" for each Right and for all purposes of
this Agreement except to the extent set forth in Section 13
thereof) by 50% of the current market price per share of Common
Stock (determined pursuant to Section 11(d) hereof) on the date
of such first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares
of Common Stock which is authorized by the Company's Articles of
Incorporation but not outstanding, or reserved for issuance for
purposes other than upon exercise of the Rights, is not
sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Board shall
(acting by at least a majority of the Continuing Directors), to
the extent permitted by applicable law and by material agreements
then in effect to which the Company is a party, and subject to
any limitations contained in Section 13.1-653 of the Virginia
Stock Corporation Act (A) determine the excess of (1) the value
of the Adjustment Shares issuable upon the exercise of a Right
(the "Current Value") over (2) the Purchase Price (such excess,
the "Spread"), and (B) with respect to each Right (subject to
Section 7(e) hereof), make adequate provision to substitute for
some or all of the Adjustment Shares, upon exercise of a Right
and payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) other equity securities of
the Company (including, without limitation, shares, or units of
shares, of preferred stock which the Board has deemed to have the
same value as shares of Common Stock) (such shares of equity
securities are herein called "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 an investment banking firm
selected by the Board; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the later of
(x) the first occurrence of a Section 11(a)(ii) Event and (y) the
date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of
a Right and without requiring payment of the Purchase Price,
shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread.
If, upon the occurrence of a Section 11(a)(ii) Event,
the Board shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized
for issuance upon exercise in full of the Rights, then if the
Board so elects, 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 period, as it may be extended,
the "Substitution Period"). To the extent that action is to be
taken pursuant to the preceding provisions of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in
order to seek any authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant
to the first sentence of this Section 11(a)(iii) and to determine
the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is
no longer in effect. For purposes of this Section 11(a)(iii),
the value of the Common Stock shall be the current market price
(as determined pursuant to Section 11(d) hereof) per share of the
Common Stock on the Section 11(a)(ii) Trigger Date and the value
of any "common stock equivalent" shall be deemed to have the same
value as the Common Stock on such date. The Board may, but shall
not be required to, establish procedures to allocate the right to
receive shares of Common Stock upon the exercise of the Rights
among holders of Rights pursuant to this Section 11(a)(iii).
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Common Stock entitling them (for a period expiring within forty-
five (45) calendar days after such record date) to subscribe for
or purchase Common Stock (or shares having the same rights,
privileges and preferences as the shares of Common Stock
("equivalent common stock") or securities convertible into Common
Stock at a price per share of Common Stock or per share of
"equivalent common stock" (or having a conversion price per share
of Common Stock, if a security convertible into Common Stock)
less than the current per share market price of the Common Stock
(as defined in Section 11(d)) on such record date, the Purchase
Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding on such record
date, plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common
Stock and/or equivalent common stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price,
and the denominator of which shall be the number of shares of
Common Stock outstanding on such record date, plus the number of
additional shares of Common Stock and/or equivalent common stock
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in
good faith by the Board, whose determination shall be described
in a statement filed with the Rights Agent and shall be
conclusive for all purposes. Shares of Common Stock owned by or
held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights or warrants are not
so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation) of
evidences of indebtedness, cash (other than a regular quarterly
cash dividend of the Company in compliance with Section 13.1-653
of the Virginia Stock Corporation Act), assets (other than a
dividend payable in Common Stock, but including any dividend
payable in stock other than Common Stock), or subscription rights
or warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the current per share market price of
the Common Stock (as defined in Section 11(d)) on such record
date, less the fair market value (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) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to a share of Common Stock and the
denominator of which shall be such current per share market price
of the Common Stock. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current market price" of the 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 30 consecutive Trading Days (as such
term is hereinafter defined) immediately prior to such date, and
for purposes of computations made pursuant to Section 11(a)(iii)
hereof, the "current market price" per share of Common Stock on
any date shall be deemed to be the average of the daily closing
prices per share of Common Stock for the ten (10) consecutive
Trading Days immediately following such date; provided, however,
that in the event that the current market price of the Common
Stock is determined during a period following the announcement by
the issuer of such Common Stock of (i) a dividend or distribution
on such Common Stock payable in shares of such Common Stock or
securities convertible into such Common Stock (other than the
Rights), or (ii) any subdivision, combination or reclassification
of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period,
as set forth above, after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
"current market price" shall be appropriately adjusted to take
into account ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities
exchange on which the shares of Common Stock are listed or
admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares of Common
Stock selected by the Board. If on any such date no market maker
is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board
shall be used. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the
transaction of business, or, if the shares of Common Stock are
not listed or admitted to trading on any national securities
exchange, the term "Trading Day" shall mean a Monday, Tuesday,
Wednesday, Thursday or Friday on which banking institutions in
the Commonwealth of Virginia are not authorized or obligated by
law or executive order to close. If the Common Stock is not
publicly held or not listed or traded, "current market price"
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.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one
percent (1%) in such price; provided, however, that any
adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share of Common Stock or other share,
as the case may be. Notwithstanding the first sentence of this
Section 11(e), an 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 requires 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 of the Company other than Common 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 Common 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 Common
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of shares of Common Stock purchasable from time
to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest one-thousandth)
obtained by (i) multiplying (x) the number of shares covered by a
Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of shares of Common Stock
issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall
be exercisable for the number of shares of Common Stock for which
a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the
nearest one-thousandth) obtained by dividing the Purchase Price
in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement
of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued,
shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Rights Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of
record of Rights Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of Common Stock issuable
upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were
expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then-par value,
if any, of the number of shares of Common Stock issuable upon
exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid
and non-assessable such number of shares of Common Stock at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the number
of shares of Common Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise over and
above the number of shares of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that any (i) consolidation or subdivision of
the Common Stock, (ii) issuance wholly for cash of any shares of
Common Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Common Stock or
securities which by their terms are convertible into or
exchangeable for Common Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to
hereinabove in this Section 11, hereafter made by the Company to
holders of its Common Stock shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (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 fifty
percent (50%) of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with
Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants
or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such consolidation,
merger or sale, the stockholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(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
notwithstanding, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding shares of Common Stock, or
(iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with
each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number
of Rights associated with each share of Common Stock immediately
prior to such event by a fraction the numerator of which shall be
the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of
such event.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares.
Whenever an adjustment is made as provided in
Sections 11 and 13 hereof, the Company shall (a) promptly prepare
a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b)
promptly file with the Rights Agent and with each transfer agent
for the Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or,
if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance
with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have
knowledge of any adjustment unless and until it shall have
received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power.
(a) Subject to Section 23 of this Agreement, in the
event that, following the Stock Acquisition Date, directly or
indirectly, (w) the Company shall consolidate with, or merge with
and into, any other Person (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, (x) 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 consolidation or
merger and, in connection with such consolidation or merger, all
or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any
other Person or cash or any other property, (y) the Company shall
be a party to a statutory share exchange with any other person
(other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) or (z) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one transaction or a series of
related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (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 (except as may be contemplated by
Section 13(d) hereof), proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof, shall, upon the expiration of the Redemption Period (as
defined in Section 23(a)), 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 tradable shares of Common Stock of the Principal Party (as
such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as
shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of shares of Common Stock
for which a Right was 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 shares of Common Stock for which
a Right was exercisable immediately prior to the first occurrence
of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and (2) dividing
that product (which product, 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 per share of the shares of Common Stock
of such Principal Party on the date of consummation of such
Section 13 Event (or the fair market value on such date or other
securities or property of the Principal Party, as provided for
herein); (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 (other than Sections
11(a)(ii) and 11(a)(iii)) shall apply only to such Principal
Party following the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including, but
not limited to, the reservation of a sufficient number of shares
of its Common Stock) in connection with the consummation of any
such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) and Section 11(a)(iii)
hereof shall be of no effect following the first occurrence of
any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (w), (x) or (y) of the first sentence of
Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the
Company are converted in such merger, consolidation or
statutory share exchange, and if no securities are so
issued, the Person that is the other party to such
merger, consolidation or statutory share exchange; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the
Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to
such transaction or transactions; provided, however,
that in any such case, (1) if the Common Stock of such
Person is not at such time and has not been continuously
over the preceding twelve (12) month period registered
under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the
Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; and
(2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks
of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such
Persons is the issuer of the Common Stock having the
greatest aggregate market value.
(c) The Company shall not consummate any 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 delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of
this Section 13 and further providing that, as soon as
practicable after the date of any such Section 13 Event, the
Principal Party will:
(i) prepare and file a registration statement
under the Securities Act, with respect to the Rights and
the securities purchasable upon exercise of the Rights
on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become
effective as soon as practicable after such filing and
(B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the
Expiration Date; and
(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of
its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or statutory share exchanges
or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner
described in Section 13(a) hereof.
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (w), (x) and (y) of Section 13(a) if
(i) such transaction is consummated with a Person or Persons (or
a wholly owned subsidiary of any such Person or Persons) who
acquired shares of Common Stock pursuant to a cash tender offer
for all outstanding shares of Common Stock which complies with
the provisions of Section 11(a)(ii) hereof, (ii) the price per
share of Common Stock offered in such transaction is not less
than the price per share of Common Stock paid to all holders of
Common Stock whose shares were purchased pursuant to such cash
tender offer and (iii) the form of consideration being offered to
the remaining holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid
pursuant to such cash tender offer. Upon consummation of any
such transaction contemplated by this Section 13(d), all Rights
hereunder shall expire.
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(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders
of the Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of the whole Right.
For the 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 for any day shall be the last sale price, or, in
case no such sale takes place on such day, the average of the
high bid and low asked prices, in either case as reported by the
New York Stock Exchange or such other system then in use or, if
on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board. If on any such date no such market
maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board
shall be used. In the event the Rights are listed or admitted to
trading on a national securities exchange, the closing price for
any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the high bid
and low asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with
respect to the national securities exchange on which the Rights
are listed or admitted to trading.
(b) The Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights
or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of this
Section 14(b), the current market value of one (1) share of
Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except
as permitted by this Section 14.
Section 15. Rights of Action.
All rights of action in respect of this Agreement,
except the rights of action vested in the Rights Agent pursuant
to Section 18 and Section 20 hereof, are vested in the respective
registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock);
and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce,
and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and will
be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the
obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and with every
other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the 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 of the Rights
Agent, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate form of assignment and the
certificate contained therein duly completed and executed;
(c) any restriction on transfer imposed or deemed to
be imposed by this Agreement is valid and enforceable against the
holder and any transferee of the holder in accordance with
Section 13.1-649 of the Virginia Stock Corporation Act;
(d) subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the Person in
whose name the 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 affected by any notice to the contrary; and
(e) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any government
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder.
No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of the Common Stock or any other securities of the
Company which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 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. 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 advice or
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 advice or
opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person and the determination of
"current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by any person believed by
the Rights Agent to be any one of the Chairman of the Board,
President, a Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own gross negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Rights Certificates (except as to its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent is serving as an administrative
agent and shall not be under any responsibility in respect of the
validity of any provision of this Agreement or the execution and
delivery of this Agreement (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of
any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in
the exercisability of the Rights (including the Rights becoming
void pursuant to Section 7(e) hereof) or any adjustment required
under any of the provisions 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 to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares
of Common Stock will, when so issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from any person believed by the Rights Agent to
be any one of the Chairman of the Board, the Chief Executive
Officer, the President, a Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such
officer. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Rights Agreement and the
date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the Rights Agent
in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall
not be less than five Business Days after the date any officer of
the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received
written instruction in response to such application specifying
the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
any of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(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, the
Rights Agent was not grossly negligent in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any 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 of transfer
without first consulting with the Company.
(l) The Rights Agent undertakes only the express
duties and obligations imposed on it by this Agreement and no
implied duties or obligations shall be read into this Agreement
against the Rights Agent.
Section 19. Compensation and Indemnification of the Rights
Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent, its officers,
employees, agents and directors for, and to hold each of them
harmless against, any loss, liability, or expense, incurred
without gross negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the
Rights Agent or such other indemnified party in connection with
the acceptance and administration of this Agreement and the
exercise of its duties hereunder, including the costs and
expenses of defending against any claim of liability in the
premises. The indemnity provided for hereunder shall survive the
expiration of the Rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration
of this Agreement or the exercise of its duties hereunder in
reliance upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper person or persons.
(c) Anything in this Agreement to the contrary
notwithstanding, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if
the Rights Agent has been advised of the likelihood of such loss
or damage and regardless of the form of the action unless such
loss or damage results from the gross negligence, bad faith or
willful misconduct of the Rights Agent.
Section 20. Merger or Consolidation or Change of Name of
Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any
of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent
or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates shall have the full force provided
in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at any such time any of the Rights
Certificates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of the Common Stock by registered or
certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock by
registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appointment within
a period of thirty (30) days after giving notice of such removal
or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of the
Commonwealth of Virginia or the State of New York (or of any
other state of the United States so long as such corporation is
authorized to do business as a banking institution in the
Commonwealth of Virginia or the State of New York), in good
standing, having a principal office in the Commonwealth of
Virginia or the State of New York which is authorized under such
laws to exercise corporate trust power and is subject to
supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least Fifty Million Dollars
($50,000,000). After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the
Common Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement
or of the Rights to the contrary, the Company may, at its option,
issue new Rights Certificates evidencing Rights in such form as
may be approved by the Board to reflect any adjustment or change
in the Purchase Price per share and the number or kind of 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
(other than upon exercise of a Right) and prior to the redemption
or expiration of the Rights, the Company (a) shall, with respect
to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board,
issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided,
however, that (i) no such Rights Certificate shall be issued if,
and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material
adverse tax consequences 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.
(a) The Board may, at its option, at any time during
the period commencing on the Rights Dividend Declaration Date and
ending on 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 (10th) day following the
Record Date), as such period may be extended or shortened in the
discretion of the Board (the "Redemption Period") or (ii) the
Final Expiration Date, cause the Company to redeem all but not
less than all the then outstanding Rights at a redemption price
of $.005 per Right, as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); provided,
however, that, if the Board authorizes redemption of the Rights
or a change in the Redemption Period on or after the time a
Person becomes an Acquiring Person, then there must be Continuing
Directors then in office and such authorization shall require the
concurrence of a majority of such Continuing Directors. If,
following the occurrence of a Stock Acquisition Date and
following the expiration of the Company's right of redemption
hereunder (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common
Stock in one transaction or series of transactions, not directly
or indirectly involving the Company or any of its Subsidiaries,
which did not result in the occurrence of a Triggering Event such
that such Person is thereafter a Beneficial Owner of ten percent
(10%) or less of the outstanding shares of Common Stock, (ii)
there are no other Persons, immediately following the occurrence
of the event described in clause (i), who are Acquiring Persons,
and (iii) the Board (with the concurrence of a majority of the
Continuing Directors) shall so approve, then the Company's right
of redemption shall be reinstated and thereafter be subject to
the provisions of this Section 23. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not
be exercisable after the first occurrence of a Section 11(a)(ii)
Event or a Section 13 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 of the Common Stock at
the time of redemption) or any other form of consideration deemed
appropriate by the Board.
(b) Immediately upon the action of the Board ordering
the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. Promptly after the
action of the Board ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent
and the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent
for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be
made.
Section 24. Exchange.
(a) The Board may, at its option, at any time after
any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions
of Section 11(a)(ii) or Section 7(e) hereof) for shares of Common
Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the
"Exchange Ratio").
(b) Immediately upon the action of the Board 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, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of
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 11(a)(ii) or Section 7(e)
hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient
Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such
action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.
(d) 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, the Company shall pay to the registered
holders of the Right Certificates with regard to which such
fractional shares 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 paragraph (d),
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) 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 Common Stock or to make any
other distribution to the holders of Common Stock (other than a
regular quarterly cash dividend of the Company in compliance with
Section 13.1-653 of the Virginia Stock Corporation Act) or
(ii) to offer to the holders of Common Stock rights or warrants
to subscribe for or to purchase any additional shares of Common
Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its
Common Stock (other than a reclassification involving only the
subdivision of outstanding Common Stock), or (iv) to effect any
consolidation or merger into or with, or to effect a statutory
share exchange with, or to effect any sale or other transfer (or
to permit one or more of its subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than fifty
percent (50%) of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, or
(v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each
holder of a 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,
statutory share exchange, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Common
Stock, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
above at least twenty (20) days prior to the record date for
determining holders of the shares of Common Stock for purposes of
such action and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the
shares of Common Stock whichever shall be the earlier.
(b) In case any 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 Common 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)
as follows:
Shenandoah Telecommunications Company
124 South Main Street
Edinburg, Virginia 22824
Attention: President
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Rights Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
Attention: Corporate Trust Department
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 shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to any such holder
at the address of such holder as shown on the registry books of
the Company.
Section 27. Supplements and Amendments.
Prior to the Distribution Date and subject to the
penultimate sentence of this Section 27, the Company may, and the
Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any
holders of certificates representing shares of Common Stock.
From and after the Distribution Date and subject to the
penultimate sentence of this Section 27, the Company may, and the
Rights Agent shall at any time and from time to time, 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 any such
Person); provided, however, that this Agreement may not be
supplemented or amended (A) to lengthen a time period relating to
when the Rights may be redeemed at such time as the Rights are
not then redeemable, or (B) to lengthen any other time period
unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of any such 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. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final
Expiration Date, the number of shares of Common Stock for which a
Right is exercisable, or the Purchase Price; provided however,
that at any time prior to the Distribution Date, the Company may
amend this Agreement to increase the Purchase Price. In
addition, no supplement or amendment that changes the rights and
duties of the Rights Agent under this Agreement shall be
effective without the consent of the Rights Agent. Prior to the
Distribution Date, the interests of the holders of Rights shall
be deemed coincident with the interests of the holders of shares
of Common Stock.
Section 28. Successors.
All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Determinations and Actions by the Board, etc.
For all purposes of this Agreement, any calculation of
the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board
(with, where specifically provided for herein, the concurrence of
the Continuing Directors or Outside 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 Outside 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 without limitation a
determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done or made
by the Board (with, where specifically provided for herein, the
concurrence of the Continuing Directors or Outside 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 any director 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, the 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 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
notwithstanding anything in this Agreement to the contrary, if
any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the
Board determines in its good faith judgment that severing the
invalid language from this Agreement would materially and
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 day following the date of such determination by the
Board.
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 Commonwealth of Virginia and for all purposes shall
be governed by and construed in accordance with laws of such
Commonwealth applicable to contracts made and performed entirely
within such Commonwealth.
Section 33. Counterparts.
This Agreement may be executed in any number of
counterparts. It shall not be necessary that the signature of or
on behalf of each party appears on each counterpart, but it shall
be sufficient that the signature of or on behalf of each party
appears on one or more of the counterparts. All counterparts
shall collectively constitute a single agreement. It shall not
be necessary in any proof of this Agreement to produce or account
for more than a number of counterparts containing the respective
signatures of or on behalf of all of the parties.
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Rights Agreement to be duly executed and their respective
corporate seals to be hereunto affixed and attested, all as of
the day and year first above written.
SHENANDOAH TELECOMMUNICATIONS
COMPANY
Attest:
By: /s/ Laurence F. Paxton By: /s/ Christopher E. French
Laurence F. Paxton Christopher E. French
President
CRESTAR BANK
Attest:
By: /s/ Karin M. Whitt By: /s/ J. Lee Judy
Karin M. Whitt J. Lee Judy
Senior Vice President
EXHIBITS
Exhibit A - Summary of Rights to Purchase Common Stock
Exhibit B - Form of Rights Certificate
Exhibit A
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On February 9, 1998, the Board of Directors of Shenandoah
Telecommunications Company (the "Company") declared a dividend
distribution of one Right for each outstanding share of common
stock (the "Common Stock") of the Company. The distribution is
payable to shareholders of record on February 20, 1998. Each
Right, when exercisable, entitles the registered holder to
purchase from the Company one-half (2) of a share of Common
Stock at a price of Forty Dollars ($40.00) per one-half (2) of a
share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and
Crestar Bank as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no
separate certificates evidencing the Rights will be distributed.
The Rights will separate from the Common Stock and a
distribution of Rights Certificates will occur upon the earlier
to occur of (I) ten (10) days following a public announcement
that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date") or (ii)
ten (10) business days (or such later date as the Continuing
Directors (as defined below) may determine) following the
commencement of a tender offer or exchange offer the
consummation of which would result in the beneficial ownership
by a person of 15% or more of the outstanding shares of Common
Stock (the earlier of such dates being called the "Distribution
Date").
Until the Distribution Date, (I) the Rights will be
evidenced by the Common Stock certificates, and will be
transferred with and only with the Common Stock certificates,
(ii) new Common Stock certificates issued after February 20,
1998, upon transfer or new issuance of the Common Stock will
contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on February 8, 2008,
unless earlier redeemed or exchanged by the Company as described
below. The Rights will not be exercisable by a holder in any
jurisdiction where the requisite qualification to the issuance
to such holder, or the exercise by such holder, of the Rights
has not been obtained or is not obtainable.
As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("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 evidence
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 the beneficial owner of
15% or more of the then outstanding shares of Common Stock
(except pursuant to an offer for all outstanding shares of
Common Stock which the Outside Directors (as defined below)
determine to be fair to and otherwise in the best interests of
the Company and its shareholders), each holder of a Right will,
after the end of a redemption period referred to below, have the
right to exercise the Right by purchasing, for an amount equal
to the Purchase Price, Common Stock (or, in certain
circumstances, cash, property or other securities of the
Company) having a value equal to two (2) times such amount.
Notwithstanding any of the foregoing, following the occurrence
of the events set forth in this paragraph, all Rights that are,
or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will
be null and void. However, Rights are not exercisable following
the occurrence of the events set forth above until such time as
the Rights are no longer redeemable by the Company as set forth
below.
For example, at a Purchase Price of Forty Dollars ($40.00)
per Right, each Right not owned by an Acquiring Person (or by
certain related parties) following an event set forth in the
preceding paragraph would entitle its holder to purchase Eighty
Dollars ($80.00) worth of Common Stock (or other consideration,
as noted above) for Forty Dollars ($40.00). Assuming that the
Common Stock had a per share value of Twenty Dollars ($20.00) at
such time, the holder of each valid Right would be entitled to
purchase four shares of Common Stock for Forty Dollars ($40.00).
In the event that, at any time following the Stock
Acquisition Date, (I) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation (other than a merger which follows
an offer described in the second preceding paragraph), or (ii)
fifty percent (50%) or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above)
shall, after the expiration of the redemption period referred to
below, have the right to receive, upon exercise, common stock of
the acquiring company having a value equal to two (2) times the
Purchase Price of the Right (e.g., common stock of the acquiring
company having a value of Eighty Dollars ($80.00) for the Forty
Dollars ($40.00) Purchase Price).
At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person, the Board of
Directors of the Company 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 per Right (subject to adjustment).
The Purchase Price payable, and the number of shares of
Common 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
Common Stock (ii) upon the grant to holders of the Common Stock
of certain rights or warrants to subscribe for Common Stock or
convertible securities at less than the current market price of
the Common Stock or (iii) upon the distribution to holders of
the Common Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least one percent (1%) in such Purchase Price.
The Company is not required to issue fractional shares and in
lieu thereof, an adjustment in cash will be made based on the
market price of the Common Stock on the last trading date prior
to the date of exercise.
In general, the Board of Directors of the Company, may
cause the Company to redeem the Rights in whole, but not in
part, at any time during the period commencing on February 9,
1998, and ending on the tenth (10th) day following the Stock
Acquisition Date, as such period may be extended or shortened by
the Board of Directors (the "Redemption Period") at a price of
$.005 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 the Rights will require the concurrence
of a majority of the Continuing Directors. After the Redemption
Period has expired, the Company's right of redemption may be
reinstated (with the concurrence of the Continuing Directors) if
an Acquiring Person reduces his beneficial ownership to ten
percent (10%) or less of the outstanding shares of Common Stock
in a transaction or series of transactions not involving the
Company and there are no other Acquiring Persons. Immediately
upon the action of the Board of Directors of the Company
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 $.005 redemption price.
The term "Continuing Director" means any member of the
Board of Directors of the Company who was a member of the Board
of Directors 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. The term "Outside
Directors" means "Continuing Directors" who are not officers of
the Company.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be subject to
federal taxation to shareholders or to the Company, shareholders
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 as set forth above.
Other than those provisions relating to the principal
economic terms of the Rights (other than an increase in the
Purchase Price), 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, defect or inconsistency or to
make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the
Rights Agreement; provided however, no amendment to adjust the
time period governing redemption may be made at such time as the
Rights are not redeemable.
Exhibit B
[Form of Rights Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER , 2008, OR
EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
DOLLARS ($ ) PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE 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 SHALL
NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A
HOLDER IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION
TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE
BEEN OBTAINED OR BE OBTAINABLE. [THE RIGHTS REPRESENTED BY
THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME
NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.] *
Rights Certificate
SHENANDOAH TELECOMMUNICATIONS COMPANY
This certifies that , or its
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights
Agreement, dated as of February 9, 1998 (the "Rights Agreement"),
between Shenandoah Telecommunications Company, a Virginia
corporation (the "Company"), and Crestar Bank (the "Rights
Agent"), to purchase from the Company at any time prior to
February 8, 2008, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent,
one-half (1/2) of a fully paid, non-assessable share of common
stock, no par value per share (the "Common Stock") of the
Company, at a purchase price of Dollars ($
) per one-half (1/2) of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per one-
half (1/2) of a share set forth above, are the number and
Purchase Price as of , 19 , based on the
Common Stock as constituted at such date, and are subject to
adjustment upon the happening of certain events as provided in
the Rights Agreement.
From and after the occurrence of an event described in
Section 11(a)(ii) of the Rights Agreement, the Rights evidenced
by this Rights Certificate beneficially owned by (i) an Acquiring
Person or an Affiliate or Associate of any such Person (as such
terms are defined in the Rights Agreement), (ii) a transferee of
any such Acquiring Person, Associate or Affiliate, or (iii) under
certain circumstances specified in the Rights Agreement, a
transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person shall become null and void and no holder
hereof shall have any right with respect to such Rights from and
after the occurrence of such Section 11(a)(ii) Event.
The Rights evidenced by this Rights Certificate shall
not be exercisable, and shall be void so long as held, by a
holder in any jurisdiction where the requisite qualification to
the issuance to such holder, or the exercise by such holder, of
the Rights in such jurisdiction shall not have been obtained or
be obtainable.
As provided in the Rights Agreement, the Purchase Price
and the number and kind of shares of Common Stock or other
securities, which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the
Rights Agreement).
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned
office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office or offices of the
Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a
like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the
Company at its option at a redemption price of $.005 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 changed in the discretion of the Board of Directors
pursuant to the Rights Agreement), and (ii) the Final Expiration
Date (as defined in the Rights Agreement). Under certain
circumstances set forth in the Rights Agreement, the decision to
redeem shall require the concurrence of a majority of the
Continuing Directors. After the expiration of the redemption
period, the Company's right of redemption may be reinstated if an
Acquiring Person reduces his beneficial ownership to ten percent
(10%) or less of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the Company,
and such reinstatement is approved by the Company's Board of
Directors (with the concurrence of a majority of the Continuing
Directors).
At any time after a person becomes an Acquiring Person,
the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such Acquiring Person which have
become void), in whole or in part, at an exchange ratio of one
share of Common Stock per Right (subject to adjustment).
The Company is not required to issue fractional shares
of Common Stock upon the exercise of any Right or Rights
evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of shares of Common Stock or of any other
securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Rights Certificate shall have
been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned
by the Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal.
Dated as of , 19
ATTEST:
SHENANDOAH TELECOMMUNICATIONS
COMPANY
By:
Name:
Title:
Countersigned:
By:
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the
within Rights Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ,
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of any
such Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or subsequently became an Acquiring Person or an Affiliate or
Associate of any such Person.
Dated: , 19
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To:
The undersigned hereby irrevocably elects to exercise
Rights represented by this Rights Certificate to
purchase the shares of Common Stock issuable upon the exercise of
the Rights (or such other securities of the Company or of any
other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
(Please 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 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 Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was
or became an Acquiring Person or an Affiliate or Associate of any
such Person.
Dated: ,
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
_______________________________
* The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
EXHIBIT NO. 2
February 11, 1998
NEWS RELEASE
For further information, please contact Laurence F. Paxton at 540-984-5222.
SHENANDOAH TELECOMMUNICATIONS COMPANY
ANNOUNCES 1997 REVENUES AND EARNINGS, AND
ADOPTION OF SHAREHOLDER RIGHTS PLAN
Shenandoah Telecommunications Company announced consolidated net income of
$4,479,563 for 1997, or $1.19 per share (basic and diluted.) The Company
experienced a solid increase in total revenues to $30,970,348 as compared to
$25,429,854 in 1996, an increase of 21.8 percent. Operating income increased
to $8,367,034, or 5.3% over $7,944,651 in 1996. Total net income decreased
by 10.3 percent from $4,994,589 in 1996, primarily due to an increase in
interest expenses associated with the Company's capital expenditures for its
cable television, Internet and wireless services expansions.
The Company experienced strong growth in its core local telephone and cellular
businesses. The Company's Telephone subsidiary increased earnings by
$469,495, or 9.3 percent. The Company's Mobile subsidiary, whose primary
business is operating Shenandoah Cellular, saw an increase of $443,709, or
58.4 percent. The Network subsidiary also experienced solid earnings growth
of 16.0 percent, while the Leasing and Long Distance subsidiaries also
reported a profitable year.
Shenandoah Cable Television, ShenTel Service, and Shenandoah Personal
Communications all reported expected losses. The annual meeting of Stockholders
of Shenandoah Telecommunications Company will be held on April 21, 1998 at the
Edinburg Fire Hall.
The Company also announced that on February 9, 1998, its Board of Directors
adopted a Shareholders Rights Plan. The Plan is designed to preserve the
long-term value of stockholders' investment in Shenandoah Telecommunications
Company, and to deter coercive or unfair takeover tactics. The Plan's adoption
is not in response to any specific effort to acquire control of the Company, nor
is the Board aware of any accumulation of the Company's stock by any potential
acquiror. Legg Mason Wood Walker, Incorporated served as financial advisor in
connection with the adoption of the Plan.
The Plan, which is similar to plans adopted by more than 2,000 public companies,
will assist the Board of Directors in dealing with any future actions which
attempt to deprive the Company and its stockholders of the opportunity to obtain
the most attractive price for their shares. Initially, the Rights are
represented by the Company's common stock certificates and are neither
exercisable nor traded separately from the Company's common stock. The
Rights would only become exercisable if a person or group in the future
becomes the beneficial owner of 15% or more of the Company's common stock, or
announces a tender or exchange offer which would result in its ownership of
15% or more.
Under certain circumstances involving a buyer's acquisition of 15% or more of
the Company's common stock, each holder of a Right, except the buyer, will be
entitled to purchase the Company's common stock at one-half of the then current
market price. If the Company is acquired in a merger, or more than 50% of the
Company's assets are sold in one or more related transactions, each Right would
enable the holder to purchase common stock of the acquiring company at half of
the then current market price of such common stock. At any time after a buyer
becomes the beneficial owner of 15% or more of the Company's common stock, the
Board of Directors may exchange one share of common stock for each Right, other
than the Rights held by the buyer. The Board of Directors generally may redeem
the Rights at any time until ten days following the public announcement that a
person or group of persons has acquired beneficial ownership of 15% or more of
the Company's outstanding common stock. The redemption price is $.005 (one-
half of one cent) per Right.
The Rights will be distributed to stockholders of record as of February 20,
1998, and will expire in the tenth year thereafter. The Rights distribution is
not taxable to stockholders. Details of the Shareholders Rights Plan will be
mailed to all stockholders of the Company.
Shenandoah Telecommunications Company is a holding company that provides a broad
range of telecommunications services through its eight operating subsidiaries.
The eight companies are Shenandoah Telephone Company, Shenandoah Cable
Television Company, ShenTel Service Company, Shenandoah Valley Leasing Company,
Shenandoah Mobile Company, Shenandoah Long Distance Company, Shenandoah Network
Company, and Shenandoah Personal Communications Company. Under an agreement
with American Personal Communications Company, Shenandoah Personal
Communications Company is now operating a personal communications network in
the four-state region from Chambersburg, Pennsylvania to Harrisonburg, Virginia.
_________________________
Laurence F. Paxton
Vice President - Finance
LFP.jt
EXHIBIT NO. 3
February 20, 1998
Dear Shareholder:
Your Board of Directors is pleased to announce that it adopted a
Shareholder Rights Plan on February 9, 1998, to further protect
your rights and investment in Shenandoah Telecommunications
Company ("Shentel"). As part of this plan, a special type of
dividend has been declared on your Shentel common stock in the
form of a distribution of rights. The enclosed Summary
Description describes the principle features of the Plan. I urge
you to read the summary carefully and keep it with your stock
records, as it contains important information.
The Shareholder Rights Plan is designed to preserve the long-term
value of stockholders' investment in Shentel, and to deter
coercive or unfair takeover tactics. The Plan's adoption is not
in response to any specific effort to acquire control of the
Company, nor is the Board aware of any accumulation of the
Company's stock by any potential acquiror.
The Shareholder Rights Plan is not intended to, and will not,
prevent a fair and equitable acquisition of Shentel. The Plan is
designed to assist your Board of Directors in obtaining maximum
shareholder value in the event of a change of control of Shentel.
The Plan will not affect any prospective acquiror willing to
negotiate in good faith with your Board of Directors and will not
impede any business transactions approved by your Board of
Directors.
Issuance of the rights will not in any way weaken the financial
strength of Shentel or interfere with its business plans. The
issuance of rights has no dilutive effect, will not affect
reported earnings per share, and will not change the way in which
you can presently trade Shentel common stock. As explained in
the enclosed summary, the rights only become exercisable upon the
occurrence of certain events. As noted in the enclosed summary
description of the Shareholder Rights Plan, this dividend will
not be subject to federal taxation.
Our overriding objective is to preserve Shentel's value for all
shareholders. In declaring the rights dividend, your Board of
Directors has expressed its confidence in Shentel's future and
its determination that you be given every opportunity to
participate fully in that future.
Sincerely,
Christopher E. French
President
CEF:jt
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On February 9, 1998, the Board of Directors of Shenandoah
Telecommunications Company (the "Company") declared a dividend
distribution of one Right for each outstanding share of common
stock (the "Common Stock") of the Company. The distribution is
payable to shareholders of record on February 20, 1998. Each
Right, when exercisable, entitles the registered holder to
purchase from the Company one-half (2) of a share of Common
Stock at a price of Forty Dollars ($40.00) per one-half (2) of a
share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and
Crestar Bank as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no
separate certificates evidencing the Rights will be distributed.
The Rights will separate from the Common Stock and a
distribution of Rights Certificates will occur upon the earlier
to occur of (I) ten (10) days following a public announcement
that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding
shares of Common Stock (the "Stock Acquisition Date") or (ii)
ten (10) business days (or such later date as the Continuing
Directors (as defined below) may determine) following the
commencement of a tender offer or exchange offer the
consummation of which would result in the beneficial ownership
by a person of 15% or more of the outstanding shares of Common
Stock (the earlier of such dates being called the "Distribution
Date").
Until the Distribution Date, (I) the Rights will be
evidenced by the Common Stock certificates, and will be
transferred with and only with the Common Stock certificates,
(ii) new Common Stock certificates issued after February 20,
1998, upon transfer or new issuance of the Common Stock will
contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any
certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock
represented by such certificate.
The Rights are not exercisable until the Distribution Date
and will expire at the close of business on February 8, 2008,
unless earlier redeemed or exchanged by the Company as described
below. The Rights will not be exercisable by a holder in any
jurisdiction where the requisite qualification to the issuance
to such holder, or the exercise by such holder, of the Rights
has not been obtained or is not obtainable.
As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("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 evidence
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 the beneficial owner of
15% or more of the then outstanding shares of Common Stock
(except pursuant to an offer for all outstanding shares of
Common Stock which the Outside Directors (as defined below)
determine to be fair to and otherwise in the best interests of
the Company and its shareholders), each holder of a Right will,
after the end of a redemption period referred to below, have the
right to exercise the Right by purchasing, for an amount equal
to the Purchase Price, Common Stock (or, in certain
circumstances, cash, property or other securities of the
Company) having a value equal to two (2) times such amount.
Notwithstanding any of the foregoing, following the occurrence
of the events set forth in this paragraph, all Rights that are,
or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will
be null and void. However, Rights are not exercisable following
the occurrence of the events set forth above until such time as
the Rights are no longer redeemable by the Company as set forth
below.
For example, at a Purchase Price of Forty Dollars ($40.00)
per Right, each Right not owned by an Acquiring Person (or by
certain related parties) following an event set forth in the
preceding paragraph would entitle its holder to purchase Eighty
Dollars ($80.00) worth of Common Stock (or other consideration,
as noted above) for Forty Dollars ($40.00). Assuming that the
Common Stock had a per share value of Twenty Dollars ($20.00) at
such time, the holder of each valid Right would be entitled to
purchase four shares of Common Stock for Forty Dollars ($40.00).
In the event that, at any time following the Stock
Acquisition Date, (I) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation (other than a merger which follows
an offer described in the second preceding paragraph), or (ii)
fifty percent (50%) or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above)
shall, after the expiration of the redemption period referred to
below, have the right to receive, upon exercise, common stock of
the acquiring company having a value equal to two (2) times the
Purchase Price of the Right (e.g., common stock of the acquiring
company having a value of Eighty Dollars ($80.00) for the Forty
Dollars ($40.00) Purchase Price).
At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person, the Board of
Directors of the Company 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 per Right (subject to adjustment).
The Purchase Price payable, and the number of shares of
Common 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
Common Stock (ii) upon the grant to holders of the Common Stock
of certain rights or warrants to subscribe for Common Stock or
convertible securities at less than the current market price of
the Common Stock or (iii) upon the distribution to holders of
the Common Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least one percent (1%) in such Purchase Price.
The Company is not required to issue fractional shares and in
lieu thereof, an adjustment in cash will be made based on the
market price of the Common Stock on the last trading date prior
to the date of exercise.
In general, the Board of Directors of the Company, may
cause the Company to redeem the Rights in whole, but not in
part, at any time during the period commencing on February 9,
1998, and ending on the tenth (10th) day following the Stock
Acquisition Date, as such period may be extended or shortened by
the Board of Directors (the "Redemption Period") at a price of
$.005 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 the Rights will require the concurrence
of a majority of the Continuing Directors. After the Redemption
Period has expired, the Company's right of redemption may be
reinstated (with the concurrence of the Continuing Directors) if
an Acquiring Person reduces his beneficial ownership to ten
percent (10%) or less of the outstanding shares of Common Stock
in a transaction or series of transactions not involving the
Company and there are no other Acquiring Persons. Immediately
upon the action of the Board of Directors of the Company
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 $.005 redemption price.
The term "Continuing Director" means any member of the
Board of Directors of the Company who was a member of the Board
of Directors 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. The term "Outside
Directors" means "Continuing Directors" who are not officers of
the Company.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be subject to
federal taxation to shareholders or to the Company, shareholders
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 as set forth above.
Other than those provisions relating to the principal
economic terms of the Rights (other than an increase in the
Purchase Price), 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, defect or inconsistency or to
make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring
Person), or to shorten or lengthen any time period under the
Rights Agreement; provided however, no amendment to adjust the
time period governing redemption may be made at such time as the
Rights are not redeemable.