First Priority Group Announces Shareholder Rights Plan and By-Law Amendments
28 December 1998
First Priority Group Announces Adoption of Shareholder Rights Plan and Amendments to Company's By-Laws
PLAINVIEW, N.Y., Dec. 28 -- First Priority Group, Inc.
announced today that its Board of Directors approved a
Shareholder Rights Plan and declared a dividend distribution of one Stock
Purchase Right on each outstanding share of the Company's Common Stock. First
Priority also announced today the implementation of a classified board of
directors and certain other amendments to its By-laws relating to matters
governing Shareholder meetings.
The Rights Plan is designed to assure that all of the Company's
shareholders receive fair and equal treatment in the event of any proposed
takeover of the Company and to guard against partial tender offers,
squeeze-outs, open market accumulations and other abusive tactics to gain
control of the Company without addressing the legitimate interests of the
Company and its shareholders.
The Plan is not designed or intended to prevent an acquisition of First
Priority on terms that are favorable and fair to all shareholders, unless at
the time the interests of the Company and its shareholders would be better
served by remaining independent. In that regard, the Company is continuing
its discussions with American Information Company, Inc. (d/b/a Consumers Car
Club) on pursuing their agreement in principle with the Company to create a
joint Internet provider of comprehensive vehicle-related services to
individual consumers and businesses of all sizes.
The Classified Board is also designed to assure that all of the Company's
shareholders receive fair and equal treatment in the event of any proposed
takeover of the Company by restricting the ability of a hostile acquiror from
effecting a rapid takeover of the Board. In addition, the Classified Board
insures that at all times at least a majority of the board has a minimum of
one year's experience and familiarity with the Company. The other by-law
amendments are intended to continue to provide Shareholders with an
opportunity to submit proposals for consideration at Shareholders' meetings
while promoting stability, enhanced public disclosure and an appropriate
period of time to permit all the Shareholders to consider shareholder
proposals.
Under the Rights Plan, the Rights will be exercisable if a person or group
that previously owns more than 20% of the Company's Common Stock acquires and
additional 1% of the Company's shares, or if a person or group holding less
than 20% of the Company's Common Stock acquires shares resulting in the
ownership of more than 20% of the Company's Common Stock. Once the Rights
become exercisable, each Right will entitle shareholders (other than such
acquiring person or members of such acquiring group) to purchase a number of
shares of Common Stock having a market value equal to twice the exercise price
of $27.50. In addition, if a tender offer for 20% or more of the Company's
Common Stock has been announced but has not been consummated, the Rights will
become exercisable ten days after the announcement (unless the Company's Board
takes action delaying such exercisability) for the purchase at the exercise
price of one one-thousandth of a share of the Company's Preferred Stock.
If the Company is acquired in a merger or other business combination
transaction, each holder of a Right will be entitled to purchase, at the
Right's then-current exercise price, a number of the acquiring company's
common shares having a market value equal to twice such exercise price.
Prior to the acquisition by a person or group of beneficial ownership of
20% or more of the Common Stock, the Rights are redeemable for one cent per
Right at the option of the Board of Directors.
The Rights Plan does not affect the acquisition or ownership of stock by
the Company, any subsidiary or any employee benefits plan of the Company.
The dividend distribution will be made on January 28, 1999, payable to
shareholders of record on that date, and will also attach to shares of Common
Stock issued by the Company after that date. Until the Rights become
exercisable, the Rights will trade with the Common Stock and will not be
evidenced by separate certificates. Upon the Rights becoming exercisable, the
Rights will trade separately from the Common Stock and as soon as practicable
thereafter, separate certificates evidencing the Rights will be mailed to the
holders of record of the Common Stock as of the close of business on the date
such event occurs and, thereafter, the separate Rights certificates alone will
represent the Rights. The Rights distribution is not taxable to shareholders.
The Rights will expire on December 28, 2008.
In addition to adopting the Shareholder Rights Plan, the Board amended the
Company By-laws to create three classes of Directors, with the first class of
two directors serving until the 2001 Annual Meeting, the second class of the
directors (with one current vacancy) serving until the 2000 Annual Meeting and
the third class of one director serving until the 1999 Annual Meeting.
The By-laws were also amended to encourage enhanced and timely public
disclosure of agenda items Shareholders wish to raise at annual meetings. To
that end, among other things, the provision providing for special meetings to
be called by shareholders was eliminated and matters to be raised by
shareholders at an annual meeting, including the election of directors, must
now be submitted within designated periods of time prior to the meeting.
Barry Siegel, Chairman and Chief Executive Officer of the Company,
commented, "After long deliberation the Company adopted these provisions to
bring the Company more closely in line with many other publicly traded
companies and, accordingly, to protect and maximize shareholder value while
permitting management to remain focused on the Company's business plan, which
at the moment, includes pursuing a strategic alliance with American
Information Company."
First Priority Group, Inc., a New York corporation, is primarily engaged
in automotive fleet management and administration of automotive repairs for
businesses, insurance companies and members of affinity groups. The services
offered by First Priority consist of vehicle maintenance and repair
management, including collision and general repair program, appraisal services
subrogation services, vehicle salvage and vehicle rentals; and the
administration of automotive collision repair referral services for self
insured fleets, insurance companies and affinity group members.
Certain information contained herein includes information that is forward-
looking. The matters referred to in forward-looking statements may be
affected by the risks and uncertainties involved in the Company's business.
These forward-looking statements are qualified in their entirety by the
cautionary statements contained in the Company's Securities and Exchange
Commission filings.