Document:

Unassociated Document

OFFICE PURCHASE AND ASSUMPTION AGREEMENT

by and between

Premier Bank & Trust, National Association

and

The Commercial and Savings Bank of Millersburg, Ohio

Entered into as of the 23rd day of June, 2011

  

  

  

 

TABLE OF CONTENTS

 

	  	  	  	 	
Page

	
1.

	
PURCHASE AND ASSUMPTION.

	 	
1

	  	
1.1

	
Purchase and Sale of Assets.

	 	
1

	  	
1.2

	
Transfer of Assets.

	 	
1

	  	
1.3

	
Acceptance and Assumption.

	 	
4

	  	
1.4

	
Payment of Funds.

	 	
6

	
2.

	
CONDUCT OF THE PARTIES PRIOR TO CLOSING.

	 	
11

	  	
2.1

	
Covenants of SELLER.

	 	
11

	  	
2.2

	
Covenants of BUYER.

	 	
16

	  	
2.3

	
Covenants of All Parties.

	 	
18

	
3.

	
REPRESENTATIONS AND WARRANTIES.

	 	
18

	  	
3.1

	
Representations and Warranties of SELLER.

	 	
18

	  	
3.2

	
Representations and Warranties of BUYER.

	 	
23

	
4.

	
ACTIONS RESPECTING EMPLOYEES AND PENSIONS AND EMPLOYEE BENEFIT PLANS.

	 	
24

	  	
4.1

	
Employment of Employees.

	 	
24

	  	
4.2

	
Terms and Conditions of Employment.

	 	
24

	  	
4.3

	
Compliance with Law.

	 	
26

	  	
4.4

	
Actions to be Taken by SELLER.

	 	
26

	
5.

	
CONDITIONS PRECEDENT TO CLOSING.

	 	
27

	  	
5.1

	
Conditions to SELLER's Obligations.

	 	
27

	  	
5.2

	
Conditions to BUYER's Obligations.

	 	
29

	  	
5.3

	
Waivers of Conditions Precedent.

	 	
32

	
6.

	
CLOSING.

	 	
32

	  	
6.1

	
Closing and Closing Date.

	 	
32

	  	
6.2

	
SELLER's Actions at Closing.

	 	
32

	  	
6.3

	
BUYER's Actions at the Closing.

	 	
35

	  	
6.4

	
Methods of Payment.

	 	
36

	  	
6.5

	
Availability of Closing Documents.

	 	
37

	  	
6.6

	
Effectiveness of Closing.

	 	
37

	
7.

	
CERTAIN TRANSITIONAL MATTERS.

	 	
37

	  	
7.1

	
Transitional Action by BUYER.

	 	
37

	  	
7.2

	
Transitional Actions by SELLER.

	 	
41

	  	
7.3

	
Overdrafts and Transitional Action.

	 	
46

	  	
7.4

	
ATMs and Debit Cards.

	 	
46

	  	
7.5

	
Environmental Matters

	 	
48

	  	
7.6

	
Effect of Transitional Action.

	 	
50

	
8.

	
GENERAL COVENANTS AND INDEMNIFICATION

	 	
50

	  	
8.1

	
Confidentiality Obligations of BUYER.

	 	
50

	  	
8.2

	
Confidentiality Obligations of SELLER.

	 	
51

	  	
8.3

	
Indemnification by SELLER.

	 	
52

	  	
8.4

	
Indemnification by BUYER.

	 	
53

	  	
8.5

	
Solicitation of Customers by BUYER Prior to Closing.

	 	
54

	  	
8.6

	
Solicitation of Customers by SELLER After the Closing.

	 	
54

 

  

i

  

 

	  	
8.7

	
Further Assurances

	 	
55

	  	
8.8

	
Operation of the Offices.

	 	
55

	  	
8.9

	
Information After Closing.

	 	
56

	  	
8.10

	
Individual Retirement Accounts.

	 	
57

	  	
8.11

	
Covenant Not to Compete.

	 	
57

	  	
8.12

	
Non-solicitation of Employees.

	 	
57

	
9.

	
TERMINATION

	 	
58

	  	
9.1

	
Termination by Mutual Agreement.

	 	
58

	  	
9.2

	
Termination by SELLER.

	 	
59

	  	
9.3

	
Termination by BUYER.

	 	
60

	  	
9.4

	
Effect of Termination.

	 	
61

	
10.

	
MISCELLANEOUS PROVISIONS.

	 	
61

	  	
10.1

	
Expenses.

	 	
61

	  	
10.2

	
Certificates.

	 	
61

	  	
10.3

	
Termination of Representations and Warranties.

	 	
62

	  	
10.4

	
Waivers.

	 	
62

	  	
10.5

	
Notices.

	 	
63

	  	
10.6

	
Parties in Interest; Assignment; Amendment.

	 	
64

	  	
10.7

	
Headings.

	 	
64

	  	
10.8

	
Terminology

	 	
64

	  	
10.9

	
Press Releases.

	 	
66

	  	
10.10

	
Entire Agreement.

	 	
66

	  	
10.11

	
Flexible Structure.

	 	
66

	  	
10.12

	
Governing Law.

	 	
67

	  	
10.13

	
Counterparts

	 	
67

	  	
10.14

	
Tax Matters.

	 	
67

	  	  	  	 	  

 

  

ii

  

 

SCHEDULES:

	
Schedule A –

	
Description of Owned Real Estate

 

	
Schedule B –

	
Description of Leased Real Estate and Office Lease

 

	
Schedule C –

	
Furniture, Fixtures and Equipment

 

	
Schedule D –

	
Assumed Contracts

 

	
Schedule E –

	
List of Leases, Safekeeping Items and Agreements

 

  

iii

  

 

OFFICE PURCHASE AND ASSUMPTION AGREEMENT

This Office Purchase and Assumption Agreement (this "Agreement"), is made and entered into as of this 23rd day of June, 2011, by and between The Commercial and Savings Bank of Millersburg, Ohio, an Ohio banking corporation with its principal office at 91 North Clay Street, Millersburg, Ohio ("BUYER") and Premier Bank & Trust, National Association, a national banking association with its principal office located at 2375 Benden Drive, Suite C, Wooster, Ohio  ("SELLER").

 

WHEREAS, BUYER desires to purchase and assume from SELLER, and SELLER desires to sell and assign to BUYER, certain assets and liabilities associated with offices of SELLER as hereinafter described;

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, BUYER and SELLER hereby agree as follows:

 

	
1.

	
PURCHASE AND ASSUMPTION.

 

	 	
1.1

	
Purchase and Sale of Assets. At the Closing (as defined in Section 6.1 hereof), BUYER shall purchase, acquire and assume, and SELLER shall sell and assign, the real estate and other assets described in Section 1.2 hereof (collectively, the "Assets"), and all leases for such real estate on which Offices (as defined below) are located, all of which are used in and/or relate to business conducted by SELLER at its branch offices known as and located at the sites described in Schedules A and B attached hereto and incorporated herein by reference, pursuant to the terms and conditions, and subject to the exceptions, set forth herein.  The foregoing offices are collectively referred to as the "Offices" and each, individually, as an "Office."  The transactions contemplated by this Agreement and the purchase of assets and assumption of liabilities provided for herein is referred to herein as the "Acquisition."

 

	 	
1.2 

	
Transfer of Assets. Subject to the terms and conditions of this Agreement, SELLER shall assign, transfer, convey and deliver to BUYER, on and as of the Closing Date (as defined in Section 6.1 hereof) free and clear of any liens, encumbrances or impairments whatsoever except those expressly agreed by BUYER, the Assets, which shall include the following:

 

  

 

  

 

	
  

	
(a)

	
Owned Real Estate.  All of SELLER's right, title and interest in and to the real estate described in attached Schedule A on which an Office is situated, together with all of SELLER's rights in and to all improvements thereon and all easements rights, privileges and appurtenances associated therewith (the "Owned Real Estate").  Schedule A identifies the Owned Real Estate by street address, legal description and/or tax parcel number;

 

	
  

	
(b)

	
Leased Real Estate.  A good and valid leasehold estate, with terms reasonably acceptable to BUYER (it being understood that assignment of the Office Lease, as defined below, in its current form or without any material changes shall be acceptable to BUYER), in the real estate described in attached Schedule B created by a certain lease agreement (the "Office Lease") relating to the referenced Office (the "Leased Real Estate"), specifically identified on Schedule B by street address, legal description and tax parcel number.  Schedule B also identifies the Office Lease;

 

	
  

	
(c)

	
Furniture and Equipment.  All of SELLER's right, title and interest to the furniture, fixtures and equipment located at the Offices as of the Closing Date (the "Fixed Assets"), free and clear of any liens or impairments whatsoever.  A preliminary listing of the Fixed Assets is contained in Schedule C attached hereto, provided, however, that such Fixed Assets shall specifically exclude, among other items (unless otherwise agreed by the parties prior to Closing), teller software, branch capture software, branch capture CPUs, controllers, servers, sign "skins" with SELLER's name, printed supplies and documents and other materials bearing any SELLER or affiliate name and/or logo, network communications equipment and related devices, leased or licensed software, and marketing fixtures.  A final listing of specific items included in the Fixed Assets will be provided by SELLER, subject to final approval by BUYER, prior to the Closing;

 

  

2

  

 

	
  

	
(d)

	
Safe Deposit Business.  All of SELLER's right, title and interest to the safe deposit business (subject to the allocation of safe deposit rental payments as provided in Section 1.3(c)(ii) hereof) conducted at the Offices as of the close of business on the Closing Date;

 

	
  

	
(e)

	
Cash on Hand.  All cash on hand at the Offices as of the close of business on the Closing Date including vault cash, petty cash, ATM cash and tellers' cash;

 

	
  

	
(f)

	
Prepaid Expenses.  All prepaid expenses recorded or otherwise reflected on the books of SELLER and attributable to the Offices as of the close of business on the day immediately preceding the Closing Date (a preliminary listing of which has been provided by SELLER to BUYER as of the date hereof).  A final listing of prepaid expenses will be provided by SELLER to BUYER, subject to BUYER’s approval, at Closing.  Any and all prepaid expenses incurred by SELLER with respect to the Offices subsequent to the date hereof shall be subject to the prior written consent of BUYER;

 

	
  

	
(g)

	
Office Loans.  All right, title and interest in and to all those loans and/or letters of credit set forth in a confidential listing provided by SELLER to BUYER concurrently with the signing of this Agreement, together with such other loans and/or letters of credit that BUYER and SELLER may mutually agree upon prior to the Closing, less any loans that may be removed from the Office Loans by the mutual agreement of BUYER and SELLER, free and clear of any and all liens or encumbrances whatsoever (other than interests of third parties that are subordinate to those of SELLER), and any loans not over thirty (30) days outstanding that are automatically created as the result of an overdraft of a Deposit Account pursuant to an overdraft protection program offered by SELLER ("Overdraft Loans"), except for those Overdraft Loans which are charged to credit card accounts not transferred to the BUYER hereunder.  Such loans shall be referred to herein individually and collectively as the "Office Loans."  BUYER shall have the option, at its sole discretion, to include in the Office Loans any loans originated by the Offices in the markets served by such Offices between the date of this Agreement and the Closing.  The final confidential listing of Office Loans will be provided by SELLER to BUYER as of the Closing;

 

  

3

  

 

	
  

	
(h)

	
Records of the Offices.  All records and documents related to the Assets transferred or liabilities assumed by BUYER as may exist and are available, whether or not physically maintained at the Offices (in whatever form or medium then maintained by SELLER) including, but not limited to, those relating to (i) the Deposit Accounts and (ii) the promissory notes, files and documents and instruments relating to the Office Loans; and

 

	
  

	
(i)

	
Contracts or Agreements.  All of SELLER's right, title and interest in and to the maintenance and service agreements related to the Offices, provided the same are assignable without consent and without cost to BUYER or SELLER, and any other contracts or agreements listed on Schedule D annexed hereto and made a part hereof (the "Assumed Contracts").

 

Any other assets of SELLER not included in the foregoing (a) through (i) shall remain the property of SELLER and shall not be sold or transferred to BUYER pursuant to this Agreement.

 

	 	
1.3 

	
Acceptance and Assumption.Subject to the terms and conditions of this Agreement, on and as of the Closing on the Closing Date, BUYER shall:

 

	
  

	
(a)

	
Assets.  Receive and accept all of the Assets assigned, transferred, conveyed and delivered to BUYER by SELLER pursuant to this Agreement, including those identified in Section 1.2 above;

 

  

4

  

 

	
  

	
(b)

	
Deposit Liabilities.  Assume and thereafter discharge, pay in full and perform all of SELLER's obligations and duties relating to the Deposit Liabilities attributable to the Offices.  The term "Deposit Liabilities" means all of SELLER's obligations, duties and liabilities of every type and character relating to all deposit accounts attributable to the Offices as of the Closing (a preliminary confidential listing of which has been provided by SELLER to BUYER as of the date of this Agreement) other than (i) KEOGH accounts, (ii) deposit accounts securing any loan of SELLER which is not an Office Loan, for which BUYER assumes no liability, (iii) deposits of SELLER employees who are not Transferred Employees (as defined below), and (iv) deposits of current directors of SELLER and its affiliates.  The deposit accounts referred to in the immediately preceding sentence (the "Deposit Accounts") include, without limitation, passbook, statement savings, checking, Money Market and NOW accounts, certificates of deposit and Individual Retirement Accounts ("IRAs") for which SELLER has not received, on or before the Closing Date, the written advice from the account holder of such account holder's objection or failure to accept BUYER as successor.  The "obligations, duties and liabilities" referred to in the definition of Deposit Liabilities include, without limitation, the obligation to pay and otherwise process all Deposit Accounts in accordance with applicable law and their respective contractual terms (including the accrual and payment of interest following the Closing), and the duty to supply all applicable reporting forms for periods following the Closing Date including, without limitation, IRS Form 1099 reports relating to the Deposit Accounts to be filed and provided after the Closing Date relating to interest accrued after the Closing Date;

 

	
  

	
(c)

	
Liabilities Under Leases/Safe Deposit Business.  Assume and thereafter fully and timely perform and discharge, in accordance with their respective terms, all of the liabilities and obligations of SELLER arising after the Closing Date with respect to:

 

	
  

	
(i)

	
the Office Lease, the Assumed Contracts, and any safe deposit leases which are sold, assigned or transferred to BUYER by SELLER pursuant to this Agreement;

 

  

5

  

 

	
  

	
(ii)

	
the safe deposit business of the Offices, including, but not limited to, the maintenance of all necessary facilities for the use of safe deposit boxes by the renters thereof during the periods for which such persons have paid rent therefor in advance to SELLER, subject to the provisions of the applicable leases or other agreements relating to such boxes.  At the Closing, SELLER shall pay to BUYER, in the manner specified in Section 6.4 hereof, the amount of rental payment previously received by SELLER for each such safe deposit box attributable to and prorated to reflect the period from and after the Closing Date; and

 

	
  

	
(iii)

	
all safekeeping items and agreements listed on Schedule E to this Agreement and delivered to BUYER by SELLER pursuant to this Agreement, including, but not limited to, all applicable safekeeping agreements, memoranda, or receipts so delivered to BUYER by SELLER hereunder; and

 

	
  

	
(d)

	
Other Liabilities.  Fully and timely perform and discharge, as the same may be or become due, any Assumed Contracts, the Office Lease, and all additional liabilities and obligations of SELLER as of the date of this Agreement, which are reflected on the books of SELLER as being attributable to an Office as of the close of business on the Closing Date and which are set forth in a listing provided by SELLER at Closing and approved by BUYER.  No additional liabilities and obligations of SELLER shall be incurred subsequent to the date of this Agreement without the prior written consent of BUYER.

 

	 	
1.4 

	
Payment of Funds. Subject to the terms and conditions hereof, at the Closing:

 

	
  

	
(a)

	
Consideration.  SELLER shall pay and transfer to BUYER, in the manner specified in Section 6.4 hereof, funds equal to the aggregate balance of all Deposit Accounts (including interest posted or accrued to such accounts as of the close of business on the Closing Date) as of the close of business on the Closing Date, plus $166,000, less an amount equal to the sum of:

 

	
  

	
(i)

	
the amount of cash on hand at the Offices transferred to BUYER as of the close of business on the Closing Date pursuant to Section 1.2(e); and

 

  

6

  

 

	
  

	
(ii)

	
the book value of the Owned Real Estate as reflected on SELLER's books as of the last day of the month ending immediately prior to the month in which the Closing Date occurs; and

 

	
  

	
(iii)

	
the net aggregate book value as reflected on SELLER's books of the Fixed Assets, as of the last day of the month ending immediately prior to the month in which the Closing Date occurs; and

 

	
  

	
(iv)

	
a premium (the "Premium") of five percent (5%) of the aggregate "Eligible Deposits" (as hereinafter defined) of the Offices as of the close of business on the Closing Date between $70 million and $77 million; provided, however, that if the aggregate Eligible Deposits are less than $70 million, the Premium shall be $3.5 million, and if the aggregate Eligible Deposits exceed $77 million, the Premium shall be $3.85 million. If Eligible Deposits exceed the sum of $77 million as of the Closing, BUYER and SELLER may, by mutual consent, except certain Deposits  from the Acquisition. The term "Eligible Deposits" shall mean the average aggregate principal balance of all Deposit Liabilities of the Offices for a period commencing ten (10) days prior to the Closing Date and ending at the close of business on the Closing Date, and

 

	
  

	
(v)

	
the amount of prepaid expenses described in Section 1.2(f) of this Agreement, prorated as of the close of business on the day immediately preceding the Closing Date; and

 

	
  

	
(vi)

	
the outstanding principal balance of the Office Loans (including Office Loans added between the date of this Agreement and the Closing Date upon the consent of BUYER and any loans substituted or added pursuant to this section, less any loans removed upon the mutual agreement of BUYER and SELLER), together with accrued and unpaid interest thereon and any and all late fees  relating thereto computed as of the close of business on the Closing Date, less any loan loss reserves for such Office Loans set forth on the confidential listing provided pursuant to Section 1.2(g), which shall be updated as of the Closing Date.  The aggregate principal balance of the Office Loans, prior to any reductions for agreed upon loan loss reserves, shall total $8.5 million.  In the event the aggregate principal balance of the Office Loans as required in the preceding sentence does not total $8.5 million, SELLER shall have the right to add or substitute other loans to increase the principal amount to the required level, which loans shall be subject to the reasonable approval of BUYER.

 

  

7

  

 

The sum of the foregoing items (i) through (vi) above is the "Acquisition Consideration."  In the event that the Acquisition Consideration exceeds the aggregate amount to be transferred by SELLER pursuant to the first paragraph of this Section 1.4(a), the full amount of such excess shall constitute an amount due from BUYER to SELLER, and shall be paid to SELLER at the Closing in the manner specified in Section 6.4 hereof.  The parties shall execute a Preliminary Settlement Statement at the Closing and a Final Settlement Statement post-Closing in accordance with section 6.4 hereof, in a form mutually agreed upon by the parties.

 

	
  

	
(b)

	
Reimbursement and Proration of Certain Expenses.  All other expenses (i) due and payable at times after the Closing Date for periods prior to the close of business on the Closing Date or (ii) paid prior to the close of business on the Closing Date for periods following the Closing Date, including the prepaid expenses described in Section 1.2(f) hereof and deferred expenses described in Section 1.3(d) hereof, including, without limitation, real estate taxes and assessments which are a lien but not yet due and payable, utility payments, payments due on leases assigned, payments due on assigned service and maintenance contracts and similar expenses relating to the Offices, shall be prorated between SELLER and BUYER as of the close of business on the day immediately preceding the Closing Date; provided, however, that all real estate taxes and assessments, to the extent payable by SELLER and/or BUYER, shall be prorated at the Closing on the basis of the most recently certified real estate taxes and assessments, and all utility payments and lease payments shall be prorated on the basis of the best information available at Closing.  Any security deposits relating to the Leased Real Estate shall be credited to the SELLER at Closing.  With respect to premiums paid to the Federal Deposit Insurance Corporation ("FDIC") for deposit insurance for the Deposit Liabilities, the proration of FDIC insurance premiums will be based on the amount of the Deposit Liabilities as of the close of business on the Closing Date and the number of days during any period for which SELLER has prepaid premiums to the FDIC but during which BUYER has held or will hold the Deposit Liabilities.  Any credits to the SELLER at Closing will be debited from the amount to be paid in the first paragraph of Section 1.4(a), and any credits to BUYER shall be added to such amount.  For prorations, if any, which cannot be reasonably calculated as of the Closing, a post-closing adjustment shall be made in the manner specified in Section 6.4 hereof.

 

  

8

  

 

	
  

	
(c)

	
Expenses Relating to Real Property and other Assets.  The transfer (or conveyance) fees relating to the Owned Real Estate and the costs, fees and expenses of all title commitments, title guaranties and title examinations relating to the procurement of the Title Commitments related to the Owned Real Estate and the Leased Real Estate referred to in Sections 2.1(b) and 5.2(f) herein, shall be allocated to, and shall be borne, solely and exclusively by SELLER.  The costs, fees and expenses relating to the premiums, including any endorsements for extended coverage, for all title insurance policies (net of the costs of all title commitments, guaranties and examinations), recording costs and other similar costs, fees and expenses, if any, relating to the sale and transfer of the Owned Real Estate or the transfer of SELLER's interest in the Leased Real Estate including, but not limited to, any conveyance fees, taxes, recording costs and other similar fees and expenses relating to the sale and transfer of any other Assets, shall be allocated to, and shall likewise be borne, solely and exclusively, by SELLER.  To the extent BUYER requests SELLER or its attorneys to seek certain title endorsements or removal of exceptions noted on the title commitments, BUYER shall reimburse SELLER at Closing for its attorney fees related thereto.  In no event shall SELLER be required to undertake any negotiations with the title insurance companies for any matters that relate to the scope of title insurance coverage or the Permitted Exceptions.  As provided in Section 6.4, BUYER shall be credited at the Closing for all the costs, fees and expenses allocated to SELLER pursuant to this Section 1.4(c) but paid by BUYER, and BUYER shall be credited at the Closing for all of the costs, fees and expenses allocated to BUYER pursuant to this Section 1.4(c) but paid by SELLER.  If this transaction does not close by virtue of a breach of this Agreement, the breaching party shall be responsible for and shall, as appropriate, reimburse the other party for its expenses set forth in this Section 1.4(c).  If this transaction does not close for any other reason, each party shall reimburse the other party upon termination of this Agreement for such party's share of expenses pursuant to this Section 1.4(c) so that each party shall pay the same share of expenses as it would have paid at Closing.

 

  

9

  

 

	
  

	
(d)

	
Insurance Premium Refunds.  With respect to the Insured Office Loans as defined in Section 7.2(j) herein, SELLER shall provide a credit to BUYER in a sum equal to the unearned premiums relating to the Insured Office Loans to compensate BUYER, in advance, for estimated refunds otherwise payable to SELLER in conjunction with future payoffs of such Insured Office Loans prior to maturity (the "Premium Settlement Payment" herein).  Such Premium Settlement Payment shall be calculated as of the Closing Date and shall appear as a credit to BUYER in the Final Settlement Statement referenced in Section 6.4 herein.

 

 

  

10

  

 

	
2.

	
CONDUCT OF THE PARTIES PRIOR TO CLOSING.

 

	 	
2.1 

	
Covenants of SELLER.   SELLER hereby covenants to BUYER that, from the date hereof until the Closing:

 

	
  

	
(a)

	
Operation of the Offices.  SELLER shall continue to operate the Offices in a manner substantially equivalent to that employed immediately prior to the date of this Agreement.

 

Notwithstanding the foregoing, between the date of this Agreement and the Closing Date, except as may be required to obtain the required authorizations referred to in Section 2.3 of this Agreement and except as may be otherwise required by a regulatory authority, SELLER shall not, without the prior consent of BUYER:

 

	
  

	
(i)

	
permit any Office to engage or participate in any transaction or incur or sustain any obligation except in the ordinary course of business;

 

	
  

	
(ii)

	
permit any Office to transfer to SELLER's other operations any Assets, except for (A) supplies, if any, which have unique function in the business of SELLER and its affiliates and ordinarily would not be useful to BUYER, (B) cash and other normal intrabank transfers which may be transferred in the ordinary course of business in accordance with normal banking practices, (C) any current loans not included as Office Loans, and (D) any loans originated by the Offices in the markets served by them after the date hereof and prior to the Closing that are not included as Office Loans;

 

	
  

	
(iii)

	
permit the Offices to transfer to SELLER's other operations any Deposit Liabilities other than (A) Deposits Liabilities securing loans made by SELLER which are not Office Loans, (B) Deposit Liabilities owned in whole or in part by employees of SELLER who are not Transferred Employees, or (C) Deposit Liabilities of current directors of SELLER or its affiliates, except in the ordinary course of business at the unsolicited request of depositors, or cause any of SELLER's other operations to transfer to the Offices any Deposit Liabilities, except in the ordinary course of business at the unsolicited request of depositors; provided, however, that SELLER shall be permitted to make such transfers of any Deposit Liabilities to or from the Offices as are in the normal course of business;

 

  

11

  

 

	
  

	
(iv)

	
invest in any Fixed Assets on behalf of any Office, except for commitments made on or before the date of this Agreement which are disclosed to BUYER on Schedule C of this Agreement and for replacements of furniture, furnishings and equipment and normal maintenance and refurbishing purchased or made in the ordinary course of business;

 

	
  

	
(v)

	
enter into or amend any continuing contract (other than those related to Deposit Liabilities, safe deposit agreements, and loans which are not included as Office Loans), which cannot be terminated without cause and without payment of any amounts as a penalty, bonus, premium or other compensation for termination;

 

	
  

	
(vi)

	
make any change to its customary policies for setting rates on deposits offered at the Offices.

 

  

12

  

 

	
  

	
(b)

	
Title Commitments for Real Estate.  SELLER shall deliver to BUYER, at SELLER' s expense, with respect to the Owned Real Estate and Leased Real Estate, no later than thirty (30) days after the date of this Agreement, a commitment or commitments (the "Title Commitments"), having an effective date as near as practicable to the date of delivery of such Title Commitments, from a title insurance company designated by SELLER and reasonably satisfactory to BUYER, to issue to BUYER as soon as practicable after the Closing Date, as applicable, an American Land Title Association ("ALTA") owners (Form B, 1970, Rev 1984) and/or a leasehold title insurance (1975 Form) policy having an effective date as of the Closing Date, covering the Owned Real Estate and the Leased Real Estate, in an amount equal to the book value for the Owned Real Estate as reflected on SELLER's books as of the end of the month immediately preceding the month in which the Closing occurs, and the amount of the leasehold interest, based on the remaining rental payments due under the balance of the remaining term of the lease to be transferred to BUYER pursuant to the Office Lease, subject to the exceptions specified in the Title Commitments.  If title to all or part of the Owned Real Estate or Lease Real Estate is unmarketable or is subject to any defect, lien, encumbrance, easement, condition, restriction or encroachment other than the Permitted Exceptions (as defined below), then BUYER shall provide written notice thereof to SELLER.  SELLER shall have thirty (30) days after written notice thereof from BUYER, to elect to remedy or remove any such defect, lien, encumbrance, easement, condition, restriction or encroachment but, if SELLER does not, BUYER may elect to attempt to cure or remove such defect or encumbrance or other matter, for a period of thirty (30) days thereafter.  If such defect or encumbrance or other matter is not cured after such thirty (30) day period, in addition to any other rights which BUYER may have hereunder,  BUYER shall have the right to (i) terminate this Agreement by written notice to SELLER, (ii) negotiate, at BUYER'S cost, with the title company for certain endorsements to the standard insurance coverage to address any such defects or encumbrances, or (iii) waive any objection to such defect or encumbrance or other matter in which event such defect, encumbrance, or other matter shall be deemed to be a Permitted Exception.  The Owned Real Estate is being sold by SELLER to BUYER hereunder free and clear of all liens, claims, encumbrances and rights of tenants in possession except for the Permitted Exceptions, and the conveyance by limited warranty deed to be delivered by SELLER pursuant hereto shall be subject only to the Permitted Exceptions.  SELLER also shall execute and deliver to BUYER at the time of Closing such affidavits and other instruments, if any, as the title insurance company issuing the Title Commitments may reasonably require to delete any inapplicable standard exceptions appearing as "Schedule B" items in a standard ALTA owners or leasehold owners title insurance policy, other than those which may only be deleted by a survey.  SELLER also shall execute and deliver a so-called "FIRPTA" affidavit at Closing.

 

  

13

  

 

	
  

	
(c)

	
Required Authorizations.  SELLER shall obtain and procure all necessary internal corporate and other approvals and authorizations, if any, required by SELLER to enable it to fully perform all obligations imposed on it hereunder which must be performed by it at or prior to the Closing.

 

	
  

	
(d)

	
Creation of Liens and Encumbrances.  With respect to the Owned Real Estate, SELLER shall not create or allow any liens, imperfections in title, charges, easements, restrictions or encumbrances other than the Permitted Exceptions.

 

	
  

	
(e)

	
Condemnation.  If prior to Closing all or any portion of the Owned Real Estate or Leased Real Estate is taken or is made subject to eminent domain or other governmental acquisition proceedings, then SELLER shall promptly notify BUYER thereof, and BUYER may either complete the Closing and receive the proceeds paid or payable on account of such acquisition proceedings (which, if received prior to Closing, shall be paid by SELLER to BUYER at Closing), or terminate this Agreement. If BUYER terminates this Agreement, both parties shall thereupon be relieved from all further obligations hereunder, except as may otherwise be expressly provided.

 

	
  

	
(f)

	
Insurance Proceeds and Casualty Payments.  SELLER shall maintain adequate insurance on all the Owned Real Estate, Leased Real Estate and Fixed Assets.  In the event of any damage or destruction affecting such Assets between the date hereof and the time of the Closing, SELLER shall deliver to BUYER at the Closing any such insurance proceeds received by SELLER as a result thereof (adding into such amount the amount of any deductible), to the extent of the applicable amount in Section 1.4(a)(ii) with respect to Owned Real Estate and to the extent of the amount set forth in Section 1.4(a)(iii) with respect to the Fixed Assets, as the case may be, unless SELLER has repaired or replaced the damaged or destroyed property.

 

  

14

  

 

	
  

	
(g)

	
IRAs.  Not later than thirty (30) days prior to the expected Closing Date, SELLER shall, at SELLER's expense, mail notice of SELLER's resignation as Custodian and the appointment of BUYER as the Successor Custodian, effective upon Closing, of each IRA maintained at the Offices.  The notice shall include such other information that is mutually agreed upon by SELLER and BUYER.

 

	
  

	
(h)

	
Assignment of Office Lease.  SELLER shall obtain (i) any written consent of any such landlord as shall be necessary for the effective assignment of the Office Lease and the assumption thereof by BUYER as of the Closing Date, and (ii) any consent necessary to assign or transfer to BUYER, or substitute BUYER as landlord under, the lease by which a third-party leases space in the Owned Real Estate, each in form and content reasonably satisfactory to BUYER, it being understood that, in the case of the foregoing (i) and (ii), that the assignment of said leases in their current form or without material changes shall be satisfactory to BUYER.  In the event any such necessary assignment is not obtained, or other arrangements reasonably satisfactory to BUYER are not made, by the Closing, BUYER may, upon written notice to SELLER, terminate this Agreement.  The assignment and assumption by BUYER of the Office Lease shall be in a form mutually agreed upon by the parties and reasonably acceptable to the Lessor under such Office Lease.

 

	
  

	
(i)

	
SELLER shall permit representatives of BUYER to attend such meetings of SELLER with regard to the Offices and business of the Offices as BUYER may reasonably request, to review such books and records of SELLER as may reasonably be relevant to the transactions contemplated hereby, and to consult with SELLER with regard to any Office Loans.

 

  

15

  

 

	
  

	
(j)

	
SELLER shall make available to BUYER the opportunity to include in the Office Loans, at BUYER’s sole discretion, any new loans originated at the Offices in the markets served by them between the date hereof and the Closing Date.

 

	
  

	
(k)

	
SELLER shall provide to BUYER copies of any blueprints and schematic drawings it may have in its possession for the Owned Real Estate.

 

	 	
2.2 

	
Covenants of BUYER. BUYER hereby covenants to SELLER that, from the date hereof until the Closing:

 

	
  

	
(a)

	
Regulatory Applications.  BUYER shall prepare and submit for filing, at no expense to SELLER, any and all applications, filings, and registrations with, and notifications to, all federal and state authorities required on the part of BUYER or any affiliate of BUYER for the Acquisition to be consummated on the terms set forth herein and for BUYER to operate the Offices following the Closing.  BUYER shall provide SELLER with a draft copy of each application, filing, registration, and notification for SELLER's approval prior to filing, which approval by SELLER will not be unreasonably withheld or delayed.  Such applications will be submitted to SELLER in draft form within thirty (30) days from the date of this Agreement and filed by BUYER without delay following SELLER's approval of such applications; provided, however, that in no event will such applications be filed later than sixty (60) days from the date of this Agreement.  Thereafter, BUYER shall pursue all such applications, filings, registrations, and notifications diligently and in good faith, and shall file such supplements, amendments, and additional information in connection therewith as may be reasonably necessary for the Acquisition to be consummated on the terms set forth herein and for BUYER to operate the Offices following the Closing.  BUYER shall deliver to SELLER evidence of the filing of each and all of such applications, filings, registrations and notifications (except for any confidential portions thereof), and any supplement, amendment or item of additional information in connection therewith (except for any confidential portions thereof).  BUYER shall also deliver to SELLER a copy of each material notice, order, opinion and other item of correspondence received by BUYER from such federal and state authorities (except for any confidential portions thereof) and shall advise SELLER, at SELLER's request, of developments and progress with respect to such matters.

 

  

16

  

 

	
  

	
(b)

	
Required Authorizations.  BUYER shall obtain and procure all necessary corporate and other approvals and authorizations, if any, required on its part to enable it to fully perform all obligations imposed on it hereunder which must be performed by it at or prior to the Closing.

 

	
  

	
(c)

	
Satisfaction of Conditions.  BUYER shall not voluntarily undertake any course of action inconsistent with the satisfaction of the requirements or the conditions applicable to it, or its agreements, undertakings, obligations, or covenants set forth in this Agreement, and it shall promptly do all such reasonable acts and take all such reasonable measures as may be appropriate to enable it to perform as early as possible the agreements, undertakings, obligations, and covenants herein provided to be performed by it, and to enable the conditions precedent to SELLER's obligations to consummate the Closing of the Acquisition to be fully satisfied.  Additionally, BUYER shall not knowingly, directly or through any existing or future subsidiary or affiliate, take any action that would be in conflict with, or result in the denial, delay, termination, or withdrawal of, any of the regulatory approvals referred to in this Agreement.

 

	
  

	
(d)

	
Cooperation Regarding Leased Real Estate.  BUYER shall, at SELLER's request in connection with SELLER's obtaining the consents specified in Section 2.1(h), advise, in writing, the lessor of Leased Real Estate, of BUYER's intent to assume and comply with the terms of the Office Lease (as to matters arising from and after the Closing Date) and provide to such lessor with any financial or other information reasonably requested in connection therewith.

 

  

17

  

 

	 	
2.3 

	
Covenants of All Parties. SELLER hereby covenants to BUYER, and BUYER hereby covenants to SELLER that, from the date hereof until the Closing, such party shall cooperate fully with the other party in attempting to obtain all consents, approvals, permits, or authorizations which are required to be obtained pursuant to any federal or state law, or any federal or state regulation thereunder, for or in connection with the transactions described and contemplated in this Agreement.

 

	
3.

	
REPRESENTATIONS AND WARRANTIES.

 

	 	
3.1 

	
Representations and Warranties of SELLER. SELLER represents and warrants to BUYER as follows:

 

	
  

	
(a)

	
Good Standing and Power of SELLER.  SELLER is a banking association validly existing under the laws of the United States with corporate power to own its properties and to carry on its business as presently conducted.  SELLER is an "insured bank" as defined in the Federal Deposit Insurance Act.

 

	
  

	
(b)

	
Authorization of Agreement.  The execution and delivery of this Agreement, and the transactions contemplated hereby, have been duly authorized by all necessary corporate action and shareholder action (if any) on the part of SELLER, and this Agreement is a valid and binding obligation of SELLER, subject to the application of applicable bankruptcy, insolvency or other laws affecting creditors' rights generally.

 

	
  

	
(c)

	
Effective Agreement.  Subject to the receipt of any and all necessary regulatory approvals and required consents, the execution, delivery, and performance of this Agreement by SELLER and the consummation of the transactions contemplated hereby, will not conflict with, result in the breach of, constitute a violation or default, result in the acceleration of payment or other obligations, or create a lien, charge or encumbrance, under any of the provisions of Articles of Association or By-Laws of SELLER, under any judgment, decree or order, under any law, rule, or regulation of any government or agency thereof, or under any material contract, material agreement or material instrument to which SELLER is subject, where such conflict, breach, violation, default, acceleration or lien would have a material adverse effect on the Assets or SELLER's ability to perform its obligations hereunder.

 

  

18

  

 

	
  

	
(d)

	
Title to Real Estate And Other Assets.  SELLER or an affiliate is the sole owner of each of the Assets (other than the Leased Real Estate and the Owned Real Estate) free and clear of any mortgage, lien, encumbrance or restrictions of any kind or nature.  As to the Owned Real Estate, SELLER or an affiliate is the sole owner of a fee simple interest in, and has good and marketable title to, such Owned Real Estate, free and clear of all  liens, claims, encumbrances and rights of tenants in possession except for the Permitted Exceptions.  SELLER or an affiliate has a valid leasehold interest in the Leased Real Estate pursuant, and subject to, the Office Lease and has the use of the Leased Real Estate pursuant to the Office Lease.

 

	
  

	
(e)

	
Zoning Variations.  As of the date of this Agreement, SELLER has no knowledge of receipt of any written notice from any governmental authority of any uncorrected violations of zoning and/or building codes relating to the Owned Real Estate or Leased Real Estate, or knowledge of the intention of any such authority to provide such notice.

 

	
  

	
(f)

	
Condemnation Proceedings.  SELLER has received no written notice of any pending or threatened, nor is it aware of any contemplated, condemnation proceeding affecting or relating to the Offices.

 

	
  

	
(g)

	
Taxes.  All federal, state and local payroll, withholding, property, sales, use and transfer taxes, if any, which are due and payable by SELLER relating to the Offices prior to the date of Closing shall be paid in full as of the Closing Date or SELLER shall have made appropriate provision for such payment in accordance with ordinary business practices.  Any claims for refunds of taxes which have been paid by SELLER shall remain the property of SELLER.

 

  

19

  

 

	
  

	
(h)

	
Operations Lawful.  To the knowledge of SELLER, the conduct of banking business at the Offices is in compliance in all material respects with all federal, state, county and municipal laws, ordinances and regulations applicable to conduct of such business.

 

	
  

	
(i)

	
Third-Party Claims.  There are no actions, suits or proceedings, pending or, to SELLER's knowledge, threatened against or affecting SELLER which, if determined adversely to SELLER, could have a material adverse effect on the aggregate value of the banking business and Assets of the Offices.

 

	
  

	
(j)

	
Insurance.  SELLER maintains such insurance on the Offices and the Fixed Assets as may be required or as is customary in the business of banking.

 

	
  

	
(k)

	
Labor Relations.  No employee located at any of the Offices is represented, for purposes of collective bargaining, by a labor organization of any type.  SELLER has no knowledge of any efforts during the past three years to unionize or organize any employees at any Office, and no material claim related to employees at the Offices under the Fair Labor Standards Act, National Labor Relations Act, Civil Rights of 1964, Walsh-Healy Act, Davis Bacon Act, Civil Rights of Act of 1866, Age Discrimination in Employment Act, Equal Pay Act of 1963, Executive Order No. 11246, Federal Unemployment Tax Act, Vietnam Era Veterans Readjustment Act, Occupational Safety and Health Act, Americans with Disabilities Act or any state or local employment related law, order, ordinance or regulation, no unfair labor practice, discrimination or wage-and-hour claim is pending or, to the best of SELLER's knowledge, threatened against or with respect to SELLER.

 

  

20

  

 

	
  

	
(l)

	
Governmental Notices.  SELLER has not received notice from any federal or state governmental agency indicating that it would oppose or not approve, if required, the transactions contemplated by this Agreement.

 

	
  

	
(m)

	
Environmental.  There are no actions, proceedings or investigations pending before any environmental regulatory body, federal or state court with respect to or threatened against or affecting SELLER in respect of any Office under any Environmental Law (as defined in Section 7.5) and in connection with any release of any Hazardous Substance (as defined in Section 7.5) nor, to the best knowledge e of the executive officers of SELLER, is there any reasonable basis for the institution of any such actions or proceedings or investigations which is probable of assertion, nor are there any such actions or proceedings or investigations in which SELLER is a plaintiff or complainant.  To the knowledge of SELLER, SELLER is not responsible in any material respect under any applicable Environmental Law for any release by SELLER or for any release by any other person at or in the vicinity of any Office of a Hazardous Substance caused by the spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of Hazardous Substances into the environment, nor is SELLER responsible for any material costs (as a result of the acts or omissions of SELLER, or, to the actual knowledge of the executive officers of SELLER, as a result of the acts or omissions of any other person) of any remedial action including, without limitation, costs arising out of security fencing, alternative water supplies, temporary evacuation and housing and other emergency assistance undertaken by any environmental regulatory body having jurisdiction over SELLER to prevent or minimize any actual or threatened release by SELLER on premises of any Hazardous Substances into the environment which would endanger the public health or the environment.

 

	
  

	
(n)

	
Access to Real Estate.  To SELLER's knowledge, no fact or condition exists which would result in the termination or impairment of access to the Owned Real Estate from adjoining public or private streets or ways or which could result in discontinuation of necessary sewer, water, electric, gas, telephone, or other utilities or services, and sewage, sanitation, plumbing, refuse disposal, and similar facilities servicing the Owned Real Estate are in material compliance with applicable governmental regulations.

 

  

21

  

 

	
  

	
(o)

	
Mechanic's Liens.  SELLER has paid or will pay in full prior to Closing all bills and invoices for labor and material of any kind arising from the ownership, operation, management, repair, maintenance, or leasing as tenant of the Owned Real Estate and the Leased Real Estate, and no actual or potential mechanic's lien or other claims are outstanding or available to any party in connection with the ownership, operation, management, repair, maintenance, or leasing as tenant of said properties.

 

	
  

	
(p)

	
Personal Property.  Schedule C is a preliminary listing of Fixed Assets owned by SELLER and located at the Offices.  A final listing of Fixed Assets will be provided to BUYER by SELLER prior to the Closing Date.

 

	
  

	
(q)

	
Assumed Contracts and Office Lease.  Schedule D is a true and accurate schedule of all Assumed Contracts related to the Offices.  Each Assumed Contract is valid and subsisting and in full force and effect in accordance with its terms and SELLER has no knowledge of any actual or threatened breach or threatened termination of any such Assumed Contract or claims or defenses thereto by the other party(ies) thereto.

 

	 	
(r)

	
Office Loans. SELLER is the sole owner of each Office Loan and no Office Loan is subject to any lien, pledge or encumbrance superior to the rights of SELLER in such loan, other than liens for taxes which are not yet due and payable. No consents of any third-parties are required for transfer of the Office Loans to BUYER as provided in this Agreement. As of the date hereof the Office Loans are not, and as of the Closing will not be, past due more than ninety (90) days in accordance with their respective terms or on non-accrual status on the books of SELLER.  SELLER has provided BUYER with the current classification of each Office Loan as of the date hereof (corresponding to asset classifications by the Office of the Comptroller of the Currency).  As to each Office Loan, such loan is adequately documented, is enforceable in accordance with its terms, SELLER has no knowledge of any claims, defenses, or set-off rights by any third parties with respect thereto, including borrowers, and SELLER has an enforceable security interest in collateral where applicable.

 

  

22

  

 

	 	
3.2 

	
Representations and Warranties of BUYER. BUYER represents and warrants to SELLER as follows:

 

	
  

	
(a)

	
Good Standing and Power of BUYER.  BUYER is a banking corporation  validly existing and in good standing under the laws of the State of Ohio with corporate power to own its properties and to carry on its business as presently conducted.  BUYER is an "insured bank" as defined in the Federal Deposit Insurance Act.

 

	
  

	
(b)

	
Authorization of Agreement.  The execution and delivery of this Agreement, and the transactions contemplated hereby, have been duly authorized by all necessary corporate action on the part of BUYER, and this Agreement is a valid and binding obligation of BUYER, subject to the application of applicable bankruptcy, insolvency or other laws affecting creditors’ rights generally.

 

	
  

	
(c)

	
Effective Agreement.  Subject to the receipt of any and all necessary regulatory approvals, the execution, delivery, and performance of this Agreement by BUYER, and the consummation of the transactions contemplated hereby, will not conflict with, result in the breach of, constitute a violation or default, result in the acceleration of payment or other obligations, or create a lien, charge or encumbrance, under any of the provisions of the Articles of Incorporation, Code of Regulations or other governing documents of BUYER, under any judgment, decree or order, under any law, rule or regulation of any government or agency thereof, or under any material agreement, material contract or material instrument to which BUYER is subject, where such conflict, breach, violation, default, acceleration or lien would have a material adverse effect on BUYER's ability to perform its obligations hereunder.

 

  

23

  

 

	
  

	
(d)

	
Governmental Notices.  BUYER has not received notice from any federal or state governmental agency indicating that it would oppose or not approve, if required, the transactions contemplated by this Agreement and has no reason to believe any such agency may oppose or not approve the Acquisition.

 

	
4.

	
ACTIONS RESPECTING EMPLOYEES AND PENSIONS AND EMPLOYEE BENEFIT PLANS.

 

	 	
4.1 

	
Employment of Employees.

 

	
  

	
(a)

	
BUYER shall extend offers of employment, to be effective as of the Closing Date, to such employees of the Offices as it may, at its sole discretion, select, and shall provide SELLER with a listing of same not less than fifteen (15) calendar days prior to the Closing Date. Employees accepting employment with BUYER are referred to as the "Transferred Employees".  Nothing contained in this Agreement shall create any rights in any third parties, including but not limited to SELLER employees, or restrict or prohibit BUYER and any Transferred Employee from entering into an agreement satisfactory to both Buyer and the Transferred Employee.

 

	
  

	
(b)

	
SELLER will cooperate with BUYER, to the extent reasonably requested and legally permissible, to provide BUYER with information about the employees of the Offices including, without limitation, providing BUYER with the personnel files of those employees of the Offices who provide SELLER with their written consent thereto, and a means to meet with the subject employees.  SELLER's managerial and supervisory employees will not participate in any way in the hiring decisions of BUYER.

 

	 	
4.2 

	
Terms and Conditions of Employment. Except as otherwise provided explicitly in this Agreement, the terms of employment for each Transferred Employee shall be determined solely by BUYER' s policies, procedures, and programs; provided, however, that BUYER agrees that each Transferred Employee shall be provided employment subject to the following terms and conditions:

 

  

24

  

 

	
  

	
(a)

	
Except as otherwise specifically provided herein, Transferred Employees shall be provided employee benefits that are no less favorable in the aggregate than those provided to similarly situated employees of BUYER.  BUYER shall provide such Transferred Employees with credit for the Transferred Employee's period of service with SELLER (including any service credited from predecessors by merger or acquisition to SELLER) towards the calculation of eligibility and vesting for such purposes as vacation, sick days, personal days, severance and other benefits, and participation and vesting in BUYER's qualified pension and/or profit sharing 401(k) plans, as such plans may exist (but not for purposes of funding of accrued pension or profit sharing plans for such Transferred Employees with respect to any period prior to the Closing Date).

 

	
  

	
(b)

	
Each Transferred Employee shall be eligible to participate in the medical, dental, or other welfare plans of BUYER, as such plans may exist, on and after the Closing Date, and any pre-existing conditions provisions of such plans shall be waived with respect to any such Transferred Employees.

 

	
  

	
(c)

	
Except as provided herein, SELLER shall pay, discharge, and be responsible for (i) all salary and wages arising out of employment of the Transferred Employees through the Closing Date, and (ii) any employee benefits arising under SELLER's employee benefit plans and employee programs prior to the Closing Date including but not limited to benefits with respect to claims incurred prior to the Closing Date but reported after the Closing Date and benefits inuring to any employees who may have been on leave prior to the Closing Date.  BUYER shall pay, discharge, and be responsible for (i) all salary and wages arising out of employment of the Transferred Employees after the Closing Date, and (ii) any employee benefits arising under BUYER's employee benefit plans and employee programs after the Closing Date.  From and after the Closing Date, Transferred Employees shall be considered "at will " employees of BUYER and BUYER shall pay, discharge, and be responsible for all salary, wages, and benefits arising out of or relating to the employment of the Transferred Employees by BUYER from and after the Closing Date, including, without limitation, all claims for welfare benefits plans incurred on or after the Closing Date.  To the extent permitted under BUYER's applicable 401(k) plan, SELLER and BUYER shall cooperate in arranging for the transfer to BUYER's 401(k) plan, as soon as practicable after the Closing Date and in a manner that satisfies Sections 414(1) and 411(d)(6) of the Internal Revenue Code, as amended, of those accounts held under SELLER's 401(k) plan on behalf of Transferred Employees.

 

  

25

  

 

	 	
4.3 

	
Compliance with Law. SELLER agrees that it shall comply with any and all applicable requirements, if any, under the Worker Adjustment and Retraining Notification Act in connection with the transaction contemplated by this Agreement. SELLER hereby agrees to indemnify and to hold BUYER harmless from and against any and all liability, loss, cost, and expense, however arising, as a result of the failure of SELLER to comply with its obligations as set forth in this section.

 

	 	
4.4 

	
Actions to be Taken by SELLER. SELLER covenants to BUYER that it will do or cause the following to occur:

 

	
  

	
(a)

	
Employee Benefit Programs.  From the date hereof through the Closing Date, SELLER's obligations to employees of the Offices, including Transferred Employees, will be as set forth in established policies of SELLER, and SELLER shall continue its employee benefit programs in full force and effect.  After the Closing, SELLER shall retain the responsibility and liability for the funding and payment of all claims incurred under such employee benefit programs through the Closing Date.  BUYER shall have no obligation or liability to compensate Transferred Employees for benefits of any kind earned, accrued, promised and/or provided to Transferred Employees as employees of SELLER, except with respect to eligibility and vesting as set forth in Section 4.2 above.

 

  

26

  

 

	
  

	
(b)

	
Employees of the Offices.  From the date of this Agreement through the Closing, SELLER shall not, without BUYER's prior written consent (i) hire any new employee of any Office or increase the aggregate full-time equivalent size of the work force at the Offices above the aggregate normal staffing levels designated by SELLER for the Offices at the date hereof, (ii) terminate any employee of the Offices, unless such person is terminated for cause as determined at the sole discretion of SELLER or otherwise pursuant to existing SELLER policies or procedures, (iii) increase the compensation of any Transferred Employee except pursuant to existing SELLER policies and procedures, (iv) promote any employee of the Offices except pursuant to existing SELLER policies and procedures or (v) transfer or reassign any employee of the Offices (other than a transfer of any employee who is not a Transferred Employee, which shall be in SELLER’s sole discretion).

 

The obligations of SELLER and BUYER pursuant to Sections 4.1 through 4.4 shall survive the Closing.

 

	
5.

	
CONDITIONS PRECEDENT TO CLOSING.

 

	 	
5.1 

	
Conditions to SELLER's Obligations. The obligations of SELLER to consummate the Acquisition are subject to the satisfaction, or the waiver in writing by SELLER to the extent permitted by applicable law, of the following conditions at or prior to the Closing:

 

	
  

	
(a)

	
Prior Regulatory Approval.  All filings and registrations with, and notifications to, all federal and state authorities required for consummation of the Acquisition shall have been made, all approvals and authorizations of all federal and state authorities required for consummation of the Acquisition shall have been received and shall be in full force and effect, and all applicable waiting periods shall have expired.

 

  

27

  

 

	
  

	
(b)

	
Corporate Action.  The Board of Directors of BUYER shall have taken all corporate action necessary by it to effectuate this Agreement and the Acquisition and BUYER shall have furnished SELLER with a certified copy of each such resolution adopted by the Board of Directors of BUYER evidencing the same.

 

	
  

	
(c)

	
Representations and Warranties.  The representations and warranties of BUYER set forth in this Agreement shall be true and correct in all material respects on the Closing Date with the same effect as though all such representations and warranties had been made on and as of such date, and BUYER shall have delivered to SELLER a Certificate to that effect, dated as of the Closing Date in a form reasonably acceptable to SELLER.

 

	
  

	
(d)

	
Covenants.  Each and all of the covenants and agreements of BUYER to be performed or complied with at or prior to Closing pursuant to this Agreement shall have been duly performed or complied with in all material respects by BUYER, or waived by SELLER, and BUYER shall have delivered to SELLER a Certificate to that effect, dated as of the Closing Date in a form reasonably acceptable to SELLER.

 

	
  

	
(e)

	
No Proceeding or Prohibition.  At the time of the Closing, there shall not be any litigation, investigation, inquiry, or proceeding pending or threatened in or by any court or agency of any government or by any third party which in the judgment of the executive officers of SELLER, with the advice of counsel, presents a bona fide claim to restrain, enjoin, or prohibit consummation of the transaction contemplated by this Agreement or which might result in rescission in connection with such transactions; and SELLER shall have been furnished with a Certificate, in a form reasonably acceptable to SELLER, dated as of the Closing Date and signed by the Chairman, President, or such other officer as may be duly authorized by the Board of Directors of BUYER, to the effect that no such litigation, investigation, inquiry, or proceeding is pending or, to the best of their knowledge, threatened.

 

  

28

  

 

	
  

	
(f)

	
SELLER shall have received, in form and substance reasonably satisfactory to SELLER, all consents, approvals or waivers of third parties (other than regulatory approvals and consents and approvals related to the Owned Real Property and Leased Real Property), the failure of which to receive would materially adversely affect the economic or business benefits of the Acquisition to SELLER.

 

	 	
5.2 

	
Conditions to BUYER's Obligations. The obligations of BUYER to consummate the Acquisition are subject to the satisfaction, or the waiver in writing by BUYER to the extent permitted by applicable law, of the following conditions at or prior to the Closing:

 

	
  

	
(a)

	
Prior Regulatory Approval.  All filings and registrations with, and notifications to, all federal and state authorities required for consummation of the Acquisition and operation of the Offices by BUYER shall have been made, all approvals and authorizations of all federal and state authorities required for consummation of the Acquisition and operation of the Offices by BUYER shall have been received and shall be in full force and effect,  with terms satisfactory to BUYER, and all applicable waiting periods shall have expired.

 

	
  

	
(b)

	
Corporate Action.  The Board of Directors of SELLER shall have taken all corporate action necessary to effectuate this Agreement and the Acquisition and SELLER shall have furnished BUYER with a certified copy of each such resolution adopted by the Board of Directors of SELLER evidencing the same.

 

	
  

	
(c)

	
Representations and Warranties.  The representations and warranties of SELLER set forth in this Agreement shall be true and correct in all material respects on the Closing Date with the same effect as though all such representations and warranties had been made on and as of such date (unless a different date is specifically indicated in such representations and warranties), and SELLER shall have delivered to BUYER a Certificate to that effect, dated as of the Closing Date in a form reasonably acceptable to BUYER.

 

  

29

  

 

	
  

	
(d)

	
Covenants.  Each and all of the covenants and agreements of SELLER to be performed or complied with pursuant to this Agreement shall have been duly performed or complied with in all material respects by SELLER, or waived by BUYER, and SELLER shall have delivered to BUYER a Certificate to that effect, dated as of the Closing Date in a form reasonably acceptable to BUYER.

 

	
  

	
(e)

	
No Proceedings or Prohibitions.  At the time of the Closing, there shall not be any litigation, investigation, inquiry, or proceeding pending or threatened in or by any court or agency of any government or by any third party which in the judgment of the executive officers of BUYER, with the advice of counsel, presents a bona fide claim to restrain, enjoin, or prohibit consummation of the transactions contemplated by this Agreement or which might result in rescission in connection with such transactions; and BUYER shall have been furnished with a Certificate, in a form reasonably acceptable to BUYER, dated as of the Closing Date and signed by the Chairman, President, or Vice President, and the Secretary or Assistant Secretary of SELLER, to the effect that no such litigation, investigation, inquiry, or proceeding is pending or threatened to the best of their knowledge.

 

	
  

	
(f)

	
Real Property.  The Title Commitments (as defined in Section 2.1(b) herein) shall have been delivered to BUYER, and updated to or as close as practicable to (but in no event more than five (5) business days prior to) the Closing Date, in accordance with the terms of such Section, and such updated Title Commitment shall not include any special exceptions other than those set forth in the original Title Commitment and any other Permitted Exceptions.  BUYER shall have been provided the opportunity to inspect the Owned Real Estate and shall be reasonably satisfied that there are no material defects or damages to the Owned Real Estate (normal wear and tear excepted) and, in the event there are material defects or damage, BUYER and SELLER shall have negotiated corresponding adjustments to the book value of such Owned Real Estate reasonably satisfactory to both parties.

 

  

30

  

 

	
  

	
(g)

	
Fixed Assets.  There shall have been no material alteration in or adjustment to the Fixed Assets except with the written consent of BUYER.  It will not be considered to be a material alteration or adjustment to the Fixed Assets if (i) there is damage or destruction to the Fixed Assets as contemplated by Section 2.1(f) herein and SELLER complies with said Section 2.1(f), (ii) SELLER makes additions to the Fixed Assets with the prior written consent of BUYER, (iii) SELLER makes additions to the Fixed Assets without BUYER's consent in order to correct emergency situations which are threatening to impair SELLER's operations at an Office, or (iv) additions to Fixed Assets otherwise permitted by this Agreement.

 

	
  

	
(h)

	
BUYER shall have received, in form and substance reasonably satisfactory to BUYER, all consents, approvals or waivers of third parties (other than regulatory approvals and consents and approvals related to the Owned Real Property and Leased Real Property), the failure of which to receive would materially adversely affect the economic or business benefits of the Acquisition to BUYER.

 

	
  

	
(i)

	
There shall have been no material adverse change in the business or prospects of SELLER or the Offices or in the condition of the Office Loans from the date hereof.

 

	
  

	
(j)

	
The Office Loans (including Office Loans added between the date of this Agreement and the Closing Date upon the consent of BUYER and any loans substituted or added pursuant to the terms of this Agreement) as of the Closing Date shall have an outstanding principal balance of $8.5 million.   In the case of Office Loans which are set forth on the confidential listing provided pursuant to Section 1.2(g) concurrently with the signing of this Agreement, no such loan shall have been downgraded from its classification as of the date of this Agreement.

 

  

31

  

 

	 	
5.3 

	
Waivers of Conditions Precedent. The conditions specified in Sections 5.1 and 5.2 herein shall be deemed satisfied or, to the extent not satisfied, waived if the Closing occurs unless such failure of satisfaction is reserved in a writing executed by BUYER and SELLER at or prior to the Closing.

 

	
6.

	
CLOSING.

 

	 	
6.1 

	
Closing and Closing Date. The Acquisition contemplated by this Agreement shall be consummated and closed (the "Closing") at such location as shall be mutually agreed upon by BUYER and SELLER, on a date to be mutually agreed upon by BUYER and SELLER which date is after all required regulatory approvals have been obtained and all applicable regulatory waiting periods associated therewith have expired.  The precise date on which the Closing shall occur (the "Closing Date") shall be confirmed by the parties in writing not less than five (5) days after receiving all required regulatory approvals.

 

	 	
6.2 

	
SELLER's Actions at Closing. At the Closing (unless another time is specifically stated), SELLER shall, with respect to the Offices:

 

	
  

	
(a)

	
deliver to BUYER at the Offices such of the Assets purchased hereunder as shall be capable of physical delivery; and

 

	
  

	
(b)

	
execute, acknowledge and deliver to BUYER all such limited warranty deeds (qualified, as necessary, to reflect all Permitted Exceptions), endorsements, assignments, bills of sale, and other instruments of conveyance, assignment, and transfer as shall reasonably be necessary or advisable to consummate the sale, assignment, and transfer of the Assets sold or assigned to BUYER hereunder and such other documents as the title company may reasonably require; the originals of all blueprints, construction plans, specifications and plat relating to the Owned Real Estate, which are now in SELLER's possession; and such other documents or instruments as may be reasonably required by BUYER, required by other provisions of this Agreement, or reasonably necessary to effectuate the Closing;

 

  

32

  

 

	
  

	
(c)

	
execute, acknowledge and deliver to BUYER a duly executed and recordable assignment to BUYER of the Office Lease and deliver to BUYER any (i) written consent of any such landlord as shall be necessary for the effective assignment of the Office Lease and the assumption thereof by BUYER, and (ii) consent necessary to assign or transfer to BUYER, or substitute BUYER as landlord under, the lease by which a third-party leases space in the Owned Real Estate, in each case in form and content reasonably satisfactory to BUYER it being understood that, in the case of the foregoing (i) and (ii), that the assignment of said leases in their current form or without material changes shall be satisfactory to BUYER.

 

	
  

	
(d)

	
assign, transfer, and make available to BUYER such of the following records as exist and are available and maintained at the Offices (in whatever form or medium then maintained by SELLER) pertaining to the Deposit Liabilities and Office Loans:

 

	
  

	
(i)

	
signature cards and IRA plan and account documents (which will be provided in electronic media form and format acceptable to BUYER and delivered directly to BUYER from SELLER's image storage vendor.  BUYER shall contract directly with such vendor, at BUYER's expense, to obtain paper copies of electronically stored documents); and

 

	
  

	
(ii)

	
other orders, contracts, and agreements between SELLER and depositors of the Offices with respect to the Deposit Liabilities and borrowers with respect to Office Loans, and records of similar character (which may be provided, at the option of SELLER, in electronic format on CD-ROM or otherwise) excepting, specifically (A) W8 and W9 forms which BUYER may obtain from customers, (B) internally generated CTR and SAR forms, and (C) retail loan credit information (for which no paper-based documents are maintained by SELLER), any relevant tax forms and documents; and

 

  

33

  

 

	
  

	
(iii)

	
a true and accurate trial balance listing of records of accounts.

 

	
  

	
(e)

	
assign, transfer, and deliver to BUYER such safe deposit and safekeeping files and records (in whatever form or medium then maintained by SELLER) pertaining to the safe deposit business of the Offices transferred to BUYER hereunder as exist and are available, together with the contents of the safe deposit boxes maintained at the Offices, as the same exist as of the close of business on the day immediately preceding the Closing Date (subject to the terms and conditions of the leases or other agreements relating to the same) and all securities and other records, if any, held by the Offices for their customers as of the close of business on the day immediately preceding the Closing Date (subject to the terms and conditions of the agreements or receipts relating to the same); and

 

	
  

	
(f)

	
make available and transfer to BUYER on the Closing Date and prior to the conclusion of the Closing any funds required to be paid to BUYER pursuant to the terms of this Agreement; and

 

	
  

	
(g)

	
execute, acknowledge and deliver to BUYER all certificates and other documents required to be delivered to BUYER by SELLER at the Closing pursuant to the terms of this Agreement; and

 

	
  

	
(h)

	
assign by endorsement in a form reasonably satisfactory to BUYER the documents and files pertaining to the Office Loans, including, but not limited to, any and all contracts, promissory notes and other evidence of indebtedness and liens related to the Office Loans together with the loan file and records (in whatever form or medium then maintained by SELLER) pertaining to such Office Loans; and

 

	
  

	
(i)

	
assign to BUYER all of SELLER' s rights in and to the Assumed Contracts which are assignable and which constitute part of the Assets.

 

  

34

  

 

	 	
6.3 

	
BUYER's Actions at the Closing. At the Closing (unless another time is specifically stated in Section 6.4 hereof), BUYER shall:

 

	
  

	
(a)

	
execute, acknowledge, and deliver to SELLER, to evidence the assumption of the liabilities and obligations of SELLER by BUYER hereunder, an instrument of assumption in the form mutually agreed upon by BUYER and SELLER.  Copies of such instrument may be recorded in the public records at the option of either party hereto.  The execution and acknowledgment of such instrument shall not be deemed to be a waiver of any rights or obligations of any party to this Agreement;

 

	
  

	
(b)

	
receive, accept and acknowledge delivery of all Assets, and all records and documentation relating thereto, sold, assigned, transferred, conveyed or delivered to BUYER by SELLER hereunder and BUYER shall be responsible for coordinating with the title companies to effectuate the recording of limited warranty deeds on or after Closing and securing gap insurance coverage in the event the limited warranty deeds are recorded post-closing, at BUYER'S sole cost and expense; and

 

	
  

	
(c)

	
execute and deliver to SELLER such written receipts for the Assets, properties, records, and other materials assigned, transferred, conveyed, or delivered to BUYER hereunder as SELLER may reasonably request at or before the Closing;

 

	
  

	
(d)

	
pay to SELLER on the Closing Date and prior to the conclusion of the Closing any funds required to be paid to SELLER at the Closing pursuant to the terms of this Agreement;

 

	
  

	
(e)

	
execute, acknowledge and deliver to SELLER all Certificates and other documents required to be delivered to SELLER by BUYER at the Closing pursuant to the terms hereof;

 

	
  

	
(f)

	
execute, acknowledge and deliver to SELLER an agreement wherein BUYER assumes obligations with respect to the Office Lease and Assumed Contracts and the IRAs for all periods following the Closing Date with respect thereto in a form mutually agreed upon by BUYER and SELLER; and

 

  

35

  

 

	
  

	
(g)

	
execute, acknowledge and deliver a letter of credit indemnity agreement, pertaining to letters of credit, if any, included in the Office Loans, in a form reasonably acceptable to SELLER.

 

	 	
6.4 

	
Methods of Payment. Subject to the adjustment procedures set forth in this Section 6.4, the transfer of the funds, if any, due to BUYER or to SELLER, as the case may be, shall be made on the Closing Date in immediately available United States Dollars.  At least two business days prior to the Closing, SELLER and BUYER shall provide written notice to one another indicating the account and bank to which such funds shall be wire transferred. In order to facilitate the Closing, the parties agree:  (i) that the amount of funds transferred on the Closing Date, pursuant to Section 1.4(a) hereof, shall be computed based upon (a) the aggregate book value plus accrued interest of the Office Loans as of the close of business on a day to be agreed between the parties, not more than seven (7) business days preceding the Closing Date, (b) cash on hand at the Offices as of the close of business on a day to be agreed between the parties, not more than seven (7) business days preceding the Closing Date, and (c) the aggregate balance of all Deposit Accounts (including interest posted or accrued to such accounts and Individual Retirement Accounts which have become IRAs as a result of the written appointment of BUYER as the successor custodian and the failure of the account holders to object to such appointment) as of the close of business on a day to be agreed between the parties, not more than seven (7) business days preceding the Closing Date, and the parties shall execute a preliminary closing statement in a form mutually agreed upon by BUYER and SELLER.  Furthermore, within ten (10) business days after the Closing, the parties shall make appropriate post-closing adjustments, consistent with the provisions of Section 1.4 hereof, based upon actual Deposit Accounts as of the Closing Date, Office Loans as of the Closing Date, and cash transactions which took place on the Closing Date or which took place prior to the Closing Date but which were not reflected in the Preliminary Closing Statement, and shall execute the Final Settlement Statement in a form mutually agreed upon by the parties.  In addition, prorations of prepaid and deferred income and expenses that cannot be reasonably calculated at the Closing shall be settled and paid based on actual amounts and calculations as soon as possible after the Closing.

 

  

36

  

 

	 	
6.5 

	
Availability of Closing Documents. The documents proposed to be used and delivered at the Closing shall be made available for examination by the respective parties not later than 12:00 noon, Ohio time, five (5) days prior to the Closing Date.

 

	 	
6.6 

	
Effectiveness of Closing. Upon the satisfactory completion of the Closing, which does not include and shall not require completion of the adjustment and proration arrangements set forth in Section 6.4, the Acquisition shall be deemed to be effective and the Closing shall be deemed to have occurred.

 

	
7.

	
CERTAIN TRANSITIONAL MATTERS.

 

	 	
7.1 

	
Transitional Action by BUYER. After the Closing, unless another time is otherwise indicated:

 

	
  

	
(a)

	
BUYER shall:  (i) pay in accordance with the law and customary banking practices and applicable Deposit Account contract terms, all properly drawn and presented checks, negotiable orders of withdrawal, drafts, debits, and withdrawal orders presented to BUYER by mail, over the counter, through electronic media, or through the check clearing system of the banking industry, by depositors of the Deposit Accounts assumed by BUYER hereunder, whether drawn on checks, negotiable orders or withdrawal, drafts, or withdrawal order forms provided by BUYER or SELLER; and (ii) in all other respects discharge, in the usual course of the banking business, the duties and obligations of SELLER with respect to the balances due and owing to the depositors whose Deposit Accounts are assumed by BUYER hereunder; provided, however, that any obligations of BUYER pursuant to this Section 7.1 to honor checks, negotiable orders of withdrawal, drafts, and withdrawal orders on forms provided by SELLER and carrying its imprint (including its name and transit routing number) shall not apply to any checks, drafts, withdrawal orders, or returned items (i) presented to BUYER more than one hundred eighty (180) days following the Closing Date, or (ii) on which a stop payment has been requested by the deposit customer. BUYER shall submit and file any required reports on IRS Form 1099 with respect to interest accrued on Deposit Liabilities after the Closing Date.  The provisions of this subsection 7.1(a) shall in no way limit BUYER's duties or obligations arising under Section 1.3(b) hereof.

 

  

37

  

 

	
  

	
(b)

	
Not earlier than the time of procurement of all applicable regulatory approvals required for consummation of the transactions contemplated by this Agreement nor later than ten days prior to the Closing Date, BUYER shall notify all depositors of the Offices by letter, acceptable to SELLER, produced in, if appropriate, several similar, but different forms calculated to provide necessary and specific information to the owners of particular types of accounts, of BUYER's pending assumption of the Deposit Liabilities hereunder, and, in appropriate instances, notify depositors that on and after the Closing Date certain SELLER deposit-related services and/or SELLER' s debit card and automatic teller machine ("ATM") services impacted by the transactions contemplated by this Agreement, will be terminated.  As an enclosure to such notices, BUYER may furnish appropriate depositors with brochures, forms and other written materials related or necessary to the assumption of the Deposit Accounts by BUYER and the conversion of said accounts to BUYER accounts, including the provision of checks and debit and ATM cards to appropriate depositors using the forms of BUYER with instructions to such depositors to utilize such BUYER checks and debit and ATM cards on and after the Closing Date and thereafter to destroy any unused checks on SELLER's forms and any SELLER debit and ATM cards.  The expenses of the printing, processing and mailing of such letter notices and providing new BUYER checks and other forms and written materials and replacement  debit and ATM cards to appropriate customers shall be borne by BUYER.  Before Closing, except as provided in this paragraph, BUYER will not contact SELLER's customers except joint customers in the normal course of business and except as may occur in connection with advertising or solicitations directed to the public generally or in the course of obtaining the requisite regulatory approvals of the transaction.  Anything to the contrary herein notwithstanding, BUYER shall provide, at no cost to SELLER, any and all notices, communications, and filings which may be required by law, regulation, or otherwise, relating to any changes in terms and other matters relating to the Deposit Accounts and the Office Loans occurring subsequent to the Closing Date.  Any and all such notices, communications, and filings which may be required to be provided prior to the Closing Date shall be submitted on a timely basis for review by SELLER and shall be subject to the written approval of SELLER prior to delivery to any third party.  BUYER shall provide, at its sole cost and expense, that any and all customer and other notices, communications, and filings provided by BUYER hereunder, including the substance and timing of same, fully comply with the requirements of applicable law and regulation.

 

  

38

  

 

	
  

	
(c)

	
BUYER shall promptly pay to SELLER an amount equivalent to the amount of any checks, negotiable orders of withdrawal, drafts, withdrawal orders, or returned items credited as of the close of business on the Closing Date to a Deposit Account assumed by BUYER hereunder which are returned uncollected to SELLER or BUYER after the Closing Date.  The foregoing shall include an amount equivalent to holds placed upon such deposit account for items cashed by SELLER as of the close of business on the Closing Date.

 

	
  

	
(d)

	
All tasks and obligations concerning the provision of data processing services to or for the Offices after the Closing, other than those specifically set forth in Section 7.2(b) herein, if any, are the sole and exclusive responsibility of, and shall be performed solely and exclusively by, BUYER.

 

  

39

  

 

	
  

	
(e)

	
Not later than the close of business on the business day immediately following the Closing Date, BUYER shall supply suitable government-backed securities as security for any deposits of governmental units or other public deposits included among the Deposit Liabilities for which SELLER had provided similar security.

 

	
  

	
(f)

	
As soon as practicable but not more than ten (10) business days after the Closing Date, BUYER shall prepare and transmit at BUYER's expense to each of the obligors on Office Loans transferred to BUYER pursuant to this Agreement a notice to the effect that the loan has been transferred and directing that payment be made to BUYER at the address specified by BUYER, with BUYER's name as payee on any checks or other instruments used to make payments, and, with respect to such loan on which a payment notice or coupon book has been issued, to issue a new notice or coupon book reflecting the name and an address of BUYER as the person to whom and place at which payments are to be made.  BUYER shall submit and file any required reports on IRS Form 1098 with respect to interest collected on Office Loans for the full calendar year in which the Closing Date occurs including interest collected during the period prior to the Closing Date.

 

	
  

	
(g)

	
If the balance due on any Office Loan transferred to BUYER pursuant to this Agreement has been reduced by SELLER as a result of a payment by check or draft received prior to the close of business on the Closing Date, which item is returned unpaid to SELLER after the day immediately preceding the Closing Date, the asset value represented by the loan transferred shall be correspondingly increased and an amount in cash equal to such increase shall be promptly paid by BUYER to SELLER.

 

	
  

	
(h)

	
BUYER shall use its reasonable best efforts to cooperate with SELLER in assuring an orderly transition of ownership of the Assets and responsibility for the liabilities, including the Deposit Liabilities, assumed by BUYER hereunder.

 

  

40

  

 

	
  

	
(i)

	
BUYER hereby grants to SELLER and its representatives access to the Offices until the close of business on second business day following the Closing Date or such other later date and time as the parties may agree, at no cost or expense to SELLER, for conduct of activities consistent with this Agreement in conjunction with the transactions contemplated hereby and to remove from the Offices any assets of SELLER not transferred to BUYER hereunder without cost to BUYER.

 

	
  

	
(j)

	
The duties and obligations of Buyer in this Section 7.1 shall survive the Closing.

 

	 	
7.2

	
Transitional Actions by SELLER. After the Closing, unless another time is otherwise indicated:

 

	
  

	
(a)

	
SELLER shall cooperate with BUYER in assuring an orderly transition of ownership of the Assets and responsibility for the liabilities, including the Deposit Liabilities, assumed by BUYER hereunder.  SELLER shall provide final statements as of the Closing Date, as appropriate, for the Deposit Liabilities, reflecting interest and service charges pro-rated to the close of business on the Closing Date.  SELLER shall submit and file any required reports on IRS Form 1099 with respect to interest paid on Deposit Liabilities through the Closing Date.  SELLER shall provide to BUYER information regarding interest collected on Office Loans during the calendar year in which the Closing Date occurs, up to and including the Closing Date.

 

	
  

	
(b)

	
SELLER's sole and exclusive responsibilities concerning the provision of data processing services to or for the Deposit Accounts of the Offices after the Closing Date, if any, shall be as set forth in this Section 7.2(b).  As soon as practicable following the date of this Agreement, SELLER shall provide BUYER with applicable product functions and specifications relating to the data processing support required for the Deposit Accounts, Office Loans, and safe deposit business (if such data processing support currently is provided with respect to such business) maintained at the Offices (such Deposit Accounts, Office Loans and safe deposit business, if applicable, hereinafter called the "Accounts").  As soon as practicable following the date of this Agreement, SELLER shall provide to BUYER file formats relating to the Accounts and up to three (3) sets of test tapes or other media reasonably acceptable to BUYER related to the Accounts in generic form which are machine readable in form specified by BUYER.  By not later than 3:00 P.M. local Wooster, Ohio time on the business day immediately following the Closing Date, SELLER shall make the foregoing documents and materials available for pick-up by BUYER.  BUYER shall review and analyze such materials including, but not limited to, the file formats and tapes or other such media, and shall advise SELLER in writing of any defects or concerns relating thereto not later than ten (10) business days following receipt thereof.

 

  

41

  

 

	
  

	
(c)

	
Prior to the Closing Date, SELLER shall cooperate with BUYER in making Transferred Employees available at reasonable times for whatever program of training BUYER deems advisable; provided, however, that BUYER shall conduct such training program in a manner that does not materially interfere with or prevent the performance of the normal duties and activities of such Transferred Employees, and BUYER shall reimburse SELLER for any employee expenses incurred by SELLER in connection with such training.  BUYER shall make request of SELLER for training opportunities prior to the Closing Date and consent by SELLER shall not be unreasonably withheld. Such requests, shall specify the time, duration and place of such training.

 

	
  

	
(d)

	
SELLER shall cooperate with BUYER to make provision for the installation of teller and platform equipment in the Offices subject to approval by SELLER; provided, however, that BUYER shall arrange for the installation and placement of such equipment at such times and in a manner that does not significantly interfere with the normal business activities and operation of SELLER or the Offices.

 

	
  

	
(e)

	
SELLER shall resign as custodian of each IRA account maintained at the Offices and assign the custodianship of such accounts to BUYER upon Closing subject to receipt of applicable customer consents and other provisions of this Agreement including the provisions of section 8.10 hereof.

 

  

42

  

 

	
  

	
(f)

	
SELLER shall terminate its ATM/debit card service effective as of close of business on the business day preceding the Closing Date or such other date and time as SELLER and BUYER may agree.  SELLER shall have no obligation with respect to conversion or change over with respect to direct deposit or payroll and retirement payments service relating to the Deposit Accounts following the Closing and, further, BUYER shall assume all responsibility and liability with respect thereto following the Closing.  SELLER will continue to redirect and/or pass through relevant Automated Clearing House ("ACH") transactions on Deposit Accounts for a period of ninety (90) days following the Closing Date.

 

	
  

	
(g)

	
As of the opening of business on the first business day after the Closing Date, SELLER and BUYER shall provide the appropriate Federal Reserve Bank (the "FRB") with all information necessary in order to expedite the clearing and sorting of all checks, drafts, instruments and other commercial paper relative to the Deposit Liabilities and/or the Office Loans (hereinafter collectively referred to as "Paper Items").  BUYER shall bear all charges and costs imposed by the FRB in connection with the reassignment of account number ranges for sorting the Paper Items.

 

  

43

  

 

In the event the FRB and/or any other regional or local clearinghouse for negotiable instruments fails, refuses or is unable to direct sort such Paper Items for delivery to BUYER with the result that such Paper Items are presented to SELLER, by not later than 3:00 p.m. local time on each business day following the Closing and continuing for ninety (90) days after the Closing, SELLER will make available to BUYER for pick up from SELLER's offices or the offices of SELLER's agent and/or processor all of the Paper Items which are received by SELLER from the FRB and/or any regional or local clearinghouse during the morning of each such business day on an "as-received basis."  At the same time SELLER shall also make available to BUYER information and records, including but not limited to systems printouts, concerning such Paper Items and concerning incoming ACH items as well as outstanding ATM transactions.  Such information and records, including but not limited to systems printouts, will utilize the most recent account number designated by SELLER for each of the Deposit Accounts and/or the Office Loans.  BUYER shall initiate appropriate Notification of Change requests relating to appropriate routing matters at the sole expense of BUYER within thirty (30) days following the Closing Date.  Except as otherwise expressly provided herein, SELLER shall provide the foregoing at no charge to BUYER for a period not to exceed thirty (30) days from the Closing Date, except that BUYER shall pay any charges assessed to SELLER by the FRB, any national or local clearinghouse and/or SELLER's agent and/or processor to the extent such assessments relate to the Deposit Accounts or Office Loans.  BUYER shall be responsible for pick up of the data to be provided by SELLER.  Except as otherwise expressly provided herein, BUYER shall be responsible for processing any and all ACH returns received subsequent to the Closing directly through the appropriate Federal Reserve Bank.  SELLER and BUYER shall arrange for appropriate daily settlement between the parties in order that the transmission of all monies associated with the matters set forth in this Section 7.2(g) might be affected promptly.

 

  

44

  

 

SELLER shall not be liable to BUYER for any failure to provide the data required by this Section 7.2(g) to the extent any such failure results from causes beyond SELLER's control including war, strike or other labor disputes, acts of God, errors or failures of the FRB, and/or a participating regional or local clearinghouse, or equipment failure or other emergency wherein SELLER and/or its agent processor has been unable to process inclearings from the FRB or such clearinghouse.

 

	
  

	
(h)

	
SELLER shall, not earlier than the time of procurement of all regulatory approvals required for consummation of the transaction contemplated by this Agreement nor later than twenty (20) days prior to the Closing Date, notify all depositors of the Offices and all borrowers of any Office Loan by letter acceptable to BUYER, produced in, if appropriate, several similar, but different forms calculated to provide necessary and specific information to the owners of particular types of accounts and/or loans, of BUYER's pending assumption of the Deposit Liabilities and acquisition of the Office Loans hereunder, and, in appropriate instances, notify depositors that on and after the Closing Date certain SELLER deposit-related services and/or SELLER's debit card and ATM services, will be terminated.  The expenses of the printing, processing and mailing of such letter notices shall be shared equally by BUYER and SELLER.

 

	
  

	
(i)

	
For a period of sixty (60) days after the Closing Date, SELLER will forward to BUYER, within two (2) business days of receipt, payments received by SELLER with respect to the Office Loans.  BUYER will forward, within two (2) business days of receipt, payments received by BUYER with respect to any loans not assigned to BUYER under this Agreement.  BUYER and SELLER further agree to refer customers to the offices of the other when such customers present payments over the counter to the party not holding their respective loan.  BUYER shall reimburse SELLER within thirty (30) days of notice by SELLER to BUYER for any payments tendered by borrowers which were credited to the outstanding balance of any Office Loan prior to the Closing Date and which are subsequently returned or otherwise withdrawn for any reason and SELLER shall assign to BUYER any rights of SELLER to recovery of such payments as against the relevant borrower.

 

  

45

  

 

	
  

	
(j)

	
SELLER shall forward notice to appropriate carriers for single premium prepaid life and A&H/Disability insurance related to the Office Loans (the "Insured Office Loans") of BUYER's acquisition of the Insured Office Loans within thirty (30) days following the Closing Date.  Such notice shall identify BUYER as the new obligee of the Insured Office Loans and shall direct the insurance carriers to forward any premium refunds otherwise payable to SELLER with respect to the Insured Office Loans following the Closing (the "Premium Refunds") to BUYER.  In the event that, following the Closing, any such Insured Office Loans are paid in full prior to maturity and BUYER receives a Premium Refund, BUYER shall credit the account of such Insured Office Loan customer with the appropriate portion of any such Premium Refund.  The Premium Settlement Payment by SELLER shall constitute the only obligation of SELLER to BUYER with respect to matters pertaining to Premium Refunds, and BUYER shall be responsible for any and all payments or credits due or owing the Insured Office Loan customers with respect to payment in full of the Insured Office Loans prior to maturity.  The Premium Settlement Payment defined in Section 1.4(d) herein shall be calculated as of the Closing Date and based upon SELLER's actual commission rate on loans with such insurance coverage.

 

	
  

	
(k)

	
The duties and obligations of the parties in this section 7.2 shall survive the Closing.

 

	 	
7.3

	
Overdrafts and Transitional Action. Overdrafts on the Deposit Accounts will be the responsibility and risk of BUYER except to the extent that such overdrafts are thirty (30) days or more past due..

 

	 	
7.4

	
ATMs and Debit Cards.

 

	
  

	
(a)

	
SELLER shall provide to BUYER, no later than sixty (60) days prior to the Closing Date, a test tape, along with a file format or file layout and a production tape thirty (30) days before the Closing Date, containing customer name, card number, withdrawal limits, the Deposit Accounts activated by, accessible to or committed to such cards issue dates and/or open dates, last transaction dates, and expiration dates as to all ATM and debit cards issued to customers of the Offices and shall notify the appropriate processor to deactivate the operation of the such ATM and debit cards completely or to deactivate or disconnect the Deposit Accounts from such ATM and debit cards no later than the business day cutoff on the date prior to the Closing Date so that all activity generated by the such  ATM and debit cards shall have settled prior to the Closing Date.  All transactions and activity related to the SELLER ATM and debit cards for Deposit Accounts transferred to BUYER following the Closing Date which are received or forwarded to SELLER will be accepted and forwarded by SELLER to BUYER along with all corresponding funds.  SELLER thereafter agrees to immediately notify its processor to deactivate such ATM and debit cards and to forward all transactions related thereto directly to BUYER.

 

  

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(b)

	
SELLER agrees to deactivate the ATMs located at the Offices on or before the business day cutoff on the day prior to the Closing Date.  Thereafter, BUYER shall reconfigure the ATMs to its standards for activation after the business day cutoff on the Closing Date.

 

	
  

	
(c)

	
BUYER and SELLER agree to cooperate with each other to assure that all transactions originated through the ATM or originated with ATM cards prior to or on the Closing Date shall be for the account of SELLER and all transactions originated after the Closing Date shall be for the account of BUYER.  A post closing adjustment shall be made in the manner set forth in Section 6.4 hereof to reflect all such transactions which cannot be reasonably calculated as of the Closing.

 

	
  

	
(d)

	
For a period of four (4) years from the Closing, BUYER shall permit any customer or employee of SELLER to use BUYER's ATMs located at the Offices without the imposition of any transaction fee, surcharge or "foreign use" charges by BUYER.

 

	
  

	
(e)

	
The obligations of the parties under this Section 7.4 shall survive the Closing.

 

  

47

  

 

	 	
7.5

	
Environmental Matters.

 

	
  

	
(a)

	
Within thirty (30) days of the date of this Agreement, SELLER shall provide to BUYER, at SELLER's expense, copies of Phase I environmental site assessments (the "Phase I Assessments" herein) for all Owned Real Estate.

 

	
  

	
(b)

	
If such Phase I Assessments reasonably indicated the necessity or desirability of further investigation to determine whether or not an Environmental Hazard exists at such Owned Real Estate, BUYER shall notify SELLER in writing, not later than ten (10) days receipt of same, of BUYER' s desire to have an environmental consultant selected by BUYER (the "Environmental Consultant"), to the extent reasonable and appropriate, conduct Phase II environmental site assessments ( the "Phase II Assessments" herein).  Any such further investigation or testing shall be conducted in such a manner so as not to interfere with the normal operation of the Office(s) involved.  All such Phase II Assessments shall be (i) conducted at BUYER's expense, (ii)  treated as information subject to Section 8.1 of this Agreement, and (iii) completed not less than sixty (60)  days after the signing of this Agreement.

 

	
  

	
(c)

	
SELLER shall have a period of two (2) business days from receipt of such notice to elect, at its sole option, to consent to conduct of the Phase II Assessment or BUYER may elect to terminate this Agreement.

 

	
  

	
(i)

	
In the event that the Phase II Assessment is conducted and the Environmental Consultant discovers an Environmental Hazard during any such Phase II Assessment at any single parcel of Owned Real Estate, the remediation of which, in the reasonable judgment of the Environmental Consultant, is or would be the responsibility of BUYER should it acquire such Owned Real Estate, BUYER may, at its sole option, elect to terminate this Agreement or to lease from SELLER such single parcel of Owned Real Estate pursuant to a Lease Agreement with terms satisfactory to BUYER at its sole discretion.

 

  

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(ii)

	
During the term of such Lease Agreement, in the event that SELLER shall deliver to BUYER a report of a qualified environmental engineer or consultant, acceptable in form and content to BUYER, certifying that the Environmental Hazard, at or on any such parcel of Owned Real Estate which is the subject of the Lease Agreement, has been remediated to the extent reasonably required under applicable Environmental Laws, BUYER may elect to purchase such parcel of Owned Real Estate at the net book value as of the Closing Date.

 

	
  

	
(d)

	
BUYER agrees that it and the Environmental Consultant shall conduct any Phase II Assessments or other investigations pursuant to this Section with reasonable care and subject to customary practices among environmental consultants and engineers, including, without limitation, following completion thereof, the restoration of any site to the extent practicable to its condition prior to such site assessment or investigation and the removal of all monitoring wells.

 

	
  

	
(e)

	
Any lease of a parcel of Owned Real Estate pursuant to this Section 7.5 shall in no way affect the transfer of any related assets or liabilities, other than such parcel of Owned Real Estate, to the BUYER at the Closing.

 

	
  

	
(f)

	
For purposes of this Section 7.5, the term "Environmental Law" shall mean any Federal or state law, statute, rule, regulation, code, order, judgment, decree, injunction, or agreement with any Federal or state governmental authority, (i) relating to the protection, preservation, or restoration of the environment (including, without limitation, air, water, vapor, asbestos, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource) or to human health or safety or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of hazardous substances, in each case as amended and now in effect. Environmental Laws include, without limitation, the Clean Air Act (42 U.S.C. section 7401 et seq.); the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. section 9601 et seq.); the Federal Water Pollution Control Act (33 U.S.C. section 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C. section 651 et seq.).

 

  

49

  

 

	
  

	
(g)

	
For purposes of this Section 7.5, the term "Environmental Hazard" shall mean the presence of any Hazardous Substance in violation of, and reasonably likely to require material remediation costs under, applicable Environmental Laws.

 

	
  

	
(h)

	
For purposes of this Section 7.5, the term "Hazardous Substance" shall mean any substance, whether liquid, solid, or gas, (i) listed, identified or designated as hazardous or toxic to a level which requires remediation under any Environmental Law including, without limitation, asbestos; (ii) which, applying criteria specified in any Environmental Law, is hazardous or toxic; or (iii) the use or disposal of which is regulated under Environmental Law.

 

	 	
7.6

	
Effect of Transitional Action.

 

	
  

	
Except as and to the extent expressly set forth in this Article 7, nothing contained in this Article 7 shall be construed to be an abridgment or nullification of the rights, customs and established practices under applicable banking laws and regulations as they affect any of the matters addressed in this Article 7.

 

	
8.

	
GENERAL COVENANTS AND INDEMNIFICATION.

 

	 	
8.1

	
Confidentiality Obligations of BUYER. From and after the date hereof, BUYER and its affiliates and parent company shall treat all information received from SELLER concerning the business, assets, operations, and financial condition of SELLER and its affiliates, and its and their customers (including without limitation the Offices), as confidential, unless and to the extent that BUYER can demonstrate that such information was already known to BUYER and its affiliates, if any, or in the public domain or received from a third person not known by BUYER to be under any obligation to SELLER; and BUYER shall not use any such information for any purpose except in furtherance of the transactions contemplated hereby (including in the filing of required regulatory applications, provided that, if available, a confidential treatment request will be made regarding such confidential information).  Upon any termination of this Agreement, BUYER shall, and shall cause its affiliates, if any, to, promptly return all documents and workpapers containing, and all copies of, any such information received from or on behalf of SELLER in connection with the transactions contemplated hereby.  The covenants of BUYER contained in this Section 8.1 are of the essence and shall survive any termination of this Agreement, but shall terminate at the Closing, if it occurs, with respect to any information that is limited solely to the activities and transactions of the Offices; provided, however, that neither BUYER nor any of its affiliates shall be deemed to have violated the covenants set forth in this Section 8.1 if BUYER shall be required to disclose any of such confidential information in compliance with any legal process, order or decree issued by any court or agency of government of competent jurisdiction.  It is expressly acknowledged by SELLER that all information provided to BUYER related to the Acquisition  may be provided to BUYER's affiliates as necessary for the purpose of consummating the Acquisition. The covenants and obligations of BUYER hereunder shall survive the Closing and any earlier termination of this Agreement.

 

  

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8.2 

	
Confidentiality Obligations of SELLER. From and after the date hereof, SELLER, its affiliates and its parent corporation shall treat all information received from BUYER concerning BUYER's business, assets, operations, and financial condition as confidential, unless and to the extent SELLER can demonstrate that such information was already known to SELLER or its affiliates or in the public domain, and SELLER shall not use any such for any purpose except in furtherance of the transactions contemplated hereby (including in the filing of required regulatory applications, provided that, if available, a confidential treatment request will be made regarding such confidential information).  Upon any termination of this Agreement, SELLER shall promptly return all documents and workpapers containing, and all copies of, any such information received from or on behalf of BUYER in connection with the transactions contemplated hereby.  The covenants of SELLER contained in this Section 8.2 are of the essence and shall survive any termination of this Agreement; provided, however, that neither SELLER nor any of its affiliates shall be deemed to have violated the covenants set forth in this Section 8.2 if SELLER shall be required to disclose any of such confidential information in compliance with any legal process, order or decree issued by any court or agency of government of competent jurisdiction.  It is expressly acknowledged by BUYER that all information provided to SELLER related to the Acquisition may be provided to SELLER's affiliates for the purpose of consummating the Acquisition.  The covenants and obligations of SELLER hereunder shall survive the Closing and any earlier termination of this Agreement.

 

  

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8.3 

	
Indemnification by SELLER. From and after the Closing Date, SELLER shall indemnify, hold harmless, and defend BUYER from and against all claims, losses, liabilities and obligations, including reasonable attorneys' fees and expenses (collectively, "Losses"), which BUYER may receive, suffer or incur arising out of, relating to or in connection with any actions, suits or proceedings (other than any proceedings to prevent or limit the consummation of the Acquisition) related to (i) operations and transactions occurring prior to the Closing and which involve the Assets transferred, the Deposit Liabilities, the Office Loans or the safe deposit business being transferred to BUYER and (ii) the operations at the Offices prior to the Closing Date.  The obligations of SELLER under this Section 8.3 shall be contingent upon BUYER giving SELLER written notice (i) of receipt by BUYER of any process and/or pleadings in or relating to any actions, suits, or proceedings of the kinds described in this Section 8.3, including copies thereof, and (ii) of the assertion of any claim or demand relating to the operation of the Offices and/or the Deposit Liabilities or Office Loans prior to the Closing, including, to the extent known to BUYER, the identity of the person(s) or entity(ies) asserting such claim or making such demand and the nature thereof, and including copies of any correspondence or other writings relating thereto. All notices required by the preceding sentence shall be given within fifteen days of the receipt by BUYER of any such process or pleadings or any oral or written notice of the assertion of any such claims or demands. SELLER shall have the right to take over BUYER's defense in any such actions, suits, or proceedings through counsel selected by SELLER, to compromise and/or settle the same (provided that no such settlement shall be made without BUYER's prior written consent unless such settlement solely consists of the payment of money by SELLER and BUYER receives a complete release in connection therewith) and to prosecute any available appeals or review of any adverse judgment or ruling that may be entered therein.  The covenants and obligations of SELLER hereunder shall survive the Closing and any earlier termination of this Agreement.  The availability of indemnification pursuant to this section shall not prevent BUYER from seeking any other remedy otherwise available to BUYER, including remedies at law or in equity.

 

  

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8.4 

	
Indemnification by BUYER. From and after the Closing Date, BUYER shall indemnify, hold harmless and defend SELLER from and against Losses which SELLER may receive, suffer, or incur arising out of, relating to or in connection with (i) SELLER' s compliance with instructions from BUYER made pursuant to Section 7.4 of this Agreement and not related to any negligence or malfeasance on the part of SELLER, (ii) operations and transactions occurring after the Closing and which involve the Assets transferred, the Deposit Liabilities, the Office Loans, the safe deposit business being transferred to BUYER or the other obligations and liabilities assumed pursuant to this Agreement or (iii) the operations at the Offices after the Closing Date.  The obligations of BUYER under this Section 8.4 shall be contingent upon SELLER giving BUYER written notice (i) of the receipt by SELLER of any process and/or pleadings in or relating to any actions, suits or proceedings of the kinds described in this Section 8.4, including copies thereof, and (ii) of the assertion of any claim or demand relating to the Assets transferred to and/or the Deposit Liabilities or Office Loans and the other obligations and liabilities assumed by BUYER on or after the Closing, including, to the extent known to SELLER, the identity of the person(s) or entity(ies) asserting such claim or making such demand and the nature thereof, and including copies of any correspondence or other writings relating thereto.  All notices required by the preceding sentence shall be given within fifteen (15) days of the receipt by SELLER of any such process or pleadings or any oral or written notice of the assertion of any such claims or demands.  BUYER shall have the right to take over SELLER's defense in any such actions, suits, or proceedings through counsel selected by BUYER, to compromise and/or settle the same (provided that no such settlement shall be made without SELLER's prior written consent unless such settlement solely consists of the payment of money by BUYER and SELLER receives a complete release in connection therewith) and to prosecute any available appeals or review of any adverse judgment or ruling that may be entered therein.  The covenants and obligations of BUYER hereunder shall survive the Closing and any earlier termination of this Agreement.  The availability of indemnification pursuant to this section shall not prevent SELLER from seeking any other remedy otherwise available to SELLER, including remedies at law or in equity.

 

  

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8.5 

	
Solicitation of Customers by BUYER Prior to Closing. At any time prior to the Closing Date, BUYER will not, and will not permit any of its affiliates to, conduct any marketing, media or customer solicitation campaign which is specifically and directly targeted to induce customers whose Deposit Account liabilities are to be assumed or Office Loans are to be acquired by BUYER pursuant to this Agreement to discontinue their account or business relationships with SELLER or its affiliates.

 

	 	
8.6 

	
Solicitation of Customers by SELLER After the Closing. From the date of this Agreement and for four (4) years following the Closing Date, SELLER will not directly solicit (a) deposit accounts from customers whose Deposit Liabilities and/or Office Loans are assumed or acquired by BUYER pursuant to this Agreement, (b) refinancing of Office Loans from borrowers whose Office Loans are being acquired by BUYER hereunder or (c) any persons located within a ten (10) mile radius of any Office to provide to such persons any retail, commercial, fiduciary, or wealth management services; provided, however, that the foregoing (a), (b) and (c) shall not apply to (i) existing customers of SELLER offices other than the Offices or persons who are employees or current directors of SELLER, Ohio Legacy Corp or any other affiliate of SELLER (ii) any general advertisement or solicitation by SELLER regarding its banking products or other services, or (iii) any person who becomes a customer of SELLER or seeks the services provided by SELLER on such person's own initiative.  The covenants and obligations of SELLER hereunder shall survive the Closing.

 

  

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8.7 

	
Further Assurances. From and after the date hereof, each party hereto agrees to execute and deliver such instruments and to take such other actions as the other party hereto may reasonably request in order to carry out and implement this Agreement.  Without limiting the foregoing, SELLER agrees to execute and deliver such deeds, bills of sale, acknowledgments, and other instruments of conveyance and transfer as, in the reasonable judgment of BUYER, shall be necessary and appropriate to vest in BUYER the legal and equitable title to the Assets of SELLER being conveyed to BUYER hereunder.  Further, BUYER, at its sole cost and expense, shall prepare and shall file, or shall cause to be prepared and filed, with any appropriate third parties, any and all documents and notices which are necessary and proper to transfer to BUYER any security interests and other rights of SELLER in and to collateral securing the Office Loans.  SELLER shall cooperate with BUYER in executing any necessary and proper documents and notices as may be appropriate in furtherance of the foregoing covenant and consistent with the terms of this Agreement provided, however, that nothing contained herein shall relieve BUYER of its obligations as set forth herein.  The covenants and obligations of the parties hereunder shall survive the Closing.

 

	 	
8.8 

	
Operation of the Offices. Except as otherwise expressly provided in this Agreement, after the Closing Date neither SELLER, nor its subsidiaries or affiliates shall be obligated to provide for any managerial, financial, business, or other services to the Offices, including without limitation any personnel, employee benefit, data processing, accounting, risk management, or other services or assistance that may have been provided to the Offices prior to the close of business on the Closing Date, and BUYER shall take such action as may, in its judgment, be necessary or advisable to provide for the ongoing operation and management of, and the provision of services and assistance to, the Offices after the Closing Date.  Upon the Closing, BUYER shall change the legal name of the Offices and, except for any documents or materials in possession of the customers of the Offices (including but not limited to deposit tickets and checks), shall not use and shall cause the Offices to cease using any signs, stationery, advertising, documents, or printed or written materials that refer to the Offices by any name that includes the words "Premier Bank and Trust," "Premier," "Ohio Legacy," the name of any affiliate of SELLER or any derivations thereof.  Preceding the Closing, SELLER shall cooperate with any reasonable requests of BUYER directed to obtaining specifications for the procurement of new signs of BUYER's choosing for installation by BUYER of new signs immediately following the close of business on the Closing Date; provided, however, that BUYER's receipt of all sign specifications shall be obtained by BUYER in a manner that does not significantly interfere with the normal business activities and operations of the Offices and shall be at the sole and exclusive expense of BUYER.  SELLER Will retain its signs located at the Offices.  BUYER shall remove the “skins” of SELLER’s signs with SELLER’s name and logo and shall hold them pending retrieval by SELLER.  It is understood by the parties hereto that, with the exception of the “skins,” all mounting facilities, electronics and components for the signs shall be considered as Fixed Assets for purposes of this Agreement.  The covenants and obligations of the parties hereunder shall survive the Closing.

 

  

55

  

 

	 	
8.9 

	
Information After Closing. For a period of seven (7) years following the Closing, upon written request of SELLER to BUYER or BUYER to SELLER, as the case may be, such requested party shall provide the requesting party with reasonable access to, or copies of, information and records relating to the Offices which are then in the possession or control of the requested party reasonably necessary to permit the requesting party or any of its subsidiaries or affiliates to comply with or contest any applicable legal, tax, banking, accounting, or regulatory policies or requirements, or any legal or regulatory proceeding thereunder or requests related to customer relationships at the Offices prior to Closing.  In the event of any such requests, the requesting party shall reimburse the requested party for the reasonable costs of the requested party related to such request.  The covenants and obligations of the parties hereunder shall survive the Closing.

 

  

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8.10 

	
Individual Retirement Accounts. All IRAs related to the Offices that shall not have been transferred to BUYER by the close of business on the thirtieth (30th) day following the Closing may be retained by SELLER at its option, and for any such IRAs retained, SELLER shall advise the account holders that it has withdrawn its resignation as custodian or transfer the amount in such IRAs to the account holders.

 

	 	
8.11 

	
Covenant Not to Compete. From and after the Closing and for a period of four (4) years following the Closing Date, SELLER and its affiliates shall not, and shall not enter into any agreement to, (i) provide to any persons located within a ten (10) mile radius of any Office retail, commercial, fiduciary, or wealth management services, or (ii) own, operate or use any building, office or other facility or premises located within a ten (10) mile radius of any Office for the purpose of operating a branch or loan production office; provided, however, that the foregoing (i) shall not apply to (A) existing customers of SELLER offices other than the Offices or persons who are employees or current directors of SELLER, Ohio Legacy Corp or any other affiliate of SELLER, (B) any general advertisement or solicitation by SELLER regarding its banking products or other services, or (C) any person who becomes a customer of SELLER or seeks the services provided by SELLER on such person's own initiative.  The covenants and obligations of SELLER hereunder shall survive the Closing.

 

	 	
8.12 

	
Non-solicitation of Employees. BUYER and SELLER agree that for a period of twenty-four (24) months from the date of this Agreement, or for a period of twenty-four (24) months from such date as this Agreement may be terminated pursuant to Section 9 hereof, neither BUYER nor SELLER nor any of their respective subsidiaries or affiliates will:

 

  

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(a)

	
Directly or indirectly solicit for employment or employ any persons who are employees of the other party or its subsidiaries or affiliates on the date hereof (except in the case of BUYER, the employment of any Transferred Employees after the Closing); or

 

	
  

	
(b)

	
directly or indirectly solicit for employment or employ any other persons who are employees of the other party or its subsidiaries or affiliates on the date hereof and with whom the party has had contact or who became known to the party solely in conjunction with any phase of the Acquisition  (except  in the case of BUYER, the employment of any Transferred Employees after the Closing) whether prior to execution of this Agreement or subsequent thereto.  As used solely in this Section 8.12(b), the term "solicit" shall not be deemed to include general advertisements or general solicitations that are not targeted or directed specifically to individuals who are employees of the other party or its subsidiaries or affiliates.  Subject to the prohibitions contained in Section 8.12(a), nothing in this Section 8.12(b) shall prohibit the parties or their respective affiliates or subsidiaries from hiring a person covered by this Section 8.12(b) who contacts the hiring party on their own initiative (and not in response to solicitation by the hiring party in violation of this section) or a person covered by this subsection 8.12(b) who is no longer in the employ of the other party or its subsidiaries or affiliates at the time of such solicitation.

 

The covenants and obligations of the parties hereunder shall survive the Closing and any earlier termination of this Agreement.

 

	
9.

	
TERMINATION.

 

	 	
9.1 

	
Termination by Mutual Agreement. This Agreement may be terminated and the transactions contemplated hereby may be abandoned by mutual consent of the parties authorized by a vote of a majority of the Board of Directors (or by the vote of the Executive Committee of such Board, if so empowered) of each of SELLER and BUYER.

 

  

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9.2 

	
Termination by SELLER. This Agreement may be terminated and the transactions contemplated hereby abandoned by a vote of a majority of the Board of Directors (or by the vote of the Executive Committee of such Board, if so empowered) of SELLER:

 

	
  

	
(a)

	
in the event of a material breach by BUYER of this Agreement;

 

	
  

	
(b)

	
in the event any of the conditions precedent specified in Section 5.1 of this Agreement (i) has not been met as of the date specified for such condition in this Agreement or if no date is specified, the Closing Date, or (ii) in the reasonable determination of SELLER, is not capable of being met, and in the case of either (i) or (ii), has not been waived by SELLER;

 

	
  

	
(c)

	
in the event any regulatory approval for the consummation of the Acquisition is denied by any applicable regulatory authority;

 

	
  

	
(d)

	
on or after the date which is 180 calendar days following the date of this Agreement (the "Termination Date") if the Closing has not then occurred unless the failure to consummate by such date is due to a breach of this Agreement by SELLER;

 

	
  

	
(e)

	
in the event that there is a material adverse change in the financial condition or results of operation of BUYER, or pending or threatened litigation or claims with respect to the transactions contemplated by this Agreement which, in the opinion of SELLER, may hinder or delay the ability of the parties to consummate the transactions contemplated by this Agreement; or

 

	
  

	
(f)

	
in the event that BUYER fails to obtain by October 31, 2011, any required regulatory approval of which it is BUYER’s responsibility to obtain, and in the event of such a termination BUYER shall pay to SELLER the actual costs, fees and expenses incurred by SELLER in connection with this Agreement and the Acquisition, including, without limitation, attorneys’ fees, filing costs and out of pocket expenses subject to a maximum payment of $150,000; or

 

  

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(g)

	
in the event that SELLER or any of its affiliates receives from a third party any unsolicited proposal to acquire both of the Offices that SELLER, in its sole discretion, determines to pursue, and in the event of such a termination (and only in such event), SELLER shall pay to BUYER a termination fee of $150,000.

 

The payment obligations of BUYER under Section 9.2(f) and the payment obligations of SELLER under Section 9.2(g) shall survive any termination of this Agreement pursuant to such sections.

 

	 	
9.3 

	
Termination by BUYER. This Agreement may be terminated and the transactions contemplated hereby abandoned by a vote of a majority of the Board of Directors (or by the vote of the Executive Committee of such Board, if so empowered) of BUYER:

 

	
  

	
(a)

	
in the event of a material breach by SELLER of this Agreement;

 

	
  

	
(b)

	
in the event any of the conditions precedent specified in Section 5.2 of this Agreement (i) has not been met as of the date specified for such condition in this Agreement or if no date is specified, the Closing Date, or (ii) in the determination of BUYER, is not capable of being met, and in the case of either (i) or (ii), has not been waived by BUYER;

 

	
  

	
(c)

	
in the event any regulatory approval required for consummation of the Acquisition is denied by any applicable regulatory authority;

 

	
  

	
(d)

	
in the event that there is a material adverse change in the financial condition or results of operation of the Offices, or pending or threatened litigation or claims with respect to the transactions contemplated by this Agreement which, in the opinion of BUYER, may hinder or delay the ability of the parties to consummate the transactions contemplated by this Agreement;

 

	
  

	
(e)

	
on or after the Termination Date if the Closing has not then occurred unless the failure to consummate by such time is due to a breach of this Agreement by BUYER;

 

  

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(f)

	
in the event any regulatory approval required for consummation of the Acquisition is received but imposes any condition that, in BUYER’s reasonable judgment, is unduly burdensome, such that the economic or business benefits of the Acquisition would be materially adversely affected or which condition would unduly burden the operations of BUYER upon completion of the Acquisition; or

 

	
  

	
(g)

	
in the event that SELLER fails to obtain by October 31, 2011, any required regulatory approval of which it is SELLER’s responsibility to obtain, and in the event of such a termination SELLER shall pay to BUYER the actual costs, fees and expenses incurred by BUYER in connection with this Agreement and the Acquisition, including, without limitation, attorneys’ fees, filing costs and out of pocket expenses subject to a maximum payment of $150,000.

 

The payment obligation of SELLER under Section 9.3(g) shall survive any termination of this Agreement pursuant to such section.

 

	 	
9.4 

	
Effect of Termination. The termination of this Agreement pursuant to Sections 9.2 or 9.3 of this Article 9 shall not release any party hereto from any liability or obligation to the other party hereto arising from (i) a breach of any provision of this Agreement occurring prior to the termination hereof or (ii) the failure of timely satisfaction of conditions precedent to the obligations of a party to the extent that such failure of timely satisfaction is attributable to the actions or inactions of such party.

 

	
10.

	
MISCELLANEOUS PROVISIONS.

 

	 	
10.1 

	
Expenses. Except as and to the extent specifically allocated otherwise herein, each of the parties hereto shall bear its own expenses, whether or not the transactions contemplated hereby are consummated.

 

	 	
10.2 

	
Certificates. All statements contained in any certificate ("Certificate") delivered by or on behalf of SELLER or BUYER pursuant to this Agreement or in connection with the transactions contemplated hereby shall be deemed to be representations and warranties of the party delivering the Certificate hereunder.  Each such Certificate shall be executed on behalf of the party delivering the Certificate by duly authorized officers of such party.

 

  

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10.3 

	
Termination of Representations and Warranties. The respective representations and warranties of SELLER and BUYER contained or referred to in this Agreement or in any Certificate, schedule, or other instrument delivered or to be delivered pursuant to this Agreement shall terminate at the Closing, except for:

 

	
  

	
(a)

	
those representations and warranties contained in any limited warranty deeds delivered by SELLER to BUYER at the Closing;

 

	
  

	
(b)

	
those representations and warranties contained in any bill of sale relating to the Assets delivered by SELLER to BUYER at Closing;

 

	
  

	
(c)

	
those representations and warranties contained in any instrument of assumption or in any Certificate delivered by BUYER to SELLER at the Closing;

 

	
  

	
(d)

	
those representations and warranties contained in any Certificate delivered by SELLER to BUYER at the Closing; and

 

	
  

	
(e)

	
the representations and warranties of SELLER contained in Section 3.1(r), which shall only survive for a period of twelve (12)  months following the Closing Date.

 

	 	
10.4 

	
Waivers. Each party hereto, by written instrument signed by duly authorized officers of such party, may extend the time for the performance of any of the obligations or other acts of the other party hereto and may waive, but only as affects the party signing such instrument:

 

	
  

	
(a)

	
any inaccuracies in the representations or warranties of the other party contained or referred to in this Agreement or in any document delivered pursuant hereto;

 

	
  

	
(b)

	
compliance with any of the covenants or agreements of the other party contained in this Agreement;

 

  

62

  

 

	
  

	
(c)

	
the performance (including performance to the satisfaction of a party or its counsel) by the other party of such of its obligations set out herein; and

 

	
  

	
(d)

	
satisfaction of any condition to the obligations of the waiving party pursuant to this Agreement.

 

	 	
10.5 

	
Notices. All notices and other communications hereunder may be made by mail, hand-delivery or by courier service and notice shall be deemed to have been given when received; provided, however, if notices and other communications are made by nationally recognized overnight courier service for overnight delivery, such notice shall be deemed to have been given one business day after being forwarded to such a nationally recognized overnight courier service for overnight delivery.

 

If to SELLER:

 

Premier Bank & Trust, National Association

6141 Whipple Avenue, N.W.

North Canton, Ohio  44720

Attn: Rick Hull, President

 

With a copy to:

 

Vorys, Sater, Seymour and Pease LLP

221 East 4th Street

Suite 200, Atrium Two

Cincinnati, Ohio 45202

Attn: Jason L. Hodges

 

If to BUYER:

 

The Commercial and Savings Bank of Millersburg, Ohio

91 North Clay Street

Millersburg, Ohio 44654

 

  

63

  

 

With a copy to:

 

Bricker & Eckler LLP

100 South 3rd Street

Columbs, Ohio 43215

Attn: Jeffery E. Smith

 

or such other person or address as any such party may designate by notice to the other parties, and shall be deemed to have been given as of the date received.

 

	 	
10.6 

	
Parties in Interest; Assignment; Amendment. The rights and obligations of each party hereto shall be binding upon, by the operation of law or otherwise, and shall inure to the benefit of, the parties hereto and their respective successors, legal representatives, and assigns.  Except as expressly provided herein, no person who is not a party hereto (or a permitted successor or assignee of such party) shall have any rights or benefits under this Agreement, either as a third party beneficiary or otherwise. This Agreement cannot be amended or modified, except by a written agreement executed by the parties hereto or their respective successors and assigns.  This Agreement may not be assigned by either party hereto without the prior written consent of the other.

 

	 	
10.7 

	
Headings. The headings and table of contents used in this Agreement are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

	 	
10.8 

	
Terminology. The specific terms that are defined in various provisions of this Agreement shall apply throughout this Agreement (including without limitation each schedule hereto), unless expressly indicated otherwise.  In addition, the following terms and phrases shall have the meanings set forth for purposes of this Agreement (including such schedule):

 

	
  

	
(a)

	
The term "business day" shall mean any day other than a Saturday, Sunday, or a day on which either SELLER or BUYER is closed in accordance with applicable law or regulation.  Any action, notice, or right which is to be taken or given or which is to be exercised or lapse on or by a given date which is not a business day may be taken, given, or exercised, and shall not lapse, until the next business day following.

 

  

64

  

 

	
  

	
(b)

	
The term "affiliate" shall mean, with respect to any person, any other person directly or indirectly controlling, controlled by or under common control with such person.

 

	
  

	
(c)

	
The term "Permitted Exceptions" shall mean, with respect to the Owned Real Estate and the Leased Real Estate, (i) those five standard exceptions appearing as Schedule B items in a standard ALTA owners or leasehold title insurance policy, and any other exceptions, restrictions, easements, rights of way, and encumbrances referenced in the Title Commitment delivered by SELLER to BUYER as indicated in Section 2.1(b) of this Agreement satisfactory to BUYER; (ii) statutory liens for current taxes or assessments not yet due, or if due not yet delinquent, or the validity of which is being contested in good faith by appropriate proceedings; (iii) such other liens, imperfections in title, charges, easements, restrictions, and encumbrances (but in all cases of Owned Real Estate excluding those which secure borrowed money) which, individually and in the aggregate, do not materially detract from the value of, or materially interfere with the present use of, any property subject thereto or affected thereby as determined by BUYER at its sole discretion; and (iv) such other exceptions as are approved by BUYER in writing.

 

	
  

	
(d)

	
The term "person" shall mean any individual, corporation partnership, limited liability company, association, trust, or other entity, whether business, personal, or otherwise.

 

	
  

	
(e)

	
Unless expressly indicated otherwise in a particular context, the terms "herein," "hereunder," "hereto," "hereof," and similar references refer to this Agreement in its entirety and not to specific articles, sections, schedules, or subsections of this Agreement.  Unless expressly indicated otherwise in a particular context, references in this Agreement to enumerated articles, sections, and subsections refer to designated portions of this Agreement (but do not refer to portions of any schedule unless such Schedule is specifically referenced) and do not refer to any other document.

 

  

65

  

 

	
  

	
(f)

	
The term "subsidiary" shall mean a corporation, partnership, limited liability company, joint venture, or other business organization more than 50% of the voting securities or interests in which are beneficially owned or controlled by the indicated parent of such entity.

 

	
  

	
(g)

	
The term "overdraft protection" shall include all such programs and product offerings that provide depositor protection for overdrafts including, but not limited to, features sometimes referred to as "overdraft privileges" and the loan relationships created thereby.

 

	
  

	
(h)

	
Capitalized terms used in this Agreement that are defined elsewhere in this Agreement shall have the meanings ascribed to then, unless the context otherwise requires.

 

	 	
10.9 

	
Press Releases.  SELLER or BUYER, as the case may be, shall approve, in writing prior to issuance, the form and substance of any press release or other public disclosure relating to any matters relating to this Agreement issued by the other.  Nothing contained herein shall restrict or prohibit BUYER or SELLER from issuance of press releases or public disclosures which, based on the advice of counsel, are required by applicable law or regulation or stock market requirement and limited to information necessary for compliance with same.

 

	 	
10.10 

	
Entire Agreement. This Agreement supersedes any and all oral or written agreements and understandings heretofore made relating to the subject matter hereof and contains the entire agreement of the parties relating to the subject matter hereof.  All schedules, exhibits, appendices to, and documents delivered in connection with, this Agreement are incorporated into this Agreement by reference and made a part hereof.

 

	 	
10.11

	
Flexible Structure.  References in this Agreement to federal or state laws or regulations, jurisdictions, or chartering or regulatory authorities shall be interpreted broadly to allow maximum flexibility in consummating the transactions contemplated hereby in light of changing business, economic, and regulatory conditions.  Without limiting the foregoing, in the event SELLER and BUYER agree in writing to alter the legal structure of the Acquisition contemplated by this Agreement references in this Agreement to such laws, regulations, jurisdictions, and authorities shall be deemed to be altered to reflect the laws, regulations, jurisdictions, and authorities that are applicable in light of such change.

 

  

66

  

 

	 	
10.12 

	
Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio and the laws of the United States, as well as regulations issued by relevant agencies thereof.

 

	 	
10.13 

	
Counterparts. This Agreement may be executed in several counterparts and by facsimile and electronic transmission (including by .pdf), each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

 

	 	
10.14 

	
Tax Matters. BUYER and SELLER agree that they will file applicable tax returns and other related schedules and documents related to their respective interests based on the allocations in this Agreement.

 

[Remainder of page intentionally blank; signatures follow]

  

67

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers thereunto duly authorized, all as of the date first above written.

 

	ATTEST:	 	 The Commercial and Savings Bank of	 
	 	 	 Millersburg, Ohio	 
	 	 	 	 	 
	
/s/Peggy Conn

	 	By:	
/s/Eddie L. Steiner

	 
	
 

	 	Its:	
Chairman

	 
	
 

	 	 	
 

	 

 

	ATTEST:	 	 Premier Bank and Trust, National Association	 
	 	 	 	 	 
	 	 	 	 	 
	
/s/Aubrey Merrill

	 	By:	
/s/Rick L. Hull

	 
	
 

	 	Its:	
President & CEO

	 
	
 

	 	 	
 

	 

 

  

68

  

SCHEDULES

TO

OFFICE PURCHASE AND ASSUMPTION AGREEMENT

	
Schedule A –

	
Description of Owned Real Estate

 

	
Schedule B –

	
Description of Leased Real Estate and Office Lease

 

	
Schedule C –

	
Furniture, Fixtures and Equipment

 

	
Schedule D –

	
Assumed Contracts

 

	
Schedule E –

	
List of Leases, Safekeeping Items and Agreements

 

  

  

  

SCHEDULE A

DESCRIPTION OF OWNED REAL ESTATE

[Remainder of page intentionally blank]

 

  

A-1

  

SCHEDULE B

DESCRIPTION OF LEASED REAL ESTATE AND OFFICE LEASE

[Remainder of page intentionally blank]

  

B-1

  

SCHEDULE C

FURNITURE, FIXTURES AND EQUIPMENT

[Remainder of page intentionally blank]

 

  

C-1

  

SCHEDULE D

ASSUMED CONTRACTS

[Remainder of page intentionally blank]

  

D-1

  

SCHEDULE E

LIST OF LEASES, SAFEKEEPING ITEMS AND AGREEMENTS

[Remainder of page intentionally blank]

  

E-1Unassociated Document

Exhibit 4.1

 

GENVEC, INC.

and

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

as Rights Agent

RIGHTS AGREEMENT

dated as of August 11, 2011

  

  

  

 

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 Certificate.

	
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.

	
9

	
Section 7.

	  	
Exercise of Rights; Purchase Price; Expiration Date of Rights.

	
10

	
Section 8.

	  	
Cancellation and Destruction of Rights Certificates.

	
12

	
Section 9.

	  	
Reservation and Availability of Capital Stock.

	
12

	
Section 10.

	  	
Preferred Stock Record Date.

	
14

	
Section 11.

	  	
Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.

	
14

	
Section 12.

	  	
Certificate of Adjusted Purchase Price or Number of Shares.

	
21

	
Section 13.

	  	
Consolidation, Merger or Sale or Transfer of Assets or Earning Power.

	
21

	
Section 14.

	  	
Fractional Rights; Fractional Shares; Waiver.

	
25

	
Section 15.

	  	
Rights of Action.

	
26

	
Section 16.

	  	
Agreement of Rights Holders.

	
26

	
Section 17.

	  	
Rights Certificate Holder Not Deemed a Stockholder.

	
27

	
Section 18.

	  	
Duties of Rights Agent.

	
27

	
Section 19.

	  	
Concerning the Rights Agent.

	
29

	
Section 20.

	  	
Merger or Consolidation or Change of Name of Rights Agent.

	
29

	
Section 21.

	  	
Change of Rights Agent.

	
30

	
Section 22.

	  	
Issuance of New Rights Certificates.

	
30

	
Section 23.

	  	
Redemption.

	
31

	
Section 24.

	  	
Exchange.

	
32

	
Section 25.

	  	
Notice of Certain Events.

	
33

	
Section 26.

	  	
Notices.

	
34

	
Section 27.

	  	
Supplements and Amendments.

	
35

	
Section 28.

	  	
Successors.

	
35

	
Section 29.

	  	
Determinations and Actions by the Board.

	
35

	
Section 30.

	  	
Benefits of this Agreement.

	
36

	
Section 31.

	  	
Severability.

	
36

	
Section 32.

	  	
Governing Law.

	
36

	
Section 33.

	  	
Counterparts.

	
36

	
Section 34.

	  	
Descriptive Headings.

	
36

 

  

i

  

 

EXHIBITS

	
Exhibit A

	
Certificate of Designation of Series B Junior Participating Preferred Stock of GenVec, Inc.

	
Exhibit B

	
Summary of Rights

	
Exhibit C

	
Form of Rights Certificate

  

ii

  

 

RIGHTS AGREEMENT

RIGHTS AGREEMENT, dated as of August 11, 2011 (this “Agreement”), by and between GenVec, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, as rights agent (the “Rights Agent”);

WHEREAS, on August 11, 2011 (the “Rights Dividend Declaration Date”), the Board of Directors of the Company authorized and declared a dividend of one preferred share purchase right (a “Right”) for each share of Common Stock (as hereinafter defined) of the Company outstanding at the Close of Business (as hereinafter defined) on the Record Date (as hereinafter defined), each Right initially representing the right to purchase one one-thousandth (subject to adjustment) of one share of Preferred Stock (as hereinafter defined), upon the terms and subject to the conditions herein set forth, and further authorized and directed the issuance of one Right (subject to adjustment) with respect to each share of Common Stock of the Company that shall become outstanding between the Record Date and the earlier of the Distribution Date and the Expiration Date (as such terms are hereinafter defined); provided, however, that Rights may be issued with respect to shares of Common Stock that shall become outstanding after the Distribution Date and prior to the Expiration Date in accordance with Section 22 hereof;

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

 

Section 1.                      Certain Definitions.

 

For purposes of this Agreement, the following terms have the meanings indicated:

(a)           “Acquiring Person” shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 20% or more of the shares of Common Stock of the Company 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 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 of Common Stock so held.  Notwithstanding anything in this definition of “Acquiring Person” to the contrary:

 

(i)           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 percentage of the shares of Common Stock beneficially owned by such Person, together with all Affiliates and Associates of such Person, to 20% or more of the shares of Common Stock of the Company then outstanding; provided, however, that if a Person, together with all Affiliates and Associates of such Person, shall become the Beneficial Owner of 20% or more of the shares of Common Stock of the Company then outstanding by reason of share acquisitions by the Company and shall, after such share acquisitions by the Company, become the Beneficial Owner of any additional shares of Common Stock of the Company (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the outstanding Common Stock), then such Person shall be deemed to be an “Acquiring Person” unless, upon becoming the Beneficial Owner of such additional shares of Common Stock, such Person, together with all Affiliates and Associates of such Person, does not beneficially own 20% or more of the Common Stock then outstanding;

 

  

  

  

 

(ii)           if the Board determines 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 (including, without limitation, because (A) such Person was unaware that it beneficially owned a percentage of the then outstanding Common Stock that would otherwise cause such Person to be an “Acquiring Person” or (B) such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement), 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,” as defined pursuant to the foregoing provisions of this paragraph (a), then such Person shall not be deemed to be or to have become an “Acquiring Person” for any purposes of this Agreement as a result of such inadvertent acquisition unless and until such Person shall again become an “Acquiring Person”;

 

(iii)           if, as of the date hereof or prior to the first public announcement of the adoption of this Agreement, any Person is or becomes the Beneficial Owner of 20% or more of the shares of Common Stock outstanding, such Person shall not be deemed to be or to become an “Acquiring Person” unless and until such time as such Person shall, after the first public announcement of the adoption of this Agreement, become the Beneficial Owner of additional shares of Common Stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the outstanding Common Stock), unless upon becoming the Beneficial Owner of such additional shares of Common Stock, such Person is not then the Beneficial Owner of 20% or more of the shares of Common Stock then outstanding; and

 

(iv)           no Person shall become an “Acquiring Person” solely as a result of any unilateral grant of any security by the Company, or through the exercise of any options, warrants, rights or similar interests (including restricted stock) granted by the Company to its directors, officers and employees; provided, however, that if a Person, who or which together with all Affiliates and Associates, shall become the Beneficial Owner of 20% or more of the shares of Common Stock of the Company then outstanding by reason of a unilateral grant of a security by the Company, or through the exercise of any options, warrants, rights or similar interests (including restricted stock) granted by the Company to its directors, officers and employees, such Person shall nevertheless be deemed to be an “Acquiring Person” if, subject to Section 1(a)(ii), such Person, together with all Affiliates and Associates, thereafter becomes the Beneficial Owner of any additional shares of Common Stock (unless upon becoming the Beneficial Owner of additional shares of Common Stock, such Person, together with all Affiliates and Associates, does not beneficially own 20% or more of the Common Stock then outstanding), except as a result of (y) a dividend or distribution paid or made by the Company on the outstanding Common Stock or a split or subdivision of the outstanding Common Stock; or (z) the unilateral grant of a security by the Company, or through the exercise of any options, warrants, rights or similar interest (including restricted stock) granted by the Company to its directors, officers and employees.

 

  

- 2 -

  

 

(b)           “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the Exchange Act Regulations, as in effect on the date of this Agreement.

(c)           A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially own” and to have “beneficial ownership” of any securities:

(i)           that such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly (as determined pursuant to Rule 13d-3 of the Exchange Act Regulations as in effect on the date of this Agreement); provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own” or to have “beneficial ownership” of, any security under this subparagraph (i) as a result of an agreement, arrangement or understanding to vote such security that would otherwise render such Person the Beneficial Owner of such security, if such agreement, arrangement or understanding (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the Exchange Act Regulations and (B) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report);

(ii)           that such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the “Beneficial Owner” of, or to “beneficially own” or to have “beneficial ownership” of, (x) securities tendered pursuant to a tender or exchange offer made in accordance with the Exchange Act Regulations 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 (y) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event, or (z) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event if such 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(a) hereof in connection with an adjustment made with respect to any Original Rights; or (B) the right to vote pursuant to any agreement, arrangement, or understanding (except to the extent contemplated by the proviso to subparagraph (i) of this paragraph (c)); or

(iii)           that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate of such Person) 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 to the extent contemplated by the proviso to subparagraph (i) of this paragraph (c)) or disposing of any such securities;

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,” or have “beneficial ownership” of, any securities acquired through such Person’s participation in good faith in a firm commitment underwriting until the expiration of forty (40) days after the date of such acquisition; provided further, however, that no Person who is an officer, director or employee of the Company or any Subsidiary of the Company shall be deemed, solely by reason of such Person's status or authority as such, to be the “Beneficial Owner” of, or to “beneficially own,” any securities that are “beneficially owned” (as defined in this paragraph (c)), including, without limitation, in a fiduciary capacity, by the Company or any Subsidiary of the Company, or by any other such officer, director or employee of the Company or any Subsidiary of the Company.

 

  

- 3 -

  

 

Notwithstanding anything in this definition of Beneficial Ownership to the contrary, the phrase “then outstanding,” when used with reference to a Person’s Beneficial Ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding that such Person would be deemed to beneficially own hereunder.

(d)           “Board” shall mean the Board of Directors of the Company or any duly authorized committee thereof.

(e)           “Book Entry” shall mean an uncertificated book entry for the Common Stock.

(f)           “Business Day” shall mean any day other than a Saturday, a Sunday, or a day on which banking or trust institutions in New York City, New York are authorized or obligated by law or executive order to close.

(g)           “Certificate of Incorporation” shall mean the Amended and Restated Certificate of Incorporation of the Company dated as of May 7, 2001, as filed with the Office of the Secretary of State of the State of Delaware (the “Secretary of State”), and together with the Certificate of Designation of the Preferred Stock of the Company adopted contemporaneously with the approval of this Agreement and attached hereto as Exhibit A (the “Certificate of Designation”), as the same may hereafter be amended or restated.

(h)           “Close of Business” on any given date shall mean 5:00 P.M., New York City time, on such date; provided, however, that if such date is not a Business Day, it shall mean 5:00 P.M., New York City time, on the next succeeding Business Day.

(i)           “Common Stock” when used with reference to the Company shall mean Common Stock, par value $0.001 per share, of the Company.  “Common Stock” when used with reference to any Person other than the Company shall mean the class or series of capital stock (or equity interest) with the greatest voting power (in relation to any other classes or series of capital stock (or equity interest)) of such other Person or if such other Person is a Subsidiary of another Person, the Person who ultimately controls such first mentioned Person.

(j)           “Distribution Date” shall mean the earlier of (i) the Close of Business on the tenth Business Day after the Stock Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) and (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 later date as may be determined by action of the Board prior to such time as any Person becomes an Acquiring Person, after the date of the commencement 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 holding shares of Common Stock for or pursuant to the terms of any such plan) of, or of the first public announcement of the intention of any Person (other than any of the Persons referred to in the preceding parenthetical) to commence, a tender or exchange offer the consummation of which would result in such Person becoming the Beneficial Owner of 20% or more of the outstanding shares of Common Stock.

 

  

- 4 -

  

 

(k)           “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(l)           “Exchange Act Regulations” shall mean the General Rules and Regulations under the Exchange Act.

(m)           “Exchange Date” shall have the meaning set forth in Section 7(a) hereof.

(n)           “Exchange Ratio” shall have the meaning set forth in Section 24(a) hereof.

(o)           “Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

(p)           “Final Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

(q)           “Person” shall mean any individual, firm, corporation, partnership (general or limited), limited liability company, limited liability partnership, association, unincorporated organization, trust or other legal entity and also (i) any syndicate or group deemed to be a Person under Section 13(d)(3) of the Exchange Act and Rule 13d-5(b) thereunder and (iii) any successor (by merger or otherwise) of any such firm, corporation, partnership (general or limited), limited liability company, limited liability partnership, association, unincorporated organization, trust, or other group or entity.

(r)           “Preferred Stock” shall mean the Series B Junior Participating Preferred Stock, par value $0.001 per share, of the Company, having the voting rights, powers, designations, preferences and relative, participating, optional or other special rights and qualifications, limitations and restrictions set forth in the Certificate of Designation.

(s)           “Principal Party” shall have the meaning set forth in Section 13(b) hereof.

(t)           “Purchase Price” shall have the meaning set forth in Sections 4(a), 11(a)(ii) and 13(a) hereof.

(u)           “Record Date” shall mean the Close of Business on September 7, 2011.

(v)           “Redemption Date” shall have the meaning set forth in Section 7(a) hereof.

(w)           “Redemption Period” shall have the meaning set forth in Section 23(a) hereof.

(x)           “Right” and “Rights” shall have the meaning set forth in the Preamble hereof.

(y)           “Rights Certificate” shall have the meaning set forth in Section 3(d) hereof.

(z)           “Rights Dividend Declaration Date” shall have the meaning set forth in the Preamble hereof.

 

  

- 5 -

  

 

(aa)           “Section 11(a)(ii) Event” shall mean any event described in Section 11(a)(ii) hereof.

(bb)           “Section 13 Event” shall mean any event described in clause (x), (y) or (z) of Section 13(a) hereof.

(cc)           “Securities Act” shall mean the Securities Act of 1933, as amended.

(dd)           “Stock Acquisition Date” shall mean the first date of public announcement (including, without limitation, the filing of any report pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such.

(ee)           “Subsidiary” shall mean, with reference to any Person, any other Person of which (1) a majority of the voting power of the voting securities or equity interests is beneficially owned, directly or indirectly, by such first-mentioned Person or otherwise controlled by such first-mentioned Person, or (2) an amount of voting securities or equity interests sufficient to elect at least a majority of the directors or equivalent governing body of such other Person is beneficially owned, directly or indirectly, by such first-mentioned Person, or otherwise controlled by such first-mentioned Person.

(ff)           “Triggering Event” shall mean any Section 11(a)(ii) Event or any Section 13 Event.

(gg)           “Trust” has the meaning set forth in Section 24(d) hereof.

(hh)           “Trust Agreement” has the meaning set forth in Section 24(d) hereof.

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 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 a copy of a Summary of Rights to Purchase Preferred Stock, in substantially the form attached hereto as Exhibit B and which may be appended to certificates that represent shares of Common Stock (hereinafter referred to as 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 representing shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for shares of Common Stock registered in the names of the holders thereof, and not by separate Rights Certificates, and with respect to Book Entry shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by the balances indicated in the Book Entry account system of the transfer agent for the Common Stock, or in the case of certificated shares, by such certificates registered in the names of the holders thereof.  Until the earlier of the Distribution Date or the Expiration Date, the transfer of any shares of Common Stock outstanding on the Record Date (whether represented by certificate(s) or evidenced by the balances indicated in the Book Entry account system of the transfer agent for the Common Stock, and, in either case, regardless of whether a copy of the Summary of Rights is submitted with the surrender or request for transfer), also shall constitute the transfer of the Rights associated with such shares of Common Stock.

 

  

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(b)           Rights shall be issued, without any further action, in respect of all shares of Common Stock that become outstanding (whether originally issued or delivered from the Company’s treasury) after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date; provided, however, that Rights also shall be issued to the extent provided in Section 22 hereof.  Confirmation and account statements sent to holders of Common Stock for Book Entry form or, in the case of certificated shares, certificates, representing such shares of Common Stock, issued after the Record Date shall bear a legend substantially in the following form:

“[This certificate] [These shares] also evidence[s] and entitle[s] the holder hereof to certain Rights as set forth in a Rights Agreement between GenVec, Inc. (the “Company”) and American Stock Transfer & Trust Company, LLC (the “Rights Agent”) dated as of August 11, 2011 as the same may be amended from time to time (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of the Company.  Under certain circumstances, as set forth in the Rights Agreement, such Rights shall be evidenced by separate certificates and will no longer be evidenced by [this certificate] [these shares].  The Company will mail to the holder of [this certificate] [these shares] 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, as set forth in the Rights Agreement, Rights that are Beneficially Owned by any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such capitalized terms are defined in the Rights Agreement), or specified transferees of such Acquiring Person (or Affiliate or Associate thereof) may become null and void.”

With respect to all certificates representing shares of Common Stock containing the foregoing legend, until the earliest of the Distribution Date, the Redemption Date and the Final 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 shares of Common Stock represented by such certificates.

With respect to Common Stock in Book Entry form for which there has been sent a confirmation or account statement containing the foregoing legend, until the earliest of the Distribution Date, the Redemption Date and the Expiration Date, the Rights associated with the Common Stock shall be evidenced by such Common Stock alone and registered holders of Common Stock shall also be the registered holders of the associated Rights, and the transfer of any such Common Stock shall also constitute the transfer of the Rights associated with such shares of Common Stock.

Notwithstanding this paragraph (b), the omission of the legend or the failure to send, deliver or provide the registered owner of shares of Common Stock, a copy of the Summary of Rights shall not affect the enforceability of any part of this Agreement or the rights of any holder of the Rights.

 

  

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In the event that the Company purchases or otherwise acquires any shares of Common Stock after the Record Date but prior to the Distribution Date, any Rights associated with such shares of Common Stock shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with the shares of Common Stock that are no longer outstanding.

(c)           Until the Distribution Date, the Rights shall 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 Company will prepare and execute, the Rights Agent will countersign and the Company will send or cause to be sent (and the Rights Agent, if so requested, will send) by first-class, insured, postage-prepaid mail, to each record holder of shares of Common Stock as of the Close of Business on the Distribution Date (other than any Acquiring Person or any Associate or Affiliate of an Acquiring Person), at the address of such holder shown on the records of the Company, one or more rights certificates, in substantially the form of Exhibit C 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 hereof, at the time of distribution of the Rights Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights.  As of and after the Distribution Date, the Rights shall be evidenced solely by such Rights Certificates.

Section 4.                      Form of Rights Certificate.

 

(a)           The Rights Certificates (and the forms of election to purchase and of assignment and the certificate to be printed on the reverse thereof) shall be substantially in the form set forth in Exhibit C 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 any rule or regulation thereunder or with any rule or regulation of any stock exchange upon which the Rights may from time to time be listed, or to conform to usage.  Subject to the provisions of this Agreement, the Rights Certificates, whenever distributed, shall be dated as of the Distribution Date and on their face shall entitle the holders thereof to purchase such number of one one-thousandth of a share of Preferred Stock as shall be set forth therein at the price set forth therein (such exercise price per one one-thousandth of a share, the “Purchase Price”), but the amount and type of securities, cash, or other assets that may be acquired upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein.

 

  

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(b)           Any Rights Certificate issued pursuant hereto 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) that becomes a transferee after the Acquiring Person becomes such ,or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) that becomes a transferee prior to or concurrently with the Acquiring Person becoming such and that receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such Associate or Affiliate) to holders of equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any Person with whom such Acquiring Person (or any such Associate or Affiliate) has any continuing written or oral plan, agreement, arrangement, or understanding regarding the transferred Rights, shares of Common Stock, or the Company or (B) a transfer that the Board has determined in good faith to be part of a plan, agreement, arrangement, or understanding that has as a primary purpose or effect the 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 upon the written direction of the Board (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 dated as of August 11, 2011 by and between GenVec, Inc. and American Stock Transfer & Trust Company, LLC (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 the Rights Agreement.”

The Company shall instruct the Rights Agent in writing of the Rights which should be so legended.

 

Section 5.                      Countersignature and Registration.

 

(a)           The Rights Certificates shall be executed on behalf of the Company by the chairperson or vice chairperson of its Board of Directors, or the President or a Vice President and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, shall have affixed thereto the Company’s corporate seal (or a facsimile thereof), and shall be attested by the Company’s Secretary or one of its Assistant Secretaries.  The signature of any of these officers on the Rights Certificates may be manual or by facsimile.  Rights Certificates bearing the manual or facsimile signatures of the individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the countersigning of such Rights Certificates by the Rights Agent or did not hold such offices at the date of such Rights Certificates.  No Rights Certificate shall be entitled to any benefit under this Agreement or be valid for any purpose unless there appears on such Rights Certificate a countersignature duly executed by the Rights Agent by manual or facsimile signature of an authorized officer, and such countersignature upon any Rights Certificate shall be conclusive evidence, and the only evidence, that such Rights Certificate has been duly countersigned as required hereunder.

(b)           Following the Distribution Date, the Rights Agent shall keep or cause to be kept, at its office designated 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 name and address of each holder of the Rights Certificates, the number of Rights evidenced on its face by each Rights Certificate, and the date of each Rights Certificate.

 

  

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Section 6.

	
Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.

 

(a)           Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates representing Rights that have become null and void pursuant to Section 7(e) hereof, that have been redeemed pursuant to Section 23 hereof, or that have been exchanged pursuant to Section 24 hereof) may be transferred, split up, combined or exchanged for another Rights Certificate or Certificates, entitling the registered holder to purchase a like number of one one-thousandth of a share of Preferred Stock (or following a Triggering Event, Common Stock, other securities, cash, or other assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitled such holder to purchase.  Any registered holder desiring to transfer, split up, combine or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purpose.  Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have properly completed and executed the certificate set forth 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) of the Rights represented by such Rights Certificate or Affiliates or Associates thereof as the Company shall reasonably request; whereupon the Rights Agent shall, subject to the provisions of Sections 4(b), 7(e) and 14 hereof, countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested.  The Company may require payment by the holder of the Rights of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Rights Certificates.

(b)           If a Rights Certificate shall be mutilated, lost, stolen, or destroyed, upon request by the registered holder of the Rights represented thereby and upon payment to the Company and the Rights Agent of all reasonable expenses incident thereto, there shall be issued, in exchange for and upon cancellation of the mutilated Rights Certificate, or in substitution for the lost, stolen, or destroyed Rights Certificate, a new Rights Certificate, in substantially the form of the prior Rights Certificate, of like tenor and representing the equivalent number of Rights, but, in the case of loss, theft, or destruction, only upon receipt of evidence satisfactory to the Company and the Rights Agent of such loss, theft or destruction of such Rights Certificate and, if requested by the Company or the Rights Agent, indemnity also satisfactory to it.

 

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, in the restrictions on exercisability set forth in Sections 9(c), 11(a)(iii) and 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 office of the Rights Agent designated for such purpose, together with payment of the Purchase Price for each one one-thousandth of a share of Preferred Stock (or Common Stock, other securities, cash or other assets, as the case may be) as to which the Rights are exercised, at or prior to the earliest of (i) the Close of Business on September 7, 2021 (the “Final Expiration Date”), (ii) the time at which the Rights are redeemed (the “Redemption Date”) as provided in Section 23 hereof or (iii) the time at which the Rights are exchanged (the “Exchange Date”) as provided in Section 24 hereof (the earliest of (i), (ii) and (iii) being herein referred to as the “Expiration Date”).

(b)           Each Right shall entitle the registered holder thereof to purchase one one-thousandth of a share of Preferred Stock.  The Purchase Price for each one one-thousandth of a share of Preferred Stock pursuant to the exercise of a Right shall initially be $32.00, 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 in accordance with paragraph (c) of this Section 7.

 

  

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(c)           Upon receipt of a Rights Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly and properly executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price per one one-thousandth of a share of Preferred Stock (or Common Stock, other securities, cash or other assets, as the case may be) to be purchased and an amount equal to any applicable tax or charge in cash, or by certified check or cashier’s check payable to the order of the Company, the Rights Agent shall, subject to Section 18(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Stock certificates representing such number of one one-thousandth of a share of Preferred Stock (or fractions of shares that are integral multiples of one one-thousandth of a share of Preferred Stock) as are to be purchased and the Company shall direct its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of shares of Preferred Stock issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts representing such number of one one-thousandth of a share of Preferred Stock as are to be purchased (in which case certificates for the shares of Preferred Stock represented by such receipts shall be deposited by the transfer agent with the depositary agent), and the Company shall direct the depositary to comply with all such requests, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or such depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate.  In the event that the Company is obligated to issue Common Stock or other securities of the Company, pay cash and/or distribute other property pursuant to Section 11(a) hereof, the Company shall make all arrangements necessary so that such Common Stock, other securities, cash and/or other property are available for distribution by the Rights Agent, if and when necessary to comply with this Agreement. The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in cash or by certified or bank check or money order payable to the order of the Company.

(d)           In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, subject to the provisions of Sections 6 and 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 who receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such Associate or Affiliate) to holders of equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any Person with whom the Acquiring Person (or any such Associate or Affiliate) has any continuing written or oral plan, agreement, arrangement or understanding regarding the transferred Rights, shares of Common Stock or the Company or (B) a transfer that the Board has determined in good faith to be part of a plan, agreement, arrangement or understanding that has as a primary purpose or effect the avoidance of this Section 7(e), shall be null and void without any further action, and any holder of such Rights thereafter shall have no rights or preferences whatsoever with respect to such Rights, whether under any provision of this Agreement, the Rights Certificates or otherwise (including, without limitation, rights and preferences pursuant to Sections 7, 11, 13, 23 and 24 hereof).  The Company shall use reasonable efforts to ensure compliance with the provisions of this Section 7(e) and Section 4(b) hereof, but neither the Company nor the Rights Agent shall have any  liability to any holder of Rights or any other Person as a result of the Company’s failure to make any determination with respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder.

 

  

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(f)           Notwithstanding anything in this Agreement or any Rights Certificate 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 by such registered holder unless such registered holder shall have (i) properly completed and executed the certificate following 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) of the Rights represented by such Rights Certificate 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 cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by this Agreement.  The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any Rights Certificates acquired by the Company otherwise than upon the exercise thereof.  The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

Section 9.                      Reservation and Availability of Capital Stock.

 

(a)           The Company shall cause to be reserved and kept available out of its authorized and unissued shares of Preferred Stock (and following the occurrence of a Triggering Event, out of its authorized and unissued shares of Common Stock and/or other securities or out of its authorized and issued shares held in its treasury), the number of shares of Preferred Stock (and, following the occurrence of a Triggering Event, shares of Common Stock and/or other securities) that, as provided in this Agreement, including Section 11(a)(iii) hereof, shall be sufficient to permit the exercise in full of all outstanding Rights.  Upon the occurrence of any events resulting in an increase in the aggregate number of shares of Preferred Stock (or Common Stock and/or other equity securities of the Company) issuable upon exercise of all outstanding Rights above the number then reserved, the Company shall make appropriate increases in the number of shares so reserved.

(b)           So long as the shares of Preferred Stock (and following the occurrence of a Triggering Event, Common Stock and/or other securities) issuable upon the exercise of the Rights may be listed or admitted to trading 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 or admitted to trading on such exchange upon official notice of issuance upon such exercise.

 

  

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(c)           The Company shall use its reasonable best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with this Agreement, or as soon as is required by law following the Distribution Date, as the case may be, a registration statement on an appropriate form under the Securities Act with respect to the securities purchasable upon exercise of the Rights; (ii) cause such registration statement to become effective as soon as practicable after such filing; and (iii) cause such registration statement to remain effective (and to include a prospectus at all times complying with the requirements of the Securities Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for the securities covered by such registration statement, and (B) the Expiration Date.  The Company shall 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.  Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect, in each case with simultaneous written notice to the Rights Agent.  Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction (x) if the requisite qualification in such jurisdiction shall not have been obtained and until a registration statement has been declared effective or (y) if the exercise thereof shall not be permitted under applicable law.

(d)           The Company shall take such action as may be necessary to ensure that all one one-thousandth of a share of Preferred Stock (and, following the occurrence of a Triggering Event, Common Stock and/or other securities that may be delivered upon exercise of Rights) shall be, at the time of delivery of the certificates or depositary receipts  for such securities (subject to payment of the Purchase Price), duly and validly authorized and issued, fully paid and non-assessable.

(e)           The Company shall pay when due and payable any and all documentary, stamp, or transfer tax, or other tax or charge, that is payable in respect of the issuance and delivery of the Rights Certificates or the issuance and delivery of any certificates or depository receipts or entries in the Book Entry account system of the transfer agent for the Preferred Stock for a number of one one-thousandth of a share of Preferred Stock (or Common Stock and/or other equity securities of the Company that may be delivered upon exercise of the Rights) upon the exercise of Rights; provided, however, the Company shall not be required to pay any such tax or charge that may be payable in connection with the issuance or delivery of any of any certificates or depositary receipts or entries in the Book Entry account system of the transfer agent for the Preferred Stock for a number of one one-thousandth of a share of Preferred Stock (or Common Stock and/or other equity securities of the Company as the case may be) to any Person other than the registered holder of the Rights Certificates evidencing the Rights surrendered for exercise.  The Company shall not be required to issue or deliver any certificates or depositary receipts or entries in the Book Entry account system of the transfer agent for the Preferred Stock (or Common Stock and/or other equity securities of the Company as the case may be) to, or in a name other than that of, the registered holder upon the exercise of any Rights until any such tax or charge shall have been paid (any such tax or charge 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 or charge is due.

 

  

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Section 10.                      Preferred Stock Record Date.

 

Each Person in whose name any certificate or entry in the Book Entry account system of the transfer agent for the Preferred Stock for a number of one one-thousandth of a share of Preferred Stock (or Common Stock and/or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such fractional shares of Preferred Stock (or Common Stock and/or other securities, as the case may be) represented thereby on, and such certificate or entry in the Book Entry account system of the transfer agent for the Preferred Stock 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 and charges) was made; provided, however, that if the date of such surrender and payment is a date upon which the Preferred Stock (or Common Stock and/or other securities as the case may be) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such securities (fractional or otherwise) on, and such certificate or entry in the Book Entry account system of the transfer agent for the Preferred Stock shall be dated, the next succeeding Business Day on which the Preferred Stock (or Common Stock and/or other securities as the case may be) transfer books of the Company are open and, provided further, that if delivery of a number of one one-thousandth of a share of Preferred Stock is delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have become the record holders of such number of one one-thousandth of a share of Preferred Stock only when such Preferred Stock first become deliverable.  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 the securities 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 securities 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 Rights Dividend Declaration Date (A) declare a dividend on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller number of shares or (D) issue any shares of its capital stock in a reclassification of Preferred Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a), 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 (or fractions thereof) of Preferred Stock or capital stock, as the case may be, issuable on such date upon exercise of the Rights, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares (or fractions thereof) of Preferred Stock or capital stock, as the case may be, which, if such Right had been exercised immediately prior to such date, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares (or fractions thereof) of capital stock of the Company issuable upon exercise of one Right.  If an event occurs that would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

  

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(ii)  Subject to Section 23 and Section 24 hereof, 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 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 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, then proper provision shall be made so that promptly following the Redemption Period (as defined in Section 23(a) hereof), 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, in lieu of a number of one one-thousandth of a share of Preferred Stock, such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price by the then number of one one-thousandth of a share of Preferred 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 hereof) by 50% of the current per share market price of Common Stock (as determined pursuant to Section 11(d) hereof) on the date of such first occurrence (such number of shares, the “Adjustment Shares”).

(iii)  The Company at its option may substitute for a share of Common Stock issuable upon the exercise of Rights in accordance with the foregoing subparagraph (ii) such number or fractions of shares of Preferred Stock having an aggregate market value equal to the current per share market price of one share of Common Stock.  In the event that the number of shares of Common Stock which is authorized by the Certificate of Incorporation, but not outstanding, or reserved for issuance for purposes other than upon exercise of the Rights, is not sufficient to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii), the Board shall, to the extent permitted by applicable law and by any agreements or instruments then in effect to which the Company is a party, (A) determine the excess of (x) the value of the Adjustment Shares issuable upon the exercise of a Right (the “Current Value”) over (y) the Purchase Price (such excess being 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) shares (or fractions of a share) of Preferred Stock or 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 being 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) hereof 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 such number of fractions of shares of Preferred Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread.

 

  

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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-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 stockholder 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 second 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 Preferred Stock entitling them (for a period expiring within forty-five (45) days after such record date) to subscribe for or purchase Preferred Stock (or shares having the same rights, privileges and preferences as the shares of Preferred Stock (“equivalent preferred stock”)) or securities convertible into Preferred Stock or equivalent preferred stock at a price per share of Preferred Stock or per share of equivalent preferred stock (or having a conversion price per share, if a security convertible into Preferred Stock or equivalent preferred stock) less than the current per share market price of the Preferred Stock (as determined pursuant to Section 11(d) hereof) on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of shares of Preferred Stock or equivalent preferred stock outstanding on such record date, plus the number of shares of Preferred Stock or equivalent preferred stock which the aggregate offering price of the total number of shares of Preferred Stock and/or equivalent preferred stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such current market price, and the denominator of which shall be the number of shares of Preferred Stock or equivalent preferred stock outstanding on such record date, plus the number of additional shares of Preferred Stock and/or equivalent preferred stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible); provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right.  In case such subscription price may be paid by delivery of consideration all or part of which may be in a form other than cash, the value of such consideration shall be as determined by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights.  Shares of Preferred Stock or equivalent preferred stock owned by or held for the account of the Company or any Subsidiary shall not be deemed outstanding for the purpose of such computation.  Such adjustment shall be made successively whenever such a record date is fixed, and in the event that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price that would then be in effect if such record date had not been fixed.

 

  

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(c)           In case the Company shall fix a record date for a distribution to all holders of shares of Preferred Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), evidences of indebtedness, cash (other than a regular quarterly cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in shares of Preferred Stock, but including any dividend payable in stock other than Preferred Stock), or subscription rights, options or warrants (excluding those referred to in Section 11(b) hereof), then, in each case, 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 (as determined pursuant to Section 11(d) hereof) of the Preferred Stock on such record date minus 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 binding and conclusive for all purposes on the Rights Agent and the holder of the Rights) of the portion of the cash, assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants distributable in respect of a share of Preferred Stock, and the denominator of which shall be such current per share market price (as determined pursuant to Section 11(d) hereof) of the Preferred Stock on such record date; provided, however, that in no event shall the consideration to be paid upon the exercise of one Right be less than the aggregate par value of the shares of capital stock of the Company issuable upon exercise of one Right.  Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price that would have been in effect if such record date had not been fixed.

(d)           (i)  For the purpose of any computation under this Agreement, the “current per share market price” of any security, including the Common Stock, on any date shall be deemed to be the average of the daily closing prices per share of such security for the thirty (30) consecutive Trading Days (as such term is hereinafter defined) immediately prior to, but not including, such date; provided, however, that in the event that the current per share market price of the security is determined during a period following the announcement by the issuer of such security of (i) a dividend or distribution on such security payable in shares of such security or securities convertible into such shares (other than the Rights), or (ii) any subdivision, combination or reclassification of such security, and prior to the expiration of the requisite 30 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 per share market price” shall be appropriately adjusted to take into account ex-dividend trading.  The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on The NASDAQ Stock Market or the New York Stock Exchange or, if the security is not listed or admitted to trading on The NASDAQ Stock Market or the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the security is listed or admitted to trading or, if the security is not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by any system then in use or, if not so quoted, the average of the closing bid and asked price furnished by a professional market maker making a market in the security selected by the Board.

If on any such date no market maker is making a market in the security, the fair value of such shares on such date as determined in good faith by the Board shall be used.  If the security 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.  The term “Trading Day” shall mean, if the security is listed or admitted to trading on any national securities exchange, a day on which the principal national securities exchange on which such security is listed or admitted to trading is open for the transaction of business or, if such security is not so listed or admitted, a Business Day.

 

  

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(ii)  For the purpose of any computation under this Agreement, the “current per share market price” of the Preferred Stock shall be determined in the same manner as set forth above for the Common Stock in clause (i) of this Section 11(d) (other than the last sentence thereof).  If the current per share market price of the Preferred Stock cannot be determined in the manner provided above or if the Preferred Stock is not publicly held or listed or traded in a manner described in clause (i) of this Section 11(d), the “current per share market price” of the Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as such number may be appropriately adjusted for such events as stock splits, reverse stock splits, stock dividends or any similar transaction with respect to the Common Stock occurring after the date of this Agreement) multiplied by the current per share market price of the Common Stock.  If neither the Common Stock nor the Preferred Stock is publicly held or so listed or traded, the “current per share market price” of the Preferred Stock shall mean the fair value per share as determined in good faith by the Board, whose determination shall be described in a statement filed with the Rights Agent and shall be binding on the Rights Agent and the holders of the Rights.  For all purposes of this Agreement, the “current per share market price” of one one-thousandth of a share of Preferred Stock shall be equal to the “current per share market price” of one share of Preferred Stock divided by 1,000.

(e)           Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Purchase Price; provided, however, that any adjustments that by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock or other share or one-millionth of a share of Preferred Stock, as the case may be.  Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction that requires such adjustment or (ii) the Expiration Date.

(f)           If, as a result of an adjustment made pursuant to Sections 11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Preferred Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Stock contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j), (k), (l) and (m) hereof, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like terms to any such other shares.

(g)           All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of one one-thousandth of a share of Preferred Stock (or other securities or amount of cash or combination thereof) that may be acquired 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) hereof, each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandth of a share of Preferred Stock (calculated to the nearest one-millionth of a share) obtained by (i) multiplying (x) the number of one one-thousandth of a share covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

 

  

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(i)           The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment in the number of one one-thousandth of a share of Preferred Stock that may be acquired upon the exercise of a Right.  Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one one-thousandth of a share of Preferred Stock for which a Right was exercisable immediately prior to such adjustment.  Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth of a Right) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price.  The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made.  This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least ten (10) days later than the date of such 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 one one-thousandth of a share of Preferred Stock issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-thousandth of a share and the number of one one-thousandth of a share 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 one one-thousandth of a share of Preferred Stock issuable upon exercise of the Rights, the Company shall take any corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue, such fully paid and non-assessable, number of one one-thousandth of a share of Preferred Stock at such adjusted Purchase Price.

(l)           In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date of that number of one one-thousandth of a share of Preferred Stock and shares of other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one one-thousandth of a share of Preferred Stock and shares of other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment.

 

  

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(m)           Anything in this Section 11 to the contrary notwithstanding, prior to the Distribution Date, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that the Board shall determine that any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less than the current market price, (iii) issuance wholly for cash of shares of Preferred Stock or securities that by their terms are convertible into or exchangeable for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights, options or warrants referred to in this Section 11, hereafter made by the Company to holders of its Preferred Stock shall not be taxable to such holders or shall reduce the taxes payable by such holders.

(n)           The Company shall not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a direct or indirect, wholly-owned Subsidiary of the Company in a transaction that complies with Section 11(o) hereof), (ii) merge with or into any other Person (other than a direct or indirect, wholly-owned Subsidiary of the Company in a transaction that 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 transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its direct or indirect, wholly-owned 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 that 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 or other Persons holding an equity interest in such Person that constitutes, or would constitute, the “Principal Party” for purposes of Section 13(a) hereof shall have received a distribution of, or otherwise have transferred to them, the Rights previously owned by such Person or any of its Affiliates and Associates; provided, however, this Section 11(n) shall not affect the ability of any Subsidiary of the Company to consolidate with, merge with or into, or sell or transfer assets or earning power to, any other Subsidiary of the Company.

(o)           After the Distribution Date and so long as any Rights shall then be outstanding (other than Rights that have become null and void pursuant to Section 7(e) hereof), the Company shall not, except as permitted by Sections 23, 24, and 27 hereof, take (or permit any Subsidiary of the Company 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, at any time after the Rights Dividend Declaration Date and prior to the Distribution Date, shall (i) declare a dividend on the outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide any outstanding shares of Common Stock,  (iii) combine any of the outstanding shares of Common Stock into a smaller number of shares or (iv) 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) 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.  The adjustments provided for in this Section 11(p) shall be made successively whenever such a dividend is declared or paid or such a subdivision, combination, or reclassification is effected.  If an event occurs that would require an adjustment under Section 11(a)(ii) and this Section 11(p), the adjustments provided for in this Section 11(p) shall be in addition and prior to any adjustment required pursuant to Section 11(a)(ii).

 

  

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Section 12.                      Certificate of Adjusted Purchase Price or Number of Shares.

 

Whenever an adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment, and a brief statement of the facts and computations accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred Stock and 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, each registered holder of shares of Common Stock) in accordance with Section 26 hereof.  The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment or statement therein contained and shall not be deemed to have knowledge of any adjustment or any such event unless and until it shall have received such a certificate.

	
Section 13.

	
Consolidation, Merger or Sale or Transfer of Assets or Earning Power.

 

(a)           Subject to Section 23 hereof, at any time after a Person has become an Acquiring Person, in the event that, directly or indirectly,

	
  

	
(x) 

	
the Company shall consolidate with, or merge with and into, any other Person (other than a direct or indirect, wholly-owned Subsidiary of the Company in a transaction that complies with Section 11(o) hereof), and the Company shall not be the continuing or surviving entity of such consolidation or merger,

	
  

	
(y) 

	
any Person (other than a direct or indirect, wholly-owned Subsidiary of the Company in a transaction that 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 entity 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 converted into or exchanged for stock or other securities of any other Person (or the Company) or cash or any other property, or

	
  

	
(z) 

	
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer) to any Person or Persons (other than the Company or any of its direct or indirect, wholly-owned Subsidiaries in one or more transactions, each of which complies with Section 11(o) hereof), in one or more transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole),

(any such event described in (x), (y), or (z) being herein referred to as a “Section 13 Event”), then, and in each such case, proper provision shall be made so that:

 

  

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(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) hereof), thereafter have the right to receive, upon the exercise of the Right at the then current Purchase Price in accordance with the terms of this Agreement, and in lieu of a number of one one-thousandth shares of Preferred Stock, such number of validly authorized and issued, fully paid, non-assessable and freely tradable shares of Common Stock of the Principal Party (as hereinafter defined), which shares shall not be subject to any liens, encumbrances, rights of first refusal, transfer restrictions or other adverse claims, as shall be equal to the result obtained by

(1)           multiplying such then current Purchase Price by the number of one one-thousandth of a share of Preferred Stock for which such Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of one one-thousandth of a share of Preferred Stock for which a Right would be exercisable hereunder but for the first occurrence of such Section 11(a)(ii) Event by the Purchase Price that would be in effect hereunder but for such first occurrence), and

(2)           dividing that product (which, following the first occurrence of a Section 13 Event, shall be the “Purchase Price” for each Right and for all purposes of this Agreement) by 50% of the then current per share market price (as determined pursuant to Section 11(d) hereof) 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 of 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 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 ensure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be possible, to its shares of Common Stock thereafter deliverable upon the exercise of the Rights; and

	
  

	
(v)

	
the provisions of Section 11(a)(ii) hereof shall be of no further effect following the first occurrence of any Section 13 Event, and the Rights that have not theretofore been exercised shall thereafter become exercisable in the manner described in this Section 13.

 

  

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(b)           “Principal Party” shall mean

(i)           in the case of any transaction described in clause (x) or (y) of the first sentence of Section 13(a) hereof, (A) the Person (including the Company as successor thereto or as the surviving entity) that is the issuer of any securities or other equity interests into which shares of Common Stock of the Company are converted in such merger or consolidation, or, if there is more than one such issuer, the issuer of Common Stock that has the highest aggregate current market price (as determined pursuant to Section 11(d) hereof) and (B) if no securities or other equity interests are so issued, the Person (including the Company as successor thereto or as the surviving entity) that is the other constituent party to such merger or consolidation, or, if there is more than one such Person, the Person that is a constituent party to such merger or consolidation, the Common Stock of which has the highest aggregate current market price (as determined pursuant to Section 11(d) hereof); and

(ii)           in the case of any transaction described in clause (z) of the first sentence of Section 13(a) hereof, the Person that is the party receiving the largest portion of the assets or earning power transferred pursuant to such transaction or transactions, or, if each Person that is a party to such transaction or transactions receives the same portion of the assets or earning power transferred pursuant to such transaction or transactions or if the Person receiving the largest portion of the assets or earning power cannot be determined, whichever Person that has received assets or earning power pursuant to such transaction or transactions, the Common Stock of which has the highest aggregate current market price (as determined pursuant to Section 11(d) hereof);

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; (2) if the Common Stock of such Person is not and has not been so registered and such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Stocks of two or more of which are and have been so registered, “Principal Party” shall refer to whichever of such Persons is the issuer of the Common Stock having the highest aggregate market value; and (3) if the Common Stock of such Person is not and has not been so registered and such Person is owned, directly or indirectly, by a joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set forth in (1) and (2) above shall apply to each of the chains of ownership having an interest in such joint venture as if such party were a Subsidiary of both or all of such joint venturers, and the Principal Parties in each such chain shall bear the obligations set forth in this Section 13 in the same ratio as their direct or indirect interests in such Person bear to the total of such interests.

(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 that have not been issued (or reserved for issuance) or that are held in its treasury 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, at its own expense, shall:

(i)           (A) prepare and file on an appropriate form a registration statement under the Securities Act, with respect to the Rights and the securities that may be acquired upon exercise of the Rights on an appropriate form, (B) use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and remain effective (and to include a prospectus at all times complying with the requirements of the Securities Act) until the Expiration Date, and (C) take such action as may be required to ensure that any acquisition of such securities that may be acquired upon exercise of the Rights complies with any applicable state security or “Blue Sky” laws as soon as practicable following the execution of such agreement;

 

  

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(ii)           deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates that comply in all respects with the requirements for registration on Form 10 (or any successor form) under the Exchange Act;

(iii)           use its best efforts to obtain any and all necessary regulatory approvals as may be required with respect to the securities that may be acquired upon exercise of the Rights; and

(iv)           use its best efforts, if such Common Stock of the Principal Party shall be listed or admitted to trading on The NASDAQ Stock Market, the New York Stock Exchange or on another national securities exchange, to list or admit to trading (or continue the listing of) the Rights and the securities that may be acquired upon exercise of the Rights on The NASDAQ Stock Market, the New York Stock Exchange or on such securities exchange, or if the securities of the Principal Party that may be acquired upon exercise of the Rights shall not be listed or admitted to trading on The NASDAQ Stock Market, the New York Stock Exchange or a national securities exchange, to cause the Rights and the securities that may be acquired upon exercise of the Rights to be authorized for quotation on any other system then in use.

(d)           In case the Principal Party that is to be a party to a transaction referred to in this Section 13 has at the time of such transaction, or immediately following such transaction shall have, a provision in any of its authorized securities or in its certificate or articles of incorporation or by-laws or other instrument governing its affairs, or any other agreements or arrangements, which provision would have the effect of (i) causing such Principal Party to issue, in connection with, or as a consequence of, the consummation of a transaction referred to in this Section 13, shares of Common Stock of such Principal Party at less than the then current per share market price (as determined pursuant to Section 11(d) hereof) or securities exercisable for, or convertible into, Common Stock of such Principal Party at less than such then current per share market price (other than to holders of Rights pursuant to this Section 13), (ii) providing for any special payment, tax or similar provisions in connection with the issuance of the Common Stock of such Principal Party pursuant to the provisions of this Section 13 or (iii) otherwise eliminating or substantially diminishing the benefits intended to be afforded by the Rights in connection with, or as a consequence of, the consummation of a transaction referred to in this Section 13, then, in such event, the Company shall not consummate any such transaction unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing that the provision in question of such Principal Party shall have been cancelled, waived or amended, or that the authorized securities shall be redeemed, so that the applicable provision will have no effect in connection with, or as a consequence of, the consummation of such transaction.

(e)           The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers.  In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights that have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a) hereof.

 

  

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Section 14.                      Fractional Rights; Fractional Shares; Waiver.

 

(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 that evidence fractional Rights.  In lieu of such fractional Rights, there shall be paid to the Persons to which such fractional Rights would otherwise be issuable, an amount in cash equal to such fraction of the market value of a whole Right.  For purposes of this Section 14(a), the market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date that such fractional Rights would have been otherwise issuable.  The closing price of the Rights 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 NASDAQ Stock Market or, if the Rights are not listed or admitted to trading on The NASDAQ Stock Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading, or 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 Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to distribute certificates which evidence fractional shares of Preferred Stock (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock).  In lieu of fractional shares of Preferred Stock that are not integral multiples of one one-thousandth of a share of Preferred Stock, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one one-thousandth of a share of Preferred Stock.  For purposes of this Section 14(b), the current market value of one one-thousandth of a share of Preferred Stock shall be one one-thousandth of the closing price of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise.

(c)           Following the occurrence of one of the events specified in Section 11 hereof giving rise to the right to receive Common Stock, common stock equivalents or other securities upon the exercise of a Right, the Company shall not be required to issue fractions of shares of Common Stock, common stock equivalents or other securities upon exercise of the Rights or to distribute certificates which evidence fractional shares of Common Stock, common stock equivalents or other securities.  In lieu of fractional shares of Common Stock, common stock equivalents or other securities, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one share of Common Stock, common stock equivalents or other securities.  For purposes of this Section 14(c), the current market value of one share of Common Stock shall be the closing price of one share of Common Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of such exercise.

 

  

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(d)           The holder of a Right, by the acceptance of the Right, expressly waives such holder’s right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14.

Section 15.                      Rights of Action.

 

All rights of action in respect of this Agreement, other than the rights of action vested in the Rights Agent pursuant to Sections 18 and 19 hereof, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of shares of the Common Stock); and any registered holder of a Rights Certificate (or, prior to the Distribution Date, any registered holder of shares 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, any registered holder of shares of the Common Stock), may, in such holder’s own behalf and for such holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company or any other Person to enforce, or otherwise act in respect of, such holder’s right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement.  Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder, and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement.

Section 16.                      Agreement of Rights Holders.

 

Every holder of a Right, by accepting such Right, 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 evidenced by the balances indicated in the Book Entry account system of the transfer agent for the Common Stock registered in the names of the holders of Common Stock (which Common Stock shall also be deemed to represent certificates for Rights) or, in the case of certificated shares, the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for shares of Common Stock shall also constitute certificates for Rights) and each Right shall be transferable only in connection with the transfer of the Common Stock;

(b)           after the Distribution Date, the Rights Certificates shall be transferable only on the registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates duly completed and executed;

(c)           subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the Person in whose name a Rights Certificate (or, prior to the Distribution Date, the associated balance indicated in the Book Entry account system of the transfer agent for the Common Stock, or in the case of certificated shares, by 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 balance indicated in the Book Entry account system of the transfer agent for the Common Stock, or in the case of certificated shares, by 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

 

  

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(d)           notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or any 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, judgment or ruling (whether interlocutory or final) issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Company shall use its best efforts to have any such order, decree, judgment or ruling lifted or otherwise overturned as promptly as practicable.

Section 17.                      Rights Certificate Holder Not Deemed a Stockholder.

 

No holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the shares of Preferred Stock or any other securities of the Company that 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 stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or, except as provided in Section 25 hereof, to receive notice of meetings or other actions affecting stockholders, 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 only 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, and the Rights Agent shall incur no liability for or in respect of, any action taken, suffered or omitted by the Rights Agent 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 an Acquiring Person and the determination of “current per share market price”) be proved or established by the Company prior to the Rights Agent taking, suffering or omitting to take any action hereunder, such fact or matter (unless other evidence in respect thereof be specified herein) may be deemed to be conclusively proved and established by a certificate signed by any one of the President and Chief Executive Officer, Chief Financial Officer or any Senior Vice President of the Company and delivered to the Rights Agent, and such certificate shall be full authorization to the Rights Agent, and the Rights Agent shall incur no liability, for or in respect of any action taken, suffered or omitted in good faith by it under the provisions of this Agreement in reliance upon such certificate.

(c)           The Rights Agent shall be liable hereunder to the Company or any other Person only for its own negligence, bad faith, or willful misconduct.

 

  

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(d)           The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates or be required to verify the same (except as to its countersignature thereof), but all such statements and recitals are and shall be deemed to have been made by the Company only.

(e)           The Rights Agent shall not have any responsibility for the validity of this Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the Rights Agent) or for the validity or execution of any Rights Certificate (except its countersignature thereon); nor shall it be responsible for any breach by the Company of any covenant or failure by the Company to satisfy conditions contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any change in the exercisability of the Rights (including Rights becoming void pursuant to Section 7(e) hereof) or any adjustment in the terms of the Rights required under the provisions of Sections 11, 13, 23, or 24 hereof or for the manner, method, or amount of any such change or adjustment or the ascertaining of the existence of facts that would require any such change or adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after receipt by the Rights Agent of the certificate describing any such adjustment contemplated by Section 12); 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 the Common Stock, the Preferred Stock or any other securities to be issued pursuant to this Agreement or any Rights Certificate or as to whether any shares of Preferred Stock or any other securities will, when so issued, be validly authorized and issued, fully paid and non-assessable.

(f)           The Company shall perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further acts, instruments and assurances as may reasonably be required by the Rights Agent for the performance by the Rights Agent of its duties under this Agreement.

(g)           The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the President and Chief Executive Officer, Chief Financial Officer or any Senior Vice President of the Company, and to apply to such officers for advice or instructions in connection with its duties, and such instructions shall be full authorization to the Rights Agent, and the Rights Agent shall not be liable for or in respect of any action taken, suffered, or omitted by it in good faith in accordance with instructions of any such officer.

(h)           The Rights Agent and any stockholder, affiliate, 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 the Rights Agent were not the Rights Agent under this Agreement.  Nothing herein shall preclude the Rights Agent or any such stockholder, affiliate, director, officer or employee from acting in any other capacity for the Company or for any other Person.

(i)           The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct; provided, however, that the Rights Agent exercised reasonable care 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 hereunder if the Rights Agent shall have reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

 

  

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(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 not been properly completed, has not been signed or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company.

Section 19.                      Concerning the Rights Agent.

 

(a)           The Company agrees to pay to the Rights Agent such compensation as shall be agreed in writing between the Company and the Rights Agent 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 expenses 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 negligence, bad faith or willful misconduct on the part of the Rights Agent, for any action taken, suffered 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, but not limited to, the costs and expenses of defending against any claim (whether asserted by the Company, a holder of Rights, or any other Person) of liability hereunder.  The indemnity provided for hereunder shall survive the expiration of the Rights and the termination of this Agreement.

(b)           The Rights Agent shall be authorized and 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 shares of Preferred Stock or any balance indicated in the Book Entry account system of the transfer agent 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 and executed by the proper person or persons.

Section 20.                      Merger or Consolidation or Change of Name of Rights Agent.

 

(a)           Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the corporate trust or stockholder services businesses 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 document or any further act on the part of any of the parties hereto; provided, however, that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof.  In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor 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.

 

  

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(b)           In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.

Section 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’ prior notice in writing mailed to the Company, and to each transfer agent of the Preferred Stock and the Common Stock, by registered or certified mail, in which case the Company shall give or cause to be given written notice to the registered holders of the Rights Certificates by first-class mail.  The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days’ prior notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock and the Preferred Stock by registered or certified mail, and to the registered holders of the Rights Certificates by first-class mail.  If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a Person organized and doing business under the laws of the United States or any state of the United States, in good standing, is authorized under such laws to exercise corporate trust, stock transfer, or stockholder services powers, is be subject to supervision or examination by federal or state authorities, and has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a Person described in clause (a) of this sentence.  After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any such appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock and the Preferred Stock, and mail a notice thereof in writing to the registered holders of the Rights Certificates by first-class mail.  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.

Section 22.                      Issuance of New Rights Certificates.

 

Notwithstanding any of the provisions of this Agreement or the Rights Certificates 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 made in accordance with the provisions of this Agreement in the Purchase Price or the number or kind or class of shares or other securities or property that may be acquired under the Rights Certificates.  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 the Expiration Date, 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.

 

  

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Section 23.                      Redemption.

 

(a)           The Board may, within its sole discretion, 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 Business 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 Business Day following the Record Date), or (ii) the Close of Business on the Final Expiration Date (the “Redemption Period”), cause the Company to redeem all, but not less than all, of the then outstanding Rights at a redemption price of $0.001 per Right, as such amount may be appropriately adjusted to reflect any stock split, reverse stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price, as adjusted, being hereinafter referred to as the “Redemption Price”); provided, however, that, if the Board authorizes redemption of the Rights on or after the time a Person becomes an Acquiring Person, then such authorization shall require the concurrence of two-thirds of the authorized number of members of the Board.  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 redemption of the Rights by the Board pursuant to this paragraph (a) may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish.  The Company may, at its option, pay the Redemption Price in cash, shares of Common Stock (based on the current per share market price (as determined pursuant to Section 11(d) hereof) 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, pursuant to paragraph (a) of this Section 23 (or such later time as the Board may establish for the effectiveness of such redemption), and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right held.  The Company shall promptly give (i) written notice to the Rights Agent of any such redemption and (ii) public notice of any such redemption; provided, however, that the failure to give, or any defect in, any such notice shall not affect the validity of such redemption.  Within ten (10) days after such action of the Board ordering the redemption of the Rights, the Company shall mail a notice of redemption to all the holders of the then outstanding Rights at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent for the Common Stock.  Any notice that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice.  Each such notice of redemption will state the method by which the payment of the Redemption Price will be made.  Neither the Company nor any of its Affiliates or Associates may redeem, acquire, or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23 or in Section 24 hereof, or other than in connection with the purchase of shares of Common Stock or the conversion or redemption of shares of Common Stock in accordance with the applicable provisions of the Certificate of Incorporation prior to the Distribution Date.

 

  

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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 null and void pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one share of Common Stock per each outstanding Right, as appropriately adjusted to reflect any stock split, reverse stock split, stock dividend or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).  Notwithstanding the foregoing, the Board shall not be empowered to effect such exchange at any time after any Acquiring Person, together with all Affiliates and Associates of such Acquiring Person, becomes the Beneficial Owner of 50% or more of the shares of Common Stock then outstanding.  The exchange of the Rights by the Board may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish.  From and after the occurrence of an event specified in Section 13(a) hereof, any Rights that theretofore have not been exchanged pursuant to this Section 24(a) shall thereafter be exercisable only in accordance with Section 13 and may not be exchanged pursuant to this Section 24(a).

(b)           Immediately upon the action of the Board ordering the exchange of any Rights pursuant to paragraph (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive 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 (i) written notice to the Rights Agent of any such exchange and (ii) 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 that is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice.  Each such notice of exchange will state the method by which the exchange of the shares of Common Stock for Rights will be effected and, in the event of any partial exchange, the number of Rights that will be exchanged.  Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights that have become null and void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.

(c)           If there are not sufficient shares of 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.  If the Company, after good faith effort, is unable to take all such action as may be necessary to authorize such additional shares of Common Stock, the Company shall substitute common stock equivalents (as defined in Section 11(a)(iii) hereof) for shares of Common Stock for Common Stock exchangeable for Rights, at the initial rate of one common stock equivalent for each share of Common Stock, as appropriately adjusted to reflect stock splits, reverse stock splits, reverse stock split, stock dividends, and other similar transactions after the date hereof.

 

  

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(d)           Upon declaring an exchange pursuant to this Section 24, or as promptly as reasonably practicable thereafter, the Company may implement such procedures as it deems appropriate, in its sole discretion, for the purpose of ensuring that the Common Stock (or such other consideration) issuable upon an exchange pursuant to this Section 24 is not received by holders of Rights that have become null and void pursuant to Section 7(e).  Before effecting an exchange pursuant to this Section 24, the Board may direct the Company to enter into a Trust Agreement in such form and with such terms as the Board shall then approve (the “Trust Agreement”).  If the Board so directs, the Company shall enter into the Trust Agreement and the Company shall issue to the trust created by the Trust Agreement (the “Trust”) all or a portion (as designated by the Board) of the shares of Common Stock and other securities, if any, distributable pursuant to the Exchange, and all stockholders entitled to distribution of such shares or other securities (and any dividends or distributions made thereon after the date on which such shares or other securities are deposited in the Trust) shall be entitled to receive a distribution of such shares or other securities (and any dividends or distributions made thereon after the date on which such shares or other securities are deposited in the Trust) only from the Trust and solely upon compliance with all relevant terms and provisions of the Trust Agreement.  Prior to effecting an exchange and registering shares of Common Stock (or other such securities) in any Person’s name, including any nominee or transferee of a Person, the Company may require (or cause the trustee of the Trust to require), as a condition thereof, that any holder of Rights provide evidence, including, without limitation, the identity of the Beneficial Owners thereof and their Affiliates and Associates (or former Beneficial Owners thereof and their Affiliates and Associates) as the Company shall reasonably request in order to determine if such Rights are null and void.  If any Person shall fail to comply with such request, the Company shall be entitled conclusively to deem the Rights formerly held by such Person to be null and void pursuant to Section 7(e) and not transferable or exerciseable or exchangeable in connection herewith.  Any shares of Common Stock or other securities issued at the direction of the Board in connection herewith shall be validly issued, fully paid, and nonassessable shares of Common Stock or of such other securities (as the case may be), and the Company shall be deemed to have received as consideration for such issuance a benefit having a value that is at least equal to the aggregate par value of the shares so issued.

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 or series to the holders of Preferred Stock or to make any other distribution to the holders of Preferred Stock (other than a regular quarterly cash dividend out of earnings or retained earnings of the Company); (ii) to offer to the holders of Preferred Stock rights or warrants to subscribe for or to purchase any additional shares of Preferred Stock or shares of stock of any class or any other securities, rights or options; (iii) to effect any reclassification of Preferred Stock (other than a reclassification involving only the subdivision of outstanding shares of Preferred Stock); (iv) to effect any consolidation or merger into or with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(o) hereof), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(o) hereof); or (v) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to each registered holder of a Rights Certificate, to the extent feasible, and to the Rights Agent in accordance with Section 26 hereof, a written notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up is to take place and the date of participation therein by the holders of the shares of Preferred Stock if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least ten (10) days prior to the record date for determining holders of the shares of Preferred Stock for purposes of such action and, in the case of any such other action, at least ten (10) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the shares of Preferred Stock, whichever shall be the earlier; provided, however, that no such action shall be taken pursuant to this Section 25(a) that will or would conflict with any provision of the Certificate of Incorporation; provided further, that no such notice shall be required pursuant to this Section 25 if any Subsidiary of the Company effects a consolidation or merger with or into, or effects a sale or other transfer of assets or earning power to, any other Subsidiary of the Company.

 

  

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(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 registered holder of a Rights Certificate, to the extent feasible, and to the Rights Agent in accordance with Section 26 hereof, a written notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in paragraph (a) of this Section 25 to Preferred Stock shall be deemed thereafter to refer to Common Stock and/or, if appropriate, to any other securities that may be acquired upon exercise of a Right.

(c)           In case any Section 13 Event shall occur, then the Company shall, as soon as practicable thereafter, give to each registered holder of a Rights Certificate, to the extent feasible, and to the Rights Agent in accordance with Section 26 hereof, a written notice of the occurrence of such event, which notice shall describe such event and the consequences of such event to holders of Rights under Section 13(a) hereof.

Section 26.                      Notices.

 

All notices and other communications provided for hereunder shall, unless otherwise stated herein, be in writing (including by facsimile, telegram or cable) and mailed or sent or delivered, if to the Company, at its address at:

GenVec, Inc.

65 West Watkins Mill Road

Gaithersburg, Maryland  20878

Attention:  Chief Executive Officer

And if to the Rights Agent, at its address at:

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, NY 11219

Attention:                    Corporate Trust Department

With a copy (which shall not constitute notice) to:

American Stock Transfer & Trust Company, LLC

6201 15th Avenue

Brooklyn, NY 11219

Attention:                    General Counsel

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate (or, if prior to the Distribution Date, the registered holder of any shares of Common Stock) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company or the Rights Agent, as the case may be.

 

  

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Section 27.                      Supplements and Amendments.

 

Except as otherwise provided in this Section 27, the Company, by action of the Board, may from time to time and in its sole and absolute discretion, and the Rights Agent shall if the Company so directs, supplement or amend this Agreement in any respect without the approval of any holders of Rights, including, without limitation, in order to (a) cure any ambiguity, (b) correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, (c) shorten or lengthen any time period hereunder, (d) otherwise change, amend, or supplement any provisions hereunder in any manner that the Company may deem necessary or desirable; provided, however, that from and after such time as any Person becomes an Acquiring Person, this Agreement shall not be supplemented or amended in any manner that would adversely affect the interests of the holders of Rights (other than Rights that have become null and void pursuant to Section 7(e) hereof) as such or cause this Agreement to become amendable other than in accordance with this Section 27.  Without limiting the foregoing, the Company, by action of the Board, may at any time before any Person becomes an Acquiring Person amend this Agreement to make the provisions of this Agreement inapplicable to a particular transaction by which a Person might otherwise become an Acquiring Person or to otherwise alter the terms and conditions of this Agreement as they may apply with respect to any such transaction.  Upon the delivery of a certificate from an appropriate officer of the Company that states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment; provided that any supplement or amendment that does not amend Sections 18, 19, 20 or 21, or this Section 27 in a manner adverse to the Rights Agent shall become effective immediately upon execution by the Company, whether or not also executed by the Rights Agent.

Notwithstanding anything contained in this Agreement to the contrary, the Rights Agent may, but shall not be obligated to, enter into any supplement or amendment that affects the Rights Agent’s own rights, duties, obligations or immunities under this Agreement.

Prior to the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock.

Section 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.

 

Except as otherwise specifically provided herein, the Board shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or to the Company hereunder, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power (a) to interpret the provisions of this Agreement, and (b) to 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 in accordance with Section 23, to exchange or not exchange the rights in accordance with Section 24, to amend or not amend this Agreement in accordance with Section 27).  All such actions, calculations, interpretations, and determinations (including, for purposes of clause (ii) below, all omissions with respect to the foregoing) that are done or made by the Board shall (i) be final, conclusive, and binding on the Company, the Rights Agent, the holders of the Rights, and all other parties, and (ii) not subject the Board or any member thereof to any liability to the holders of the Rights.

 

  

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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 shares of the Common Stock of the Company) 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, the registered holders of shares of Common Stock of the Company).

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 Business 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 State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State.

Section 33.                      Counterparts.

 

This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument.

Section 34.                      Descriptive Headings.

 

The headings contained in this Agreement are for descriptive purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

[Signature Page To Follow On Next Page]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the date first above written.

 

 

	 	GENVEC, INC.	 
	 	 	 	 
	
 

	
By: 

	/s/ Douglas J. Swirsky 	 
	 	 	Name:	Douglas J. Swirsky	 
	 	 	Title:	Senior Vice President, Chief Financial Officer, Treasurer and Corporate Secretary	 
	 	 	 	 

 

 

	 	

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC

as Rights Agent

	 
	 	 	 	 
	
 

	
By: 

	/s/ Paula Caroppoli 	 
	 	 	Name:	Paula Caroppoli	 
	 	 	Title:	Senior Vice President	 
	 	 	 	 

 

  

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Exhibit A

CERTIFICATE OF DESIGNATION

OF

SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

OF

GENVEC, INC.

________________________

Pursuant to Section 151 of the

General Corporation Law of

the State of Delaware

_________________________

GenVec, Inc., a corporation duly organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), DOES HEREBY CERTIFY:

That, pursuant to authority conferred by the Corporation’s Amended and Restated Certificate of Incorporation, and by the provisions of Section 151 of the General Corporation Law of the State of Delaware, the Board of Directors of the Corporation (the “Board”), at a duly called meeting held on August 11, 2011, at which a quorum was present and acted throughout, adopted the following resolutions, which resolutions remain in full force and effect on the date hereof, creating a series of thirty thousand (30,000) shares of Preferred Stock, $0.001 par value, designated as Series B Junior Participating Preferred Stock:

RESOLVED, that pursuant to the authority vested in the Board in accordance with the provisions of the Amended and Restated Certificate of Incorporation of the Corporation and Section 151(g) of the General Corporation Law of the State of Delaware, the Board does hereby create, authorize and provide for the issuance of a series of Preferred Stock, $0.001 par value, of the Corporation, designated as “Series B Junior Participating Preferred Stock,” having the voting powers, designation, preferences and relative, participating, optional and other special rights, and qualifications, limitations and restrictions thereof that are set forth as follows:

Section 1.  Designation and Amount.  The shares of such class shall be designated as “Series B Junior Participating Preferred Stock” (the “Series B Preferred Stock”) and the number of shares constituting such class shall be thirty thousand (30,000).  Such number of shares may be increased or decreased by resolution of the Board of Directors, provided, however that no such decrease shall reduce the number of shares of the Series B Preferred Stock to a number less than the number of shares then outstanding, plus the number reserved for issuance upon the exercise of options, rights or warrants, or upon conversion of any outstanding securities issued by the Corporation convertible into Series B Preferred Stock.

 

  

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Section 2.  Dividends and Distributions.  (A) Subject to the prior and superior rights of the holders of any shares of any other class or series of Preferred Stock of the Corporation ranking prior and superior to the shares of Series B Preferred Stock with respect to dividends, each holder of a share (a “Share”) of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for that purpose, (i) quarterly dividends payable in cash on the last day of March, June, September, and December in each year (each such date being a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of such Share of Series B Preferred Stock, in an amount per Share (rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends declared on shares of the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Share of Series B Preferred Stock, and (ii) subject to the provision for adjustment hereinafter set forth, quarterly distributions (payable in kind) on each Quarterly Dividend Payment Date in an amount per Share equal to 1,000 times the aggregate per share amount of all non-cash dividends or other distributions (other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock, by reclassification or otherwise) declared on shares of Common Stock since the immediately preceding Quarterly Dividend Payment Date, or with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Share of Series B Preferred Stock.  In the event that the Corporation shall at any time after the Rights Dividend Declaration Date (as that term is defined in the Rights Agreement dated August 11, 2011 by and between the Corporation and American Stock Transfer & Trust Company, LLC) (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case the amount to which the holder of a Share of Series B Preferred Stock was entitled immediately prior to such event pursuant to the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

(B)           The Corporation shall declare a dividend or distribution on Shares of Series B Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the shares of Common Stock (other than a dividend or distribution payable in shares of Common Stock); provided, however, that in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Date, a dividend of $1.00 per Share on the Series B Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

(C)           Dividends shall begin to accrue and shall be cumulative on each outstanding Share of Series B Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issuance of such Share of Series B Preferred Stock, unless the date of issuance of such Share is prior to the record date for the first Quarterly Dividend Payment Date, in which case, dividends on such Share shall begin to accrue from the date of issuance of such Share, or unless the date of issuance is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of Shares of Series B Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not bear interest.  Dividends paid on Shares of Series B Preferred Stock in an amount less than the aggregate amount of all such dividends at the time accrued and payable on such Shares shall be allocated pro rata on a share-by-share basis among all Shares of Series B Preferred Stock at the time outstanding.  The Board of Directors may fix a record date for the determination of holders of Shares of Series B Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.

 

  

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Section 3.  Voting Rights.  The holders of Shares of Series B Preferred Stock shall have the following voting rights:

(A)           Subject to the provision for adjustment hereinafter set forth, each Share of Series B Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the holders of Common Stock of the Corporation.  In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine the outstanding shares of Common Stock into a small number of shares, then in each such case the number of votes per Share to which holders of Shares of Series B Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

(B)           Except as otherwise provided herein or in any other Certificate of Designation creating a series of preferred stock, or any similar stock, or by law, the holders of Shares of Series B Preferred Stock, the holders of shares of Common Stock, and the holders of any other class or series of capital stock of the Corporation entitled to vote generally, together with the Common Stock, shall vote together as one class on all matters submitted to a vote of the holders of such stock.

(C)           (i) If at any time dividends on any Shares of Series B Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, then during the period (a “default period”) from the occurrence of such event until such time as all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all Shares of Series B Preferred Stock then outstanding shall have been declared and paid or set apart for payment, the holders of the outstanding Shares of Series B Preferred Stock, together with the holders of outstanding shares of any one or more other classes or series of stock of the Corporation upon which like voting rights have been conferred and are exercisable (voting together as a class), shall have the right to elect two Directors to the Board of Directors of the Corporation at the Corporation’s next annual meeting of stockholders, and so long as such default period continues, shall have the right to elect a successor to each of the two Directors so elected upon the expiration of their respective terms, such right to be exercised at the subsequent annual meeting or meetings at which the respective terms of such Directors expire.  Any Director who shall have been so elected pursuant to this paragraph may be removed only for cause.  If the office of any Director elected by the holders of Shares of Series B Preferred Stock pursuant to this paragraph becomes vacant for any reason, the remaining Director elected pursuant to this paragraph may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred, and if the offices of both such Directors elected by the holders of Shares of Series B Preferred Stock pursuant to this paragraph become vacant for any reason, such vacancies may be filled for the unexpired term in respect of which such vacancy occurred only by the affirmative vote of the holders of the outstanding Shares of Series B Preferred Stock, together with the holders of the outstanding shares of any other class or series of stock upon which like voting rights have been conferred and are exercisable (voting together as a class).

(ii)           The voting rights vested pursuant to paragraph (C)(i) hereof in the holders of the outstanding Shares of Series B Preferred Stock, together with the holders of outstanding shares of any one or more other classes or series of stock of the Corporation upon which like voting rights have been conferred and are exercisable (voting together as a class), may not be exercised at any annual meeting unless one-third of the outstanding shares of stock of the corporation upon which such voting rights have been conferred shall be present at such meeting in person or by proxy.  The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Shares of Series B Preferred Stock of such rights.  In connection with the election of Directors pursuant to paragraph (C)(i) hereof, each holder of Shares of Series B Preferred Stock shall be entitled to one vote for each one one-thousandth of a Share held (the holders of shares of any other class or series of preferred stock having like voting rights being entitled to such number of votes, if any, for each share of such stock held as may be granted to them).

 

  

A-3

  

 

(iii)  During any default period, the holders of shares of Common Stock and Shares of Series B Preferred Stock, and other classes or series of stock of the Corporation, if applicable, shall continue to be entitled to elect (voting together as a class) all the Directors other than the two Directors to be elected pursuant to paragraph (C)(i) hereof by the holders of the outstanding shares of Series B Preferred Stock, together with the holders of outstanding shares of any one or more other classes or series of stock of the Corporation upon which like voting rights have been conferred and are exercisable (voting together as a class).

(iv)  Immediately upon the expiration of a default period, (x) the right of the holders of Shares of Series B Preferred Stock to elect Directors pursuant to paragraph (C)(i) hereof shall cease (subject to re-vesting in the event of each and every subsequent default of the character mentioned in paragraph (C)(i) above), and (y) the term of any Directors elected by the holders of Shares of Series B Preferred Stock pursuant to paragraph (C)(i) hereof shall terminate.

(D)           Except as set forth herein, holders of Shares of Series B Preferred Stock shall have no special voting rights and their consents shall not be required (except to the extent they are entitled to vote with holders of share of Common Stock as set forth herein) for taking any corporate action.

Section 4.  Certain Restrictions.  (A)  Whenever quarterly dividends or other dividends or distributions payable on Shares of Series B Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on outstanding Shares of Series B Preferred Stock shall have been paid in full, the Corporation shall not

(i) declare or pay dividends on, or make any other distributions on, any shares of Junior Stock;

(ii) declare or pay dividends on or make any other distributions on any shares of Parity Stock, except dividends paid ratably on Shares of Series B Preferred Stock and shares of all such Parity Stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of such Shares and all such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for consideration shares of any Junior Stock, provided, however, that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such Junior Stock in exchange for shares of any Junior Stock;

(iv) redeem or purchase or otherwise acquire for consideration any Shares of Series B Preferred Stock, or any Parity Stock except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates, and other relative rights and preferences of the respective series and classes, shall determine in good faith, will result in fair an equitable treatment among the respective series or classes.

 

  

A-4

  

 

(B)           The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

Section 5.  Reacquired Shares.  Any Shares of Series B Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof.  All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock, $0.001 par value, and may be reissued as part of a new series of Preferred Stock, subject to the conditions and restrictions on issuance set forth herein, in the Certificate, or in any other Certificate of Designation creating series of Preferred Stock, $0.001 par value, or any similar stock, or as otherwise restricted by law.

Section 6.  Liquidation, Dissolution or Winding Up.  (A)  Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation no distribution shall be made (i) to the holders of shares of Junior Stock unless the holders of Shares of Series B Preferred Stock shall have received, subject to adjustment as hereinafter provided in paragraph (B), the greater of either (a) $1.00 per Share plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not earned or declared, to the date of such payment, or (b) the amount equal to 1,000 times the aggregate per share amount to be distributed to holders of shares of Common Stock, or (ii) to the holders of shares of Parity Stock, unless simultaneously therewith distributions are made ratably on Shares of Series B Preferred Stock and all other shares of such Parity Stock in proportion to the total amounts to which the holders of Shares of Series B Preferred Stock are entitled under clause (i)(a) of this sentence and to which the holders of shares of such Parity Stock are entitled, in each case upon such liquidation, dissolution or winding up.

(B)           In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case the aggregate amount to which holders of Shares of Series B Preferred Stock were entitled immediately prior to such event pursuant to clause (i)(b) of paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by a fraction the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

Section 7.  Consolidation, Merger, etc.  In case the Corporation shall enter into any consolidation, merger, combination, or other transaction in which the shares of Common Stock are exchanged for or converted into other stock, securities, cash, and/or any other property, then in any such case Shares of Series B Preferred Stock shall at the same time be similarly exchanged for or converted into an amount per Share (subject to the provision for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of stock, securities, cash, and/or other property (payable in kind), as the case may be, into which or for which each share of Common Stock is converted or exchanged.  In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the immediately preceding sentence with respect to the exchange or conversion of Shares of Series B Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event.

 

  

A-5

  

 

Section 8.  Redemption.  The Shares of Series B Preferred Stock shall not be redeemable.

Section 9.  Ranking.  Except as provided below, the Series B Preferred Stock shall rank junior to all other series of Preferred Stock, $0.001 par value, and to any other class of preferred stock that hereafter may be issued by the Corporation as to the payment of dividends and the distribution of assets, unless the terms of any such series or class shall provide otherwise.  The Series B Preferred Stock shall rank prior, as to dividends and upon liquidation, dissolution, or winding up, to the Common Stock.

Section 10.  Amendment.  Except as set forth in Section 1 hereof, the Certificate, including, without limitation, this Certificate of Designation shall not hereafter be amended, either directly or indirectly, or through merger or consolidation with another corporation in any manner that would alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two thirds of the outstanding Shares of Series B Preferred Stock, voting separately as a class.

Section 11. Fractional Shares.  The Series B Preferred Stock may be issued in fractions of one one-thousandth of a Share or other fractions of a share, which fractions shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions, and to have the benefit of all other rights of holders of Series B Preferred Stock.

Section 12.  Definitions. All capitalized terms used herein have the meanings ascribed to them in the Amended and Restated Certificate of Incorporation of the Corporation (the “Certificate”), unless otherwise defined herein.  In addition, for purposes hereof, the following terms shall have the meanings set forth below:

(A)           The term “Common Stock” shall mean the class of stock designated as the Common Stock, $0.001 par value, of the Corporation at the date hereof or any other class of stock resulting from successive changes or reclassification of such Common Stock.

(B)           The term “Junior Stock” (i) as used in Section 4, shall mean the Common Stock and any other class or series of capital stock of the Corporation hereafter authorized or issued over which the Series B Preferred Stock has preference or priority as to the payment of dividends and (ii) as used in Section 6, shall mean the Common Stock and any other class or series of capital stock of the Corporation over which the Series B Preferred Stock has preference or priority in the distribution of assets on any liquidation, dissolution or winding up of the Corporation.

(C)           The term “Parity Stock” (i) as used in Section 4, shall mean any class or series of stock of the Corporation hereafter authorized or issued ranking pari passu with the Series B Preferred Stock as to the payment of dividends and (ii) as used in Section 6, shall mean any class or series of stock of the Corporation hereinafter authorized or issued and ranking pari passu with the Series B Preferred Stock as to the distribution of assets on any liquidation, dissolution, or winding up of the Corporation.

 

  

A-6

  

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be signed by its authorized officer this 11th day of August, 2011.

 

 

 

	 	GENVEC, INC.	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Name:	Douglas J. Swirsky	 
	 	Title:	Senior Vice President, Chief Financial Officer, Treasurer and Corporate Secretary	 
	 	 	 	 

 

 

  

A-7

  

 

Exhibit B

 

SUMMARY OF RIGHTS TO PURCHASE

SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

On August 11, 2011, the Board of Directors of GenVec, Inc. (the “Company”) declared a distribution of one Right (a “Right”) for each outstanding share of Common Stock, $0.001 par value per share (the “Common Stock”), to stockholders of record at the close of business on September 7, 2011, (the “Record Date”) and for each share of Common Stock issued (including shares distributed from Treasury) by the Company thereafter and prior to the Distribution Date (as described below and defined in the Rights Agreement).  Each Right entitles the registered holder, subject to the terms of the Rights Agreement (as defined below), to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock, $0.001 par value per share (the “Preferred Stock”), at a Purchase Price of $32.00 per one one-thousandth of a share of Preferred Stock, subject to adjustment (the “Purchase Price”).  The description and terms of the Rights are set forth in a Rights Agreement between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agreement”).

Copies of the Rights Agreement and the Certificate of Designation for the Preferred Stock (the “Certificate of Designation”) have been filed with the Securities and Exchange Commission on a Current Report on Form 8-K dated August 11, 2011 (the “Form 8-K”).  Copies of the Rights Agreement and the Certificate of Designation are available free of charge from the Company.  This summary description of the Rights and of the Preferred Stock does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Rights Agreement and the Certificate of Designation, including the definitions therein of certain terms, which Rights Agreement and Certificate of Designation are incorporated herein by reference.  Capitalized terms herein and defined in the Rights Agreement and not otherwise defined herein shall have the meaning set forth in the Rights Agreement.

The Rights Agreement

Initially, no separate Rights Certificates will be distributed and instead the Rights will attach to all certificates representing shares of outstanding Common Stock, or, with respect to Common Stock in Book Entry form, to the outstanding shares of Common Stock evidenced by the balances indicated in the Book Entry account system of the transfer agent for the Common Stock.  The Rights will separate from the Common Stock and the “Distribution Date” will occur upon the earlier of (i) ten Business Days following a public announcement that a person or group of affiliated or associated persons has become an “Acquiring Person,” or (ii) ten Business Days (or such later date as may be determined by the Board of Directors prior to such time as any person becomes an Acquiring Person) following the commencement of a tender offer or exchange offer that would result in a person or group of affiliated and associated persons beneficially owning 20% or more of the shares of Common Stock then outstanding.  Until the Distribution Date, (i) the Rights will be evidenced by the balances indicated in the Book Entry account system of the transfer agent for the Common Stock registered in the names of the holders thereof or, in the case of certificated shares, by Common Stock certificates, and will be transferred with and only with such underlying shares of Common Stock, (ii) confirmation and account statements sent to holders of Common Stock in Book Entry form or, in the case of certificated shares, certificates, representing such shares of Common Stock, issued after the Record Date (including shares distributed from Treasury) will contain a notation incorporating the Rights Agreement by reference, and (iii) the transfer of any shares of outstanding Common Stock will also constitute the transfer of the Rights associated with such shares of Common Stock.

 

  

B-1

  

 

As used in the Rights Agreement, an “Acquiring Person” means a person or group of affiliated or associated persons that has acquired, obtained the right to acquire, or otherwise obtained beneficial ownership of 20% or more of the shares of Common Stock then outstanding.  The following, however, are not Acquiring Persons:  the Company, its subsidiaries, any employee benefit plan of the Company or any of its subsidiaries, or any entity holding shares of Common Stock pursuant to the terms of any such plan.  Moreover, no person or affiliated persons will be deemed to be an Acquiring Person as a result of the following:  (1) an acquisition of Common Stock by the Company, which, by reducing the number of shares of Common Stock outstanding, increases the percentage of the shares of Common Stock that such person, or group of affiliated or associated persons, beneficially owns to 20% or more of the shares of Common Stock then outstanding, (2) any unilateral grant of any security by the Company to such person, (3) through the exercise of any options, warrants, rights or similar interests (including restricted stock) granted by the Company to its directors, officers and employees or (4) being the beneficial owner of 20% or more of the shares of Common Stock then outstanding as of the date of the Rights Agreement or prior to the first public announcement of the adoption of the Rights Agreement.

Notwithstanding the foregoing, a person, or group of affiliated or associated persons, who would be considered an Acquiring Person but for the exceptions in (1) through (4) in the foregoing sentence, will nonetheless be considered an Acquiring Person if such person, or group of affiliated or associated persons, continues to hold 20% or more of the shares of Common Stock outstanding and becomes the beneficial owner of additional shares of Common Stock, subject to certain exceptions described in the Rights Agreement.  Moreover, if the Board of Directors of the Company determines that a person, or group of affiliated or associated persons, who would otherwise be an Acquiring Person, has become so inadvertently (either because such person, or group of persons, was unaware that it beneficially owned the requisite percentage of outstanding Common Stock or because it had no actual knowledge of the consequences of such beneficial ownership under the Rights Agreement), and such person, or group of affiliated or associated persons, promptly divests a sufficient number of shares of Common Stock so that it would no longer be an Acquiring Person, then such person or group of affiliated or associated persons shall not be deemed to be or to have become an Acquiring Person for any purposes of the Rights Agreement.

The Rights are not exercisable until the Distribution Date and will expire at the Close of Business on September 7, 2021 unless earlier redeemed or exchanged by the Company as described below.

As soon as practicable after the Distribution Date, Rights Certificates will be mailed to holders of record of Common Stock as of the Close of Business on the Distribution Date and, thereafter, the separate Rights Certificates alone will represent the Rights.

In the event that a person or group of affiliated or associated persons becomes an Acquiring Person, then each holder of a Right will thereafter have the right to receive, upon exercise, shares of Common Stock (or, in certain circumstances, shares of Preferred Stock, other securities, cash, property, or a combination thereof) having a value equal to two times the exercise price of the Right.  The exercise price is the Purchase Price multiplied by the number of one one-thousandth of a share of Preferred Stock issuable upon exercise of a Right prior to the events described in this paragraph.

Notwithstanding any of the foregoing, following the time any person or group becomes an Acquiring Person, all Rights that are, or under certain circumstances specified in the Rights Agreement were, beneficially owned by any Acquiring Person or its Affiliates or Associates will be null and void.

 

  

B-2

  

 

In the event that, at any time after a person or group becomes an “Acquiring Person,” (i) the Company is acquired in a merger or other business combination with another company and the Company is not the surviving corporation, (ii) another company consolidates or merges with the Company and all or part of the Common Stock is converted or exchanged for other securities, cash, or property, or (iii) 50% or more of the consolidated assets or earning power of the Company and its subsidiaries is sold or transferred to another company, then each holder of a Right (except Rights that previously have been voided as described above) shall thereafter have the right to receive, upon exercise, Common Stock or other equity interest of the ultimate parent of such other company having a value equal to two times the exercise price of the Right.

The Purchase Price payable, and the number of one one-thousandth of a share of Preferred Stock (or other securities, as applicable) issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred Stock, or (iii) upon the distribution to the holders of the Preferred Stock of evidences of indebtedness, cash or assets (excluding regular quarterly cash dividends or dividends payable in the Preferred Stock) or of subscription rights or warrants (other than those referred to above).

With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price.  The Company is not required to issue fractional shares of Preferred Stock (other than fractional shares that are integral multiples of one one-thousandth of a share).  In lieu thereof, an adjustment in cash may be made based on the market price of the Preferred Stock prior to the date of exercise.

At any time prior to the earlier of the Close of Business on (1) the tenth Business Day following a public announcement that a person or group of affiliated or associated persons has become an “Acquiring Person,” and (2) the Final Expiration Date, the Company’s Board of Directors may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (subject to adjustment in certain events) (the “Redemption Price”).  Immediately upon the action of the Company’s Board of Directors ordering the redemption of the Rights, the Rights will terminate and the only right of the holders of such Rights will be to receive the Redemption Price for each Right held.

At any time after any person or group of affiliated or associated persons becomes an Acquiring Person and before any such Acquiring Person shall become the beneficial owner of 50% or more of the shares of Common Stock then outstanding, the Board of Directors, at its option, may exchange each Right (other than Rights that previously have become void as described above) in whole or in part, at an exchange ratio of one share of Common Stock (or under certain circumstances one one-thousandth of a share of Preferred Stock or equivalent preferred stock) per Right (subject to adjustment in certain events).

In the event the Board elects to exchange Rights for shares as described above, it may also direct the Company to enter into a Trust Agreement, and shares issuable upon the exchange would be issued to the trust created pursuant to the Trust Agreement.  Under the terms of the Trust Agreement, holders of exercisable Rights would become beneficiaries of the trust created pursuant thereto, and would be entitled to receive from the trust a distribution of the shares issued on exchange of their Rights upon certifying that they owned the Rights on the record date for the exchange and that they are not an Acquiring Person or any affiliate or associate of an Acquiring Person or holding shares on behalf of an Acquiring Person.

 

  

B-3

  

 

Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.  While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for one one-thousandth of a share of Preferred Stock (or other consideration).

Any of the provisions of the Rights Agreement may be amended without the approval of the holders of Rights in order to cure any ambiguity, defect, inconsistency or to make any other changes that the Board may deem necessary or desirable.  After any person or group of affiliated or associated persons becomes an Acquiring Person, the provisions of the Rights Agreement may not be amended in any manner that would adversely affect the interests of the holders of Rights excluding the interests of any Acquiring Person.

Description of Preferred Stock

The Preferred Stock that may be acquired upon exercise of the Rights will not be redeemable and will rank junior to any other shares of preferred stock that may be issued by the Company with respect to the payment of dividends and as to distribution of assets in liquidation.

Each share of Preferred Stock will have a minimum preferential quarterly dividend of the greater of $1.00 per share or 1,000 times the aggregate per share amount of any cash dividend declared on the Common Stock since the immediately preceding quarterly dividend, subject to certain adjustments.

In the event of liquidation, the holder of Preferred Stock will be entitled to receive a preferred liquidation payment per share equal to the greater of $1.00 (plus accrued and unpaid dividends thereon) or 1,000 times the amount paid in respect of a share of Common Stock, subject to certain adjustments.

Generally, each share of Preferred Stock will vote together with the Common Stock and any other class or series of capital stock entitled to vote in such a manner, and will be entitled to 1,000 votes per share, subject to certain adjustments. The holders of the Preferred Stock, voting as a separate class, shall be entitled to elect two directors if dividends on the Preferred Stock are in arrears in an amount equal to six quarterly dividends thereon.

Because of the nature of the Preferred Stock’s dividend, liquidation and voting rights, the economic value of one one-thousandth of a share of Preferred Stock is expected to approximate the economic value of one share of Common Stock.

 

*     *     *     *     *

 

  

B-4

  

 

Exhibit C

[Form of Rights Certificate]

 

 

	Certificate No. R-          	            Rights

                                                                                                                   

NOT EXERCISABLE AFTER SEPTEMBER 7, 2021 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY.  THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON 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.] */

*/           The portion of the legend in brackets shall be inserted only if applicable and shall replace the preceding sentence.

 

  

C-1

  

 

Rights Certificate

 

This certifies that                                           , or its registered assigns, is the registered holder of the number of Rights set forth above, each of which entitles the holder thereof, subject to the terms, provisions and conditions of the Rights Agreement, dated as of August 11, 2011, as the same may be amended from time to time (the “Rights Agreement”), between GenVec, Inc., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, LLC, as Rights Agent (the “Rights Agent”), to purchase from the Company at any time after the Distribution Date and prior to 5:00 p.m., New York City time, on September 7, 2021 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one one-thousandth of a fully paid, non-assessable share of Series B Junior Participating Preferred Stock, par value $0.001 per share (the “Preferred Stock”), of the Company, at a purchase price of $32.00 per one one-thousandth share of Preferred Stock (the “Purchase Price”), upon presentation and surrender of this Rights Certificate with the Election to Purchase and related Certificate duly executed.  The number of Rights evidenced by this Rights Certificate (and the number of shares that may be purchased upon exercise thereof) set forth above, and the Purchase Price per share as set forth above, are the number and Purchase Price as of September 7, 2011, based on the Preferred Stock as constituted at such date, and are subject to adjustment upon the happening of certain events as provided in the Rights Agreement.  Capitalized terms used and not defined herein shall have the meanings specified in the Rights Agreement.

From and after the occurrence of a Section 11(a)(ii) Event or Section 13 Event, the Rights evidenced by this Rights Certificate beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person, (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 or Section 13 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 Preferred Stock or other securities which may be acquired upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events, including Triggering Events.

This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of 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.

 

  

C-2

  

 

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 one one-thousandths of a share of Preferred Stock as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase.  If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights 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 under certain circumstances at its option at a redemption price of $0.001 per Right at any time prior to the earlier of the Close of Business on (i) the tenth Business Day following the Stock Acquisition Date and (ii) the Final Expiration Date.  Under certain circumstances set forth in the Rights Agreement, the decision to redeem shall require the concurrence of two-thirds of the members of the Board.

At any time after a person becomes an Acquiring Person and prior to the acquisition by such person of 50% or more of the outstanding Common Stock, the Board 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 each outstanding Right or, in certain circumstances, other equity securities of the Company which are deemed by the Board to have the same value as shares of Common Stock, subject to adjustment.

No fractional shares of Preferred Stock will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends or be deemed for any purpose the holder of shares of Preferred Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.

This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Rights Agent.

 

  

C-3

  

 

WITNESS the facsimile signature of the proper officers of the Company.

Dated as of                      ,        

 

	 	

GENVEC, INC.

 

By:                                                                                          

Name:                                                                                     

Title:                                                                                       

 

 

Countersigned:

Dated as of                      ,        

AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,

as Rights Agent

By:                                                                                         

       Authorized Signatory

 

[Form of Reverse Side of Rights Certificate]

 

  

C-4

  

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:

 

  

C-5

  

 

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); and

(2)           after due inquiry and to the best knowledge of the undersigned, it [  ] did [  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of any such Person.

 

	

Dated                       ,        

	

                                                                                   

Signature          

 

Signature Guaranteed:

 

  

C-6

  

 

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.

Signatures must be guaranteed by an approved eligible financial institution acceptable to the Rights Agent in its sole discretion or by a participant in the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Program.

In the event the certification set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the case of an Assignment, will affix a legend to that effect on any Rights Certificates issued in exchange for this Rights Certificate.

 

  

C-7

  

 

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 Preferred Stock issuable upon the exercise of the Rights (or such other securities of the Company or of any other person or such other property which may be issuable upon the exercise of the Rights) and requests that certificates for such shares (or such other securities of the Company or of any other person or such other property as may be issuable upon the exercise of the Rights) 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:

 

  

C-8

  

 

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); and

(2)           after due inquiry and to the best knowledge of the undersigned, the undersigned [  ] did   [  ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of any such Person.

 

 

	

Dated                       ,        

	

                                                                                   

Signature          

 

Signature Guaranteed:

  

C-9

  

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.

Signatures must be guaranteed by an approved eligible financial institution acceptable to the Rights Agent in its sole discretion or by a participant in the Securities Transfer Agents Medallion Program, the Stock Exchange Medallion Program or the New York Stock Exchange Medallion Program.

In the event the certification set forth above is not completed, the Company will deem the beneficial owner of the Rights evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the case of an Assignment, will affix a legend to that effect on any Rights Certificates issued in exchange for this Rights Certificate.

  

C-10

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