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EXHIBIT 4.1
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SOUTHWEST GAS CORPORATION,
a California corporation
and
XXXXXX TRUST COMPANY OF CALIFORNIA,
Rights Agent
______________________
RIGHTS AGREEMENT
Dated as of March 5, 1996
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TABLE OF CONTENTS
Page
Section 1. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . 1
Section 2. APPOINTMENT OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . 5
Section 3. ISSUANCE OF RIGHT CERTIFICATES . . . . . . . . . . . . . . . . 5
Section 4. FORM OF RIGHT CERTIFICATES . . . . . . . . . . . . . . . . . . 7
Section 5. COUNTERSIGNATURE AND REGISTRATION. . . . . . . . . . . . . . . 8
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS. 9
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES . . . . . . 12
Section 9. RESERVATION AND AVAILABILITY OF SHARES; REGISTRATION . . . . . 12
Section 10. RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 12. CERTIFICATION 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 AND FRACTIONAL SHARES . . . . . . . . . . . 25
Section 15. RIGHTS OF ACTION. . . . . . . . . . . . . . . . . . . . . . . 26
Section 16. AGREEMENT OF RIGHT HOLDERS. . . . . . . . . . . . . . . . . . 26
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER . . . . . . 27
Section 18. CONCERNING THE RIGHTS AGENT . . . . . . . . . . . . . . . . . 27
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT . . 28
Section 20. DUTIES OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . 29
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Section 21. CHANGE OF RIGHTS AGENT. . . . . . . . . . . . . . . . . . . . 30
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. . . . . . . . . . . . . . 31
Section 23. REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 24. NOTICE OF PROPOSED ACTIONS. . . . . . . . . . . . . . . . . . 32
Section 25. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 26. SUPPLEMENTS AND AMENDMENTS. . . . . . . . . . . . . . . . . . 34
Section 27. EXCHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 28. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 29. DETERMINATION AND ACTIONS TAKEN BY THE BOARD OF DIRECTORS . . 35
Section 30. CONDITIONS TO THE AGREEMENT . . . . . . . . . . . . . . . . . 36
Section 31. BENEFITS OF THIS AGREEMENT. . . . . . . . . . . . . . . . . . 36
Section 32. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 33. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 34. SECTION HEADINGS. . . . . . . . . . . . . . . . . . . . . . . 36
Section 35. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 37
Exhibit A Form of Right Certificate. . . . . . . . . . . . . . . . . . . A-1
Exhibit B Form of Summary of Rights. . . . . . . . . . . . . . . . . . . B-1
Exhibit C Certificate re Junior Participating Preference Stock . . . . . C-1
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RIGHTS AGREEMENT
AGREEMENT, dated as of March 5, 1996 between Southwest Gas
Corporation, a California corporation (the "Company"), and Xxxxxx Trust
Company of California, as Rights Agent.
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company has authorized and
declared the distribution of one right for (i) each share of Common Stock of
the Company ("Common Stock") outstanding at the Close of Business (as
hereinafter defined) on April 15, 1996 (the "Rights Record Date"), each right
representing the right to purchase one Unit consisting, initially, of one one-
hundredth of a share of Junior Participating Preference Stock, and (ii) each
additional share of Common Stock which shall become outstanding between the
Rights Record Date and the earliest of the Distribution Date, the Expiration
Date (as such terms are hereinafter defined) and the date, if any, on which
such rights may be redeemed, all upon the terms and subject to the conditions
hereinafter set forth (each such right being hereinafter referred to as a
"Right");
NOW, THEREFORE, the parties agree as follows:
Section 1. CERTAIN DEFINITIONS.
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(a) For purposes of this Agreement, the following terms have the
meanings indicated:
"ACQUIRING PERSON" shall mean any Person who or which, alone or
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner (within the meaning of Section 1(b)) of a Substantial
Block of Voting Stock, but shall not include (i) an Exempt Person or
(ii) any Person who or which acquires a Substantial Block of Voting Stock
in connection with a transaction or series of transactions approved prior
to such transaction or transactions by the Board of Directors of the
Company; provided that no person shall become an Acquiring Person solely
as a result of a reduction in the number of shares of Voting Stock
outstanding, unless and until such Person shall thereafter become the
Beneficial Owner of additional shares constituting 1% or more of the
general voting power of the Company.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, as in effect as of the date hereof.
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"BUSINESS DAY" shall mean any day other than a Saturday, Sunday
or day on which banking institutions in the States of California, New
York or Nevada are authorized or obligated by law or executive order to
close.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., Las
Vegas time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 p.m., Las Vegas time, on the next
succeeding Business Day.
"COMMON STOCK" shall have the meaning assigned to it in the
preamble; and "COMMON STOCK" when used with reference to Persons other
than the Company shall mean: (i) in the case of Persons organized in
corporate form, the capital stock or equity security with the greatest
voting power of such Person or, if such Person is a Subsidiary of another
Person, of the Person or Persons which ultimately control such first-
mentioned Person; and (ii) in the case of Persons not organized in
corporate form, the units of beneficial interest which (A) represent the
right to participate generally in the profits and losses of such Person
(including without limitation any flow-through tax benefits resulting
from an ownership interest in such Person) and (B) are entitled to
exercise the greatest voting power of such Person or, in the case of a
limited partnership, shall have the power to remove the general partner
or partners.
"CONTINUING DIRECTOR" shall mean any member of the Board of
Directors of the Company (while such Person is a member of the Board) who
(i) is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any
such Affiliate or Associate, and (ii) either (A) was a member of the
Board of Directors prior to the time any Person became an Acquiring
Person, or (B) became a member of the Board of Directors subsequent to
the time any Person became an Acquiring Person, if such Person's
nomination for election, or re-election, to the Board was recommended, or
approved, by a majority of the Continuing Directors then in office.
"DISTRIBUTION DATE" shall have the meaning assigned to it in
Section 3(a).
"EQUIVALENT STOCK" shall have the meaning assigned to it in
Section 7(a).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"EXEMPT PERSON" shall mean the Company, any Subsidiary of the
Company and any employee benefit plan or employee stock plan of the
Company or of any Subsidiary of the Company, or any trust or other entity
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organized, established or holding shares of Common Stock by, for or
pursuant to, the terms of any such plan.
"EXPIRATION DATE" shall have the meaning assigned to it in
Section 7(a).
"OFFER DATE" shall have the meaning assigned to it in Section
3(a).
"PERSON" shall mean any individual, firm, corporation,
partnership, limited liability company, association, group (as such term
is used in Rule 13d-5 promulgated under the Exchange Act as in effect on
the date hereof), trust or other entity and shall include any successor
by merger (or otherwise) of any of the foregoing.
"PRINCIPAL PARTY" shall have the meaning assigned to it in
Section 13(b).
"Purchase Price" shall mean the price payable for one Unit upon
exercise of a Right.
"QUALIFIED OFFER" shall mean a tender or exchange offer for all
outstanding Common Stock at a price and on terms determined to be
adequate and otherwise in the best interests of the Company and its
shareholders (other than the Person or an Affiliate or Associate thereof
on whose behalf the offer is made) by at least a majority of the
Continuing Directors who are not representatives of or affiliated with
the Person making such offer or any Affiliate or Associate of such
Person.
"REDEMPTION PRICE" shall have the meaning assigned to it in
Section 23(a).
"RIGHT" shall have the meaning assigned to it in the preamble.
"RIGHTS RECORD DATE" shall have the meaning assigned to it in
the preamble.
"SUBJECT SHARES" shall mean the class or series of shares then
issuable on exercise of the Rights.
"STOCK ACQUISITION DATE" shall mean the date of the first
public announcement by the Company or an Acquiring Person (which, for
purposes of this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) under the Exchange Act) that an Acquiring
Person has become such.
"SUBSIDIARY" shall mean, with respect to any Person, a
corporation or other entity the securities or other ownership interests
of which having ordinary voting power sufficient to elect a majority of
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the board of directors or other persons performing similar functions are
at the time directly or indirectly owned by such Person and any Affiliate
of such Person.
"SUBSTANTIAL BLOCK" shall mean a number of shares of Voting
Stock having in the aggregate 20 percent or more of the general voting
power.
"TRADING DAY" shall have the meaning assigned to it in Section
11(d).
"UNIT" shall mean the shares or other securities issuable upon
exercise of one Right, initially one one-hundredth of a share of Junior
Participating Preference Stock of the Company having the rights and
preferences set forth in Exhibit C, before any adjustment pursuant to
Section 11(a)(ii) or Section 13.
"VOTING STOCK" shall mean shares of the Company's capital stock
the holders of which have general voting power.
(b) For purposes of this Agreement, a Person shall be deemed the
"BENEFICIAL OWNER" of any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, (whether or not in writing)
or upon the exercise of any conversion, exchange or purchase rights
(other than the Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for payment or exchange; or
(B) the right to vote or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing); or
(C) the right to dispose or to direct the disposition of, pursuant to any
agreement, arrangement or understanding (whether or not in writing); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any
securities of the Company;
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provided, however, that a Person shall not be deemed the Beneficial Owner of,
or to Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from the grant of a
revocable proxy or consent given to such Person in connection with a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act, and (2) is not also
then reportable on Schedule 13D (or any comparable or successor report) under
the Exchange Act; provided, further, that a Person engaged in business as an
underwriter of securities shall not be deemed the "Beneficial Owner" of
securities acquired through such person's participation in good faith in a
firm commitment underwriting until the expiration of the 40-day period
immediately following the date of such acquisition.
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 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 Agent or Agents as it may deem necessary or desirable
and determine the respective duties of the Rights Agent and the Co-Rights
Agents.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
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(a) Until the Close of Business on the earlier of (i) the tenth
Business Day after a Stock Acquisition Date or (ii) the tenth Business Day (or
such later date as the Company's Board of Directors shall determine) after the
date of the commencement by any Person (other than an Exempt Person) of, or
the date of the first public announcement (such commencement date or
announcement date being herein referred to as the "Offer Date") of the intent
of any Person (other than an Exempt Person) to commence, a tender or exchange
offer upon the successful consummation of which such Person, together with its
Affiliates and Associates, would be the Beneficial Owner of 20 percent or more
of the then outstanding Voting Stock (irrespective of whether any shares are
actually purchased pursuant to such offer) (the tenth Business Day after the
first to occur of a Stock Acquisition Date or an Offer Date being herein
referred to as the "Distribution Date"),
(i) the Rights will automatically attach to, and be evidenced
by, the certificates for Common Stock registered in the names of the
holders of Common Stock (which certificates for Common Stock shall be
deemed also to be Right Certificates) and not by separate Right
Certificates, and
(ii) each Right will be transferable only in connection with
the transfer of the underlying shares of Common Stock.
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As soon as practicable after the Distribution Date, the Rights Agent
will mail, by first-class, insured, postage prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Distribution Date,
as shown by the records of the Company at the Close of Business on the
Distribution Date, at the address of such holder shown on such records, a
Right Certificate, in substantially the form of Exhibit A hereto, evidencing
one Right for each share of Common Stock so held.
(b) As soon as practicable after the Rights Record Date, the
Company will send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit B, by first-class mail, postage prepaid, to each
record holder of Common Stock as of the Close of Business on the Rights Record
Date, at the address of such holder shown on the records of the Company.
(c) The Company will cause certificates for Common Stock issued
after the Rights Record Date (including replacement certificates for shares of
Common Stock outstanding on or prior to the Rights Record Date), but prior to
the earliest of (i) the Distribution Date, (ii) the Expiration Date and
(iii) the date, if any, on which the Rights may be redeemed, to have impressed
on, printed on, written on or otherwise affixed to them the following legend:
This certificate also entitles the holder hereof to certain Rights
as set forth in the Rights Agreement between the Company and Xxxxxx
Trust Company of California, as Rights Agent, as the same shall 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 will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will mail to
the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an
Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) or certain transferees of
any thereof, whether currently held by or on behalf of such Person
or by any subsequent holder, may be limited as provided in Section
7(f) of the Rights Agreement.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
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for transfer of any such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
(d) Until the Distribution Date, the surrender for transfer of any
of the certificates for Common Stock outstanding on or after the Rights Record
Date, with or without a copy of the Summary of Rights attached thereto and
with or without the legend set forth in subsection (c) above, shall also
constitute the transfer of the Rights associated with such Common Stock.
After the Distribution Date, the Rights will be evidenced solely by the Right
Certificates.
Section 4. FORM OF RIGHT CERTIFICATES.
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(a) The Right Certificates (and the forms of assignment and
certification and of election to purchase shares to be printed on the reverse
thereof) shall be in substantially the form of Exhibit A 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 law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights Beneficially Owned by: (i) an Acquiring
Person or any Associate or Affiliate of any Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights, or (B) a transfer which the Board of Direc-
tors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect avoidance of Section
7(f), and any Right Certificate issued pursuant to Section 6 or Section 11
upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the extent
feasible and reasonably identifiable as such) the following legend:
The Rights represented by this Right 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) or certain transferees thereof. Accordingly, under
certain circumstances as provided in the Rights Agreement, this Right
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Certificate and the Rights represented hereby may be limited as provided
in Section 7(f) of such Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
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(a) The Right Certificates shall be executed on behalf of the
Company by its President or any of its Vice Presidents, either manually or by
facsimile signature, and have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent, issued
and delivered with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right Certificate, shall be a
proper officer (as specified above) of the Company to sign such Right Certifi-
cate, although at the date of the execution of this Rights Agreement any such
person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced
on its face by each Right Certificate, the date of each Right Certificate and
the number of each Right Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
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CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
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CERTIFICATES.
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(a) Subject to the provisions of Section 4(b), Section 7(f) and
Section 14, at any time after the Close of Business on the Distribution Date,
and prior to the Close of Business on the Expiration Date or the day prior to
the day, if any, on which the Rights are to be redeemed pursuant to Section
23, any Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase such number of Units as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate(s) to be
transferred, split up, combined or exchanged, with the form of assignment on
the reverse side(s) thereof duly completed and executed, at the stock transfer
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office of the Rights Agent. Thereupon the Rights Agent shall countersign and
deliver to the persons entitled thereto the Right Certificate(s) requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates. Notwithstanding the
foregoing, neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered
Right Certificate unless and until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate, if mutilated, the Company will execute and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
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RIGHTS.
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(a) Subject to Section 7(f), and unless earlier redeemed as
provided in Section 23, the registered holder of any Right Certificate may
exercise the Rights evidenced thereby in whole or in part at any time after
the Distribution Date upon surrender of the Right Certificate, with the form
of election to purchase on the reverse side thereof duly completed and
executed, to the Rights Agent at the stock transfer office of the Rights
Agent, together with payment of the Purchase Price for each Unit as to which
the Rights are exercised, at or prior to the Close of Business on the tenth
anniversary of the Rights Record Date or such other date to which the Rights
may be extended as provided in this Agreement (the latest of such dates being
herein referred to as the "Expiration Date"). If at any time after the
Distribution Date but prior to the Expiration Date the Company is unable,
under its Articles of Incorporation, to issue the number and class of shares
required to be issued upon the exercise of all of the outstanding Rights, the
Company may issue upon exercise of any of the Rights shares of capital stock
or other securities of the Company of equivalent value to the shares so
required to be issued ("Equivalent Stock"), as determined by the Board of
Directors.
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(b) The Purchase Price for each Unit pursuant to the exercise of a
Right shall initially be $45.00, shall be subject to adjustment from time to
time as provided in Sections 11 and 13 and shall be payable in lawful money of
the United States of America.
(c) Upon receipt of a Right Certificate, with the form of election
to purchase duly executed, accompanied by payment of the Purchase Price for
the Units to be purchased and an amount equal to any applicable transfer tax
in cash, or by certified check, bank draft or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) requisition from
the Company or any transfer agent of the Company a certificate for the number
of shares to be purchased and the Company will comply, and hereby irrevocably
authorizes its transfer agent to comply, with all such requests, (ii) requisi-
tion from the Company the amount of cash to be paid in lieu of issuance of a
fractional share, when appropriate, in accordance with Section 14, and
(iii) promptly after receipt of such certificate from any such transfer agent,
cause the same to be delivered to or upon the order of the registered holder
of such Right Certificate, registered in such name or names as may be
designated by such holder, and, when appropriate, after receipt promptly
deliver such cash in lieu of a fractional share to or upon the order of the
registered holder of such Right Certificate; provided, however, that in the
case of the purchase, in connection with the exercise of a Right, of
securities other than shares of stock, the Rights Agent shall promptly take
the appropriate actions with respect thereto as shall as nearly as practicable
correspond to the actions described in the foregoing clauses (i) through
(iii).
(d) The Company shall not be required to pay any transfer tax which
may be payable in respect of any transfer involved in the transfer or delivery
of Right Certificates, or the issuance or delivery of certificates in a name
other than that of the registered holder of the Right Certificate evidencing
Rights surrendered for exercise, or to issue or deliver any certificates upon
the exercise of any Rights, until any such tax shall have been paid (any such
tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
(e) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14.
(f) Notwithstanding any provision of this Agreement to the
contrary, upon the occurrence of any of the events described in any of clauses
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(A), (B), (C) or (D) of Section 11(a)(ii), the adjustment provided for under
Section 11(a)(ii) shall not apply with respect to any Rights that are at the
time of the occurrence of such event Beneficially Owned by (i) an Acquiring
Person or by any Associate or Affiliate of such Acquiring Person (which
Acquiring Person or Affiliate or Associate engages in, or realizes the benefit
of, one or more of the transactions described in clause (A) or clause (B) of
Section 11(a)(ii), realizes the benefits set forth in clause (C) of Section
11(a)(ii) or, alone or together, become the Beneficial Owner(s) of a number of
shares of Voting Stock which equals or exceeds the percentage of the general
voting power as provided in clause (D) of Section 11(a)(ii), as the case may
be), or (ii) a transferee of an Acquiring Person or of any Associate or
Affiliate of such Acquiring Person (which Acquiring Person or Associate or
Affiliate engages in, or realizes the benefit of, one or more of the
transactions described in clause (A) or clause (B) of Section 11(a)(ii),
realizes the benefits set forth in clause (C) of Section 11(a)(ii) or, alone
or together with such Acquiring Person or any such Associate or Affiliate,
become the Beneficial Owner(s) of a number of shares of Voting Stock which
equals or exceeds the percentage of the general voting power as provided in
clause (D) of Section 11(a)(ii), as the case may be) (A) who becomes a
transferee after the Acquiring Person becomes such, or (B) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (1) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (2) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(f). Upon the
exercise of such Rights, the holders thereof shall be entitled to receive,
upon payment of the Purchase Price, the number of Units issuable upon exercise
of such Rights without giving effect to the adjustment provided for under
Section 11(a)(ii). The Company shall use all reasonable efforts to insure
that the provisions of this Section 7(f) and Section 4(b) are complied with,
but shall have no liability to any holder of Right Certificates or other
Person as a result of its making or failing to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(g) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
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evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request
of the Company, destroy such can-celled Right Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF SHARES; REGISTRATION.
----------------------------------------------------
(a) The Company covenants and agrees that it shall (i) on or prior
to the Rights Record Date, take all such action as shall be necessary to cause
to be reserved and kept available out of its authorized and unissued capital
stock, the number, class and series of shares that will be sufficient to
permit the exercise in full of all Rights to be outstanding as of the Rights
Record Date, (ii) no later than promptly following the Distribution Date, take
all such action as shall be necessary to cause to be reserved and kept
available out of its authorized and unissued capital stock, the number of
additional shares that will, from time to time, be sufficient to permit the
exercise in full of all Rights from time to time outstanding, (iii) take all
such action as may be necessary to insure that all shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable, and (iv) pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares upon the exercise of Rights (except as otherwise provided in
Section 7(d)).
(b) The Company agrees to take all such action, from and after the
Distribution Date, as may be necessary or appropriate to permit the issuance
of shares in connection with the exercise of the Rights, including any
required registration under (i) the Securities Act of 1933, as amended from
time to time (the "Securities Act"), and (ii) the securities or "blue sky"
laws of the various states and obtaining any necessary approvals of the
California Public Utilities Commission and any other governmental agency as
shall be required by law. The Company may temporarily suspend, for a period
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of time not to exceed 120 days, the exercisability of the Rights in order to
prepare and file a registration statement or statements for the purpose of
effecting any such registration and permit such statement(s) to become
effective and to prepare and file any application or applications for the
purpose of obtaining any such approvals and permit such approvals to be
obtained. At the commencement and termination of any such suspension, the
Company shall issue a public announcement and shall provide written notice to
the Rights Agent, stating that the exercisability of the Rights has been
temporarily suspended, or that such suspension has terminated, as the case may
be.
(c) If and so long as the stock issuable upon the exercise of
Rights is listed on any national securities exchange, the Company shall use
its reasonable efforts to cause all shares reserved for issuance upon exercise
of Rights to be listed on such exchange upon official notice of issuance upon
such exercise.
Section 10. RECORD DATE. Each Person in whose name any stock
certificate is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares represented thereby
on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a shareholder of the Company with
respect to shares for which the Rights shall be exercisable, including without
limitation the right to vote or to receive dividends or other distributions,
and such holder shall not be entitled to receive any notice of any proceedings
of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares or other
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 date
of this Agreement (A) declare and pay a dividend on the shares which are
subject to the Rights ("Subject Shares") payable in shares of stock of
the Company, (B) subdivide or split the Subject Shares, (C) combine or
consolidate the Subject Shares into a smaller number of shares or effect
a reverse stock split of the Subject Shares or (D) issue any shares of
its capital stock in a reclassification of the Subject Shares (including
any such reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation), then, and
in each such event, except as otherwise provided in this Section 11(a),
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the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, split, reverse
split, combination, consolidation or reclassification, and the number and
kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the transfer books of
the Company were open, he would have received upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, split,
reverse split, combination, consolidation or reclassification. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii), 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).
(ii) In the event that at any time after the date of this
Agreement
(A) any Acquiring Person, or any Associate or Affiliate
of any Acquiring Person, directly or indirectly (1) shall merge into
the Company or any of its Subsidiaries or otherwise combine with the
Company or any of its Subsidiaries and the Company or such
Subsidiary shall be the continuing or surviving corporation of such
merger or combination and the Common Stock shall remain outstanding
and the outstanding shares thereof shall not be changed into or
exchanged for stock or other securities of the Company or of any
other Person or cash or any other property, or (2) shall sell or
otherwise transfer in one or more transactions, assets to the
Company or any of its Subsidiaries in exchange for 25 percent or
more of the shares of any class of capital stock of the Company or
any of its Subsidiaries, and the Common Stock shall remain
outstanding and unchanged, or
(B) directly or indirectly, any Acquiring Person, or any
Associate or Affiliate of any Acquiring Person, shall (1) in one or
more transactions, transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of any
class of capital stock of the Company or any of its Subsidiaries or
for securities exercisable for or convertible into shares of any
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class of capital stock of the Company or any of its Subsidiaries or
otherwise obtain from the Company or any of its Subsidiaries, with
or without consideration, any additional shares of any class of
capital stock of the Company or any of its Subsidiaries or other
securities exercisable for or convertible into shares of any class
of capital stock of the Company or any of its Subsidiaries (other
than as part of a PRO RATA distribution by the Company or such
Subsidiary to all holders of Common Stock), (2) sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise dispose (in
one or more transactions), to, from or with, as the case may be, the
Company or any of its Subsidiaries, assets on terms and conditions
less favorable to the Company or such Subsidiary than the Company or
such Subsidiary would be able to obtain in arm's-length negotiation
with an unaffiliated third party, (3) receive any compensation from
the Company or any of the Company's Subsidiaries other than
compensation for full-time employment as a regular employee, or fees
for serving as director, at rates in accordance with the Company's
(or its Subsidiaries') past practices, or (4) receive the benefit,
directly or indirectly (except proportionately as a shareholder), of
any loans, advances, guarantees, pledges or other financial
assistance provided by the Company or any of its Subsidiaries, on
terms and conditions less favorable to the Company or such
Subsidiary than the Company or such Subsidiary would be able to
obtain in arm's-length negotiation with an unaffiliated third party,
or
(C) during any such time as there is an Acquiring Person,
there shall be any reclassification of securities (including any
reverse stock split), or recapitalization of the Company, or any
merger or consolidation of the Company with any of its Subsidiaries
or any other similar transaction or series of transactions involving
the Company or any of its Subsidiaries (whether or not with or into
or otherwise involving an Acquiring Person or any Affiliate or
Associate of such Acquiring Person) which has the effect, directly
or indirectly, of increasing by more than one percent the
proportionate share of the outstanding shares of any class of equity
securities, or of securities exercisable for or convertible into
equity securities, of the Company or any of its Subsidiaries which
is directly or indirectly owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, or
(D) any Person shall become an Acquiring Person otherwise
than pursuant to a Qualified Offer,
then, and in each such case, but subject to the provisions of Section 27,
proper provision shall be made so that each holder of a Right, except as
provided below and in Section 7(f), shall, on and after the later of (I) the
date of the occurrence of an event described in clause (A), (B), (C) or (D) of
this Section 11(a)(ii), or (II) the date of the expiration of the period
within which the Rights may be redeemed pursuant to Section 23 (as the same
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may have been amended as provided in Section 26), have the right to receive,
upon exercise thereof at the then current Purchase Price, such number of
shares of Common Stock as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the then number of Units for which a Right
is then exercisable and dividing that product by (y) 50 percent of the current
market price per share of Common Stock (determined in accordance with Section
11(d)) on the date of the occurrence of the relevant event listed above in
clause (A), (B), (C) or (D) of this subparagraph (ii); PROVIDED, HOWEVER, that
if the transaction that would otherwise give rise to the foregoing adjustment
is also subject to the provisions of Section 13, then only the provisions of
Section 13 shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii). The Company shall not consummate any such merger,
combination, transfer or transaction referred to in any of such clauses (A),
(B) and (C) unless prior thereto there shall be sufficient authorized but
unissued Common Stock to permit the exercise in full of the Rights in
accordance with the foregoing sentence, unless the Board of Directors has
determined to issue Equivalent Stock in accordance with Section 7(a);
PROVIDED, HOWEVER, that in no case may the Company consummate any such merger,
combination, transfer or transaction if at the time of or immediately after
such transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
In the event that the Company issues Equivalent Stock upon the
exercise of any Rights pursuant to the immediately preceding paragraph, then,
upon any such exercise, proper provision shall be made so that the holder of a
Right (except as provided in Section 7(f)) shall have the right to receive,
upon such exercise at the then current Purchase Price, such number of shares
or other units of Equivalent Stock of the Company as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the number of
Units for which a Right is then exercisable and dividing that product by
(y) 50 percent of the current market price per share or other unit of the
Equivalent Stock of the Company (determined on substantially the same basis as
is prescribed by Section 11(d) with respect to the valuation of Common Stock)
on the date of occurrence of the relevant event listed above in clause (A),
(B), (C) or (D) of this subparagraph (ii). In the event that at any time the
Company should be prohibited by law, by any provision of its Articles of
Incorporation, or by any instrument or agreement to which the Company is a
party or by which it is bound, from issuing, or should be unable under its
Articles of Incorporation to issue, sufficient Equivalent Stock to permit the
exercise of all outstanding Rights in accordance with the foregoing sentence,
then, in lieu of issuing such Equivalent Stock upon such exercise, the Company
shall pay to each holder of a Right (except as provided in Section 7(f)) upon
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surrender of the Right as provided herein but without payment of the Purchase
Price, an amount in cash for each Right equal to the Purchase Price.
(b) In case the Company shall at any time after the Rights Record
Date fix a record date for the issuance of rights or warrants to all holders
of Common Stock or Subject Shares entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or purchase Common
Stock or Subject Shares or securities convertible into Common Stock or Subject
Shares at a price per share (or having a conversion price per share, if a
security convertible into Common Stock) less than the current market price per
share (determined in accordance with Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, of which the numerator shall be the total number of shares of
Common Stock and Subject Shares outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of the
total number of shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price and of which the denominator shall be
the total number of shares of Common Stock and Subject Shares outstanding on
such record date plus the number of additional shares to be offered for
subscription or purchase (or into which the convertible securities to be
offered are initially convertible). In case such subscription or purchase
price may be paid, in whole or in part, in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall at any time after the Rights Record
Date fix a record date for the making of a distribution on the shares of
Common Stock or the Subject Shares, whether by way of a dividend,
distribution, reclassification of stock, recapitalization, reorganization or
partial liquidation of the Company or otherwise (and including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation), of subscription rights or warrants
(excluding those referred to in Section 11(b)), evidences of indebtedness or
other assets (other than (i) regular periodic cash dividends, (ii) a dividend
payable in Common Stock or (iii) a distribution which is part of or is made in
connection with a transaction to which Section 11(a)(ii) or Section 13
applies), the Purchase Price to be in effect after such record date shall be
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determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, of which the numerator shall be the current
market price per share of Common Stock (determined in accordance with Section
11(d)) on such record date, less the fair market value applicable to one share
of Common Stock (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of such assets or evidences of indebtedness or of such
subscription rights or warrants so to be distributed, and of which the denomi-
nator shall be such current market price per share of Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed;
and in the event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current
market price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date; PROVIDED, HOWEVER,
that in the event that the current market price per share of Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of Common
Stock (other than the Rights), and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, then, and in
each such case, the current market price shall be appropriately adjusted to
reflect the current market price per share of Common Stock in connection with
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the average
of the high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc., Automated
Quotation System ("NASDAQ"). If on any such date the shares of Common Stock
are not quoted by any such organization, the fair market value of such shares
on such date as determined in good faith by the Board of Directors of the
issuer of such Common Stock shall be used. Any such determination of current
market price shall be described in a statement filed with the Rights Agent.
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For the purpose of any computation hereunder, the "current market
price" of a Unit shall be deemed to be equal to the current market price per
share of Common Stock, and the "current market price" of a Subject Share shall
be deemed to be equal to the current market price per share of Common Stock
divided by the number of Subject Shares which comprise a Unit.
For purposes of this Agreement, the term "Trading Day" shall mean a
day on which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Business Day.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
in such Price; PROVIDED, HOWEVER, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one-hundredth
of a share, as the case may be. Notwithstanding the proviso to the first
sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of
the transaction which gives rise to such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
(f) In the event that at any time, as a result of an adjustment
made pursuant to Section 11(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares
so receivable upon exercise of any Right shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions, with respect to such shares, contained in Sections 11(a)
through (c), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14
with respect to the shares of Common Stock shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall represent the right to
purchase, at the adjusted Purchase Price, the number of shares purchasable
from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
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that number of shares (calculated to the nearest one-hundredth) obtained by
(i) multiplying (x) the number of shares covered by a Right immediately prior
to such adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares purchasable upon the exercise of each
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of Units 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-hundredth) 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 Right Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i) the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14, 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 Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right
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 Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
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(k) In any case in which this Section 11 requires that an
adjustment in the Purchase Price be made effective as of the record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the additional shares or securities of the Company, if any, issuable as a
consequence of such adjustment; PROVIDED, HOWEVER, that the Company shall
deliver to such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares or securities upon the
occurrence of such event.
(l) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such adjustments in the number of shares
which may be acquired upon exercise of the Rights, and such adjustments in the
Purchase Price, in addition to those adjustments expressly required by the
other subsections of this Section 11, as and to the extent that the Company,
in its sole discretion, shall determine to be advisable, in order that, in the
event of (i) any reclassification, consolidation or subdivision of the Common
Stock, (ii) any reorganization or partial liquidation of the Company or
similar transaction, (iii) any issuance wholly for cash of any Common Stock at
less than the current market price, (iv) any issuance wholly for cash of
Common Stock or securities which by their terms are convertible into or
exchangeable for Common Stock, (v) any stock dividends or (vi) any issuance of
rights, options or warrants, hereafter made by the Company to holders of its
Common Stock as provided herein above in this Section 11, (x) the holders of
the Rights in any such event shall be treated equitably and in accordance with
the purpose and intent of this Agreement, and (y) to the extent reasonably
possible, such event shall not, in the opinion of counsel for the Company,
result in the shareholders of the Company being subject to any United States
federal income tax liability by reason thereof.
Section 12. CERTIFICATION OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 13, the
Company shall (i) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(ii) promptly file with the Rights Agent and with each transfer agent for the
Common Stock a copy of such certificate, and (iii) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to give
such notice shall not affect the validity of, or the force or effect of, the
requirement for such adjustment.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
------------------------------------------------------
EARNING POWER.
-------------
(a) In the event that, at any time after an Acquiring Person has
become such,
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(i) the Company shall consolidate with, or merge with and
into, any other Person and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(ii) any other Person(s) shall consolidate or merge with and
into the Company, the Company shall be the continuing or surviving
corporation of such merger and, in connection with such consolidation or
merger, all or part of the Common Stock shall be changed into or
exchanged for stock or other securities of the Company or of any other
Person or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating more than 50
percent of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person, (other than a pro
rata distribution by the Company of assets (including securities) of the
Company or any of its Subsidiaries to all holders of the Company's Common
Stock),
then, on and after the later of (I) the date of the occurrence of an event
described in clause (i), (ii) or (iii) of this Section 13(a), or (II) the date
of the expiration of the period within which the Rights may be redeemed
pursuant to Section 23 (as the same may have been amended as provided in
Section 26):
(A) proper provision shall be made so that each holder of
a Right shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, such number of
shares of common stock of the Principal Party as shall be equal to
the result obtained by (x) multiplying the then current Purchase
Price by the number of Units for which a Right is then exercisable
and dividing that product by (y) 50 percent of the current market
price per share of the common stock of the Principal Party
(determined in the same manner as the current market price of Common
Stock is determined under Section 11(d)) on the date of consummation
of such consolidation, merger, sale or transfer;
(B) the Principal Party shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to
this Agreement, and proper provision shall be made for the
foregoing, provided that the Principal Party shall, prior to the
first occurrence of an event described in clause (i), (ii) or (iii)
of this Section 13(a), have caused to be reserved out of its
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authorized and unissued shares of common stock (or its authorized
and issued shares of common stock held in its treasury), for
issuance pursuant to this Agreement, the number of shares of common
stock that will be sufficient to permit the exercise in full of the
Rights after the occurrence of such event;
(C) the term "Company" wherever used in this Agreement
shall thereafter be deemed to refer to such Principal Party; and
(D) the Principal Party shall, in addition to the
reservation of shares of its common stock as provided in the proviso
to clause (B) above, take such steps (including without limitation
compliance with the Company's other obligations as set forth in
Section 9) in connection with such consummation as may be necessary
to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights;
PROVIDED, HOWEVER, that, upon the subsequent occurrence of any
merger, consolidation, sale of all or substantially all assets,
recapitalization, reclassification of shares, reorganization or
other extraordinary transaction in respect of such Principal Party,
each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Purchase Price, such cash,
shares, rights, warrants and other property which such holder would
have been entitled to receive had such holder, at the time of such
transaction, owned the shares of common stock of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party
shall take such steps (including, but not limited to, reservation of
shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property.
(b) For purposes of this Agreement, "Principal Party" shall mean
(i) in the case of any transaction described in clause (i) or
(ii) of Section 13(a), (A) the Person that is the issuer of the
securities into which shares of Common Stock are converted in such merger
or consolidation, or, if there is more than one such issuer, the issuer
the common stock of which has the greatest market value, or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger or consolidation and that survives said merger or consolidation,
or, if there is more than one such Person, the Person the common stock of
which has the greatest market value or (y) if the Person that is the
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other party to the merger or consolidation does not survive the merger or
consolidation, the Person that does so survive (including the Company if
it survives); and
(ii) in the case of any transaction described in clause (iii)
of Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, whichever of
such Persons is the issuer of common stock having the greatest market
value of shares outstanding;
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
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another corporation the common
stock of which is and has been so registered, "Principal Party" shall refer to
such other corporation; (2) if the common stock of such Person is not and has
not been so registered and such Person is not a direct or indirect Subsidiary
of another corporation the common stock of which is and has been so
registered, "Principal Party" shall refer to the corporation which ultimately
controls such Person; (3) in case such Person is a Subsidiary, directly or
indirectly, of more than one corporation, the common stocks of all of which
are and have been so registered, "Principal Party" shall refer to whichever of
such corporations is the issuer of common stock having the greatest market
value of shares held by the public; and (4) 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
clauses (1), (2) and (3) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such Person were a "Subsidiary"
of both or all of such joint ventures and the Principal Party in each such
chain shall bear the obligations set forth in this Section 13 in the same
ratio as its direct or indirect interests in such Person bear to the total of
such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and the Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement making valid provision for the results described in clause (A) of
Section 13(a) and confirming that the Principal Party will perform its
obligations under this Section 13(a); PROVIDED, HOWEVER, that in no case may
the Company consummate any such consolidation, merger, sale or transfer if
(i) at the time of or immediately after such transaction there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
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intended to be afforded by the Rights or (ii) prior to, simultaneously with or
immediately after such transaction, the shareholders of the Person which
constitutes, or would constitute, the Principal Party for purposes of this
Section 13 shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(d) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. This
Section 13 shall not be applicable to a transaction described in Subparagraphs
(i), (ii) or (iii) of Subsection (a) of this Section if (i) such transaction
is consummated with a Person or Persons who acquired Common Stock pursuant to
a Qualified Offer (or a wholly owned subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction
or distributable to shareholders upon conclusion of such transaction is not
less than the price per share of Common Stock paid to all holders of Common
Stock whose shares were purchased pursuant to such Qualified Offer and
(iii) the form of consideration being offered to the remaining holders of
Common Stock pursuant to such transaction or distributable to shareholders
upon conclusion of such transaction is the same as the form of consideration
paid pursuant to such Qualified Offer. Upon conclusion of any transaction
described in the foregoing sentence, all Rights shall expire.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional Rights. If the
Company shall elect not to issue such fractional Rights, in lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such Fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, the average of the high bid and low asked prices in the over-the-
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counter market, as reported by NASDAQ. If on any such date the Rights are not
quoted by any such organization, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used. Any such determination of current market value shall be described in a
statement filed with the Rights Agent.
(b) The Company shall not be required to issue fractions of shares
upon exercise of a Right or to distribute certificates which evidence
fractional shares. In lieu of fractional shares, the Company shall pay to the
registered holders of Right Certificates at the time such Right Certificates
are exercised as herein provided an amount in cash equal to the same fraction
of the current market value of a share of Common Stock. For purposes of this
Section 14, the current market value of a share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to the second
sentence of Section 11(d)) for the Trading Day immediately prior to the date
of such exercise.
(c) The holder of a Right by the acceptance thereof expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Right
Certificates (and prior to the Distribution Date, the registered holders of
the Common Stock), and any registered holder of any Right Certificate (or,
prior to the Distribution Date, any registered holder of the Common Stock),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, any other registered holder
of the Common Stock), may, on his own behalf and for his own benefit, enforce,
and may institute and maintain, any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of the obligations of any Person subject to, this
Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
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(b) on and after the Distribution Date, the Right Certificates will
be transferable only on the registry books of the Rights Agent and then if
surrendered at the stock transfer office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense incurred, without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or Certificate for Common Stock or for other securities of
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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, acting with reasonable
care, to be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper person or persons.
If and for so long as the Rights are listed on the New York Stock
Exchange or the American Stock Exchange, the Rights Agent, if its principal
offices are located outside New York City, shall maintain in the New York City
area facilities for the servicing of the Rights in the area of Manhattan
located south of Xxxxxxxx Street. Such facilities may consist of either an
office or agency where transactions in the Rights are serviced directly or a
"drop" where Common Stock certificates, Right Certificates, and other
instruments relating to transactions in Rights may be received for redelivery
to an office or agency outside New York City, all in accordance with the
applicable rules of the stock exchange on which the Rights are listed.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
---------------------------------------------------
AGENT.
-----
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section
21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned, and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned, and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
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Certificates either in its prior name or in its changed name, and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the President, any Vice
President, or the Secretary of the Company and delivered to the Rights Agent,
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify
the same, but all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof), nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate,
nor shall it be responsible for any adjustment required under the provisions
of Section 11 or 13 or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment),
nor shall it by any act hereunder be deemed to make any representation or
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warranty as to the authorization or reservation of any shares of stock to be
issued pursuant to this Agreement or any Right Certificate or as to whether
any shares of stock will, when issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performance by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
President, any Vice President or the Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first obtaining the Company's
approval.
Section 21. CHANGE OF RIGHTS AGENT. Unless the Company and the
Rights Agent agree to a shorter time period, the Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
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upon 15 days' notice in writing mailed to the Company and to each transfer
agent of Common Stock by registered or certified mail, and to the holders of
the Right Certificates by first-class mail. Unless the Company and the Rights
Agent agree to a shorter time period, the Company may remove the Rights Agent
or any successor Rights Agent upon 15 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of Common Stock by registered or certified mail, and to the
holders of the Right 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 15 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right
Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any state of the
United States in good standing, which is authorized under such laws to
exercise stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $100,000,000. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed, but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of Common
Stock and mail a notice thereof in writing to the registered holders of the
Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Expiration Date, the Purchase Price per share or
the number or kind or class of shares of stock or other securities or property
purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
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Section 23. REDEMPTION.
----------
(a) The Board of Directors of the Company may, at its option and as
provided herein, and notwithstanding the provisions of Sections 11 and 13 of
this Agreement, elect to redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend, reclassification or
similar transaction occurring after the date hereof (such redemption price
being herein referred to as the "Redemption Price") at any time up to the
Close of Business on the tenth Business Day after a Stock Acquisition Date;
PROVIDED, HOWEVER, the Board of Directors of the Company may authorize the
redemption of the Rights after the time that an Acquiring Person has become
such only if (i) there is at least one Continuing Director then in office and
(ii) a majority of all of the Continuing Directors then in office approves
such redemption.
(b) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights, the Company shall make a public
announcement thereof, and from and after the date of such announcement,
without any further action and without any further 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. As soon as
practicable after the election of the Board of Directors to redeem the Rights,
the Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be
made.
Section 24. NOTICE OF PROPOSED ACTIONS. In case the Company, after
the Rights become exercisable, shall propose (i) to pay any dividend payable
in stock of any class to the holders of its Common Stock or the Subject Shares
or to make any other distribution to the holders of its Common Stock or
Subject Shares (other than a regular periodic cash dividend), or (ii) to offer
to the holders of its Common Stock or Subject Shares rights or warrants to
subscribe for or to purchase any additional shares of Common Stock or shares
of stock of any class or any other securities, rights or options, or (iii) to
effect any reclassification of its Common Stock or Subject Shares (other than
a reclassification involving only the subdivision of outstanding shares of
Common Stock) or any recapitalization or reorganization of the Company, or
(iv) to effect any consolidation or merger into or with, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50 percent
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, or (v) to effect the liquidation, dissolution or
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winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right, in accordance with Section 25, a notice of such
proposed action, which shall specify the record date for the purposes of such
dividend, distribution of rights or warrants, or the date on which such
reclassification, recapitalization, reorganization, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of Common Stock and/or
Subject Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least
twenty days prior to the record date for determining holders of the Common
Stock and/or Subject Shares for purposes of such action, and in the case of
any such other action, at least twenty days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of
Common Stock and/or Subject Shares, whichever shall be the earlier. The
failure to give notice required by this Section 24 or any defect thereon shall
not affect the legality or validity of the action taken by the Company or the
vote upon any such action.
Section 25. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Xxxxxx Trust Company of California
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
Southwest Gas Corporation
0000 Xxxxxx Xxxxxxxx Xxxx
X.X. Xxx 00000
Xxx Xxxxx, Xxxxxx 00000-0000
Attention: Chief Financial Officer
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to or on the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
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Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company
and the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the Distri-
bution Date and subject to the penultimate sentence of this Section 26, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Right Certificates
in order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period
hereunder (which lengthening or shortening, after the time that any Acquiring
Person has become such, shall be effective only if (x) there is at least one
Continuing Director then in office and (y) a majority of all of the Continuing
Directors then in office have approved of such action), or (iv) to change or
supplement the provisions hereof in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Right Certificates; PROVIDED, HOWEVER, this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other time period,
unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 26, the Rights Agent shall execute such supplement or
amendment. Notwithstanding anything contained in this Agreement to the
contrary: (1) no supplement or amendment shall be made which changes the
Redemption Price, the Purchase Price or the number of shares or Units for
which a Right is exercisable; and (2) the duration of the Rights may not be
shortened without the written consent of the registered holders thereof (other
than by a redemption of the Rights pursuant to Section 23). 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 27. EXCHANGE.
--------
(a) The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become subject to the provisions of Section 7(f) hereof) for Common
Stock at an exchange ratio of one share of Common Stock per Right, appropri-
ately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
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(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
PROVIDED, HOWEVER, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become subject to the provisions of Section 7(f) hereof) held by each holder
of Rights.
(c) In the event that there shall not be sufficient authorized
Common Stock to permit an exchange of Rights as contemplated in accordance
with this Section, the Company shall take all such action as may be necessary
to authorize additional Common Stock or Equivalent Stock for issuance upon
exchange of the Rights.
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. DETERMINATION AND ACTIONS TAKEN BY THE BOARD OF
DIRECTORS. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock (or other applicable securities hereunder)
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock (or other
securities) of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) (as in effect on the
date of this Agreement) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights
and powers specifically granted to such Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including
without limitation the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or
35
39
not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (B) below, all omissions with respect to the foregoing) which are done
or made by the Board in good faith, shall (A) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (B) not subject the Board to any liability to the holders of the
Rights.
Section 30. CONDITIONS TO THE AGREEMENT. The effectiveness of this
Agreement and each and every right and obligation obtained or incurred
pursuant hereto, including, but not limited to, the exercisability of the
Rights, is conditioned upon (a) the Company having received all necessary
approvals and consents from all local, state and federal regulatory
authorities having jurisdiction over the Company and the transactions contem-
plated by this Agreement and (b) the absence of any statute, rule, regulation,
injunction or other order (whether temporary, preliminary or permanent)
enacted, issued, promulgated, enforced or entered into by any United States,
state or local legislative body, governmental agency or commission or court of
competent jurisdiction which is in effect and has the effect of making the
distribution or exercise of the Rights illegal or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement.
Section 31. 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 Right Certificates (and, prior to the
Distribution Date, the holders of Common Stock) any legal or equitable right,
remedy or claim under this Agreement. This Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
holders of Common Stock).
Section 32. GOVERNING LAW. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California 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. The rights and obligations
of the Rights Agent under this Agreement shall be governed by and construed in
accordance with the laws in effect in the State of California.
Section 33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 34. SECTION HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
36
40
Section 35. 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, illegal, or unenforceable, (i) such invalid,
illegal or unenforceable term, provision, covenant or restriction shall
nevertheless be valid, legal and enforceable to the extent, if any, provided
by such court or authority, and (ii) 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
SOUTHWEST GAS CORPORATION:
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Title: Senior Vice President/C.F.O.
XXXXXX TRUST COMPANY OF CALIFORNIA:
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Title: Vice President
37
41
Exhibit A
[Form of Right Certificate]
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER PUBLIC ANNOUNCEMENT OF
REDEMPTION IS MADE. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE
AGREEMENT. IN THE EVENT THAT THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO
A PERSON WHO IS AN ACQUIRING PERSON OR AN ASSOCIATE
OR AFFILIATE THEREOF (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) OR CERTAIN TRANSFEREES
THEREOF, THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BE SUBJECT TO CERTAIN
LIMITATIONS IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7 OF THE RIGHTS AGREEMENT.
RIGHT CERTIFICATE
This certifies that _______________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of March 5, 1996 (the "Rights Agreement"),
between Southwest Gas Corporation, (the "Company"), and Xxxxxx Trust Company
of California (the "Rights Agent"), to purchase from the Company, unless the
Rights have been previously redeemed, at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to the Expiration
Date (as such term is defined in the Rights Agreement), or the date, if any,
on which the Rights evidenced by this Certificate may be redeemed, at the
stock transfer office of the Rights Agent, or its successors as Rights Agent,
one one-hundredth of a fully paid and nonassessable share of Junior
Participating Preference Stock ("Preference Shares"), at a purchase price of
$45.00 (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly completed and executed.
The number of Rights evidenced by this Right Certificate as set forth above
(and the number of shares which may be purchased upon exercise thereof), and
the Purchase Price set forth above, are the number and Purchase Price as of
the date of the Rights Agreement based on the Preference Shares as constituted
on such date.
A-1
42
Upon the occurrence of an event described in clause (A), (B), (C) or
(D) of Section 11(a)(ii) of the Rights Agreement, the holder of any Rights
that are, or were, beneficially owned by an Acquiring Person or an Associate
or Affiliate thereof (as such terms are defined in the Rights Agreement) or
certain transferees thereof which engaged in, or realized the benefit of, an
event or transaction or transactions described in clause (A), (B), (C) or (D)
of such Section 11(a)(ii), shall not be entitled to the benefit of the
adjustment described in such Section 11(a)(ii).
As provided in the Rights Agreement, the Purchase Price and the
number and class of shares which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the 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 Right Certificates, which
limitations of rights include the temporary suspension of the exercisability
of such Rights under 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 at the principal office of the Company.
This Right Certificate, with or without other Right Certificates,
upon surrender at the stock transfer office of the Rights Agent set forth
above, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase such
number of shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at
a redemption price of $.01 per Right.
No fractional shares will be issued upon the exercise of any Rights
evidenced hereby, but in lieu thereof a cash payment may be made, as provided
in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares or of any
other securities of the Company which may at any time be issuable on the
A-2
43
exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signatures of the proper officers of the
Company.
Dated as of ____________, ____.
SOUTHWEST GAS CORPORATION
By: _________________________
Title:
Countersigned:
XXXXXX TRUST COMPANY OF
CALIFORNIA By: ______________________
Title:
By: _______________________
Authorized Signature
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44
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________________________________
hereby sells, assigns and transfers unto _____________________________________
______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney to transfer the within Right Certificate on the books of the within-
named Corporation, with full power of substitution.
Dated: ____________, ____ ______________________________
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best
knowledge of the undersigned) by checking the appropriate boxes that:
(1) this Right 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 an Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Right Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Date: ______________, ____ ______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-4
45
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To Southwest Gas Corporation and [Rights Agent]:
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate and to purchase
the shares issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number: _____________________________
__________________________________________________________________________
(Please print name and address)
____________________________________________________________ If such number of
Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered
in the name of and delivered to:
Please insert social security
or other identifying number: _____________________________
__________________________________________________________________________
(Please print name and address)
____________________________________________________________
Dated: ______________, ____
Signature: _____________________
(Signature must conform in all respects to name
of holder as specified on the face of this Right
Certificate)
Signature Guaranteed:
A-5
46
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best
knowledge of the undersigned) by checking the appropriate boxes that:
(1) the Rights evidenced by this Right 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 an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Right Certificate from any person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Date: ______________, ____ ______________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
A-6
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EXHIBIT B
[Form of Summary of Rights]
On March 5, 1996, the Board of Directors of Southwest Gas
Corporation (the "Company") declared a distribution of one Right for each
outstanding share of common stock (the "Common Stock") of the Company. The
distribution is to be made as of April 15, 1996 (the "Record Date") to the
shareholders of record on that date. Each Right entitles the registered
holder to purchase from the Company, initially, one one-hundredth of a share
of Junior Participating Preference Stock ("Preference Stock") at a price of
$45.00 (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement between the Company
and Xxxxxx Trust Company of California, as Rights Agent.
Shares of Preference Stock purchasable upon exercise of the Rights
will be entitled to dividends of 100 times the dividends, per share, declared
on shares of the Common Stock and in the event of liquidation will be entitled
to a minimum preferential liquidating distribution of $100 per share and an
aggregate liquidating distribution, per share, of 100 times the distribution
made per share of Common Stock. In the event no dividends are declared on
shares of Common Stock, holders of Preference Stock will be entitled to
receive at least $1.00 per share of Common Stock for each quarter that a
dividend is not declared on shares of Common Stock. The holders of Preference
Stock will vote together with holders of Common Stock and in the event of any
merger, consolidation or other transaction in which shares of Common Stock are
exchanged, each share of Preference Stock will be entitled to receive 100
times the amount received per each share of Common Stock.
Because of the Preference Stock' dividend and liquidation rights,
the value when issued of the one one-hundredth interest in a share of
Preference Stock purchasable upon exercise of each Right should approximate
the value of one share of Common Stock.
Until the earlier to occur of (i) 10 business days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of 20% or more of
the Company's general voting power other than pursuant to a Qualified Offer
(as defined below), the date of such public announcement being called the
"Stock Acquisition Date," or (ii) 10 business days (or such later date as may
be determined by action of the Board of Directors) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of 20% or more of the Company's general voting power (the date of
B-1
48
such earlier occurrence being called the "Distribution Date"), the Rights will
be evidenced by the certificates representing the Common Stock and will be
transferred with and only with the Common Stock. New Common Stock
certificates issued after the Record Date upon transfer or new issuance of
shares of Common Stock will contain a notation incorporating the Rights
Agreement by reference, and the surrender for transfer of any certificate for
shares of Common Stock, even without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on the tenth anniversary of the Record Date (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company, as described below.
The Purchase Price payable, the number of shares or other securities
or property issuable upon exercise of the Rights, and the number of
outstanding Rights, are subject to adjustment from time to time to prevent
dilution.
A QUALIFIED OFFER is a tender offer or exchange offer for all
outstanding shares of Common Stock which is determined by the non-affiliated
continuing directors to be adequate and otherwise in the best interests of the
Company and its shareholders.
In the event that any person becomes an Acquiring Person other than
by a purchase pursuant to a QUALIFIED OFFER, proper provision shall be made so
that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will not be entitled to the benefit of such
adjustment) will thereafter have the right to receive upon exercise that
number of shares of Common Stock or Common Stock equivalents having a market
value of two times the exercise price of the Right.
In the event that, at any time after an Acquiring Person has become
such, the Company is acquired in a merger or other business combination
transaction (other than a merger which follows a QUALIFIED OFFER at the same
or a higher price) or 50% or more of its consolidated assets or earning power
are sold, proper provision will be made so that each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
B-2
49
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right.
At any time after an Acquiring Person has become such, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such person or group), in whole or in part, at an exchange ratio of one share
of Common Stock per Right (subject to adjustment).
Up to and including the tenth business day after a Stock Acquisition
Date, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right (the "Redemption Price").
Immediately upon any redemption of the Rights, the right to exercise them will
terminate and the only right of the holders will be to receive the Redemption
Price.
The terms of the Rights may be amended by the Board of Directors
without the consent of the holders of the Rights at any time prior to the
Distribution Date. Thereafter the Rights may be amended to make changes which
do not adversely affect the interests of the holders of the Rights, or which
shorten or lengthen time periods, subject to certain limitations set forth in
the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, but, not limited to, the
right to vote or to receive dividends. The exercise of the Rights is subject
to compliance with applicable legal and regulatory requirements, including,
approval of the California Public Utilities Commission.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a registration statement on Form 8-A.
A copy of the Rights Agreement is available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
B-3
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Exhibit C
---------
CERTIFICATE OF DETERMINATION
of
JUNIOR PARTICIPATING PREFERENCE STOCK
of
SOUTHWEST GAS CORPORATION
The undersigned officers of Southwest Gas Corporation, a California
corporation (the "Corporation"), hereby certify that the following resolution
has been duly adopted by the Board of Directors of the Corporation:
RESOLVED, that pursuant to the authority granted to the Board of
Directors of the Corporation by the Articles of Incorporation, a series of
shares of the Preference Stock of the Corporation is hereby established and
the number of shares constituting such series and the designation thereof, and
the rights, preferences, privileges and restrictions of the shares of such
series, are fixed and established as follows:
I. DESIGNATION AND AMOUNT
----------------------
The shares of such series shall be designated as "Junior Participating
Preference Stock" (the "Junior Preference Stock"), the number of shares
constituting the Junior Preference Stock shall be 2,000,000 and the par value
shall be $20 per share. Such number of shares may be decreased by resolution
of the Board of Directors; PROVIDED, that no decrease shall reduce the number
of shares of Junior Preference Stock to a number less than the number of
shares then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Corporation convertible into
Junior Preference Stock.
II. DIVIDENDS AND DISTRIBUTIONS
---------------------------
(A) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Junior Preference Stock with respect to dividends, the holders of shares of
Junior Preference Stock, in preference to the holders of Common Stock of the
Corporation, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
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dividends payable in cash on the first day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Junior Preference 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, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share
of Junior Preference Stock. In the event the Corporation shall at any timE
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Junior Preference Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Junior Preference Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); PROVIDED that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
share on the Junior Preference Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Preference Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue
from the date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Junior Preference Stock entitled to
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52
receive a quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to accrue and bE
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Junior
Preference Stock in an amount less than the total amount of such dividends
at the time accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Junior Preference Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the payment thereof.
III. VOTING RIGHTS
-------------
The holders of shares of Junior Preference Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Junior Preference Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the shareholders of the
Corporation.
(B) Except as otherwise provided herein, or in the Articles of
Incorporation or by law, the holders of shares of Junior Preference Stock
and the holders of shares of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Corporation.
IV. CERTAIN RESTRICTIONS
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Preference Stock as provided in Section II are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preference Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Junior Preference Stock;
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Preference
Stock, except dividends paid ratably on the Junior Preference Stock and
all such parity stock on which dividends are payable or in arrears in
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proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Junior
Preference Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Junior Preference Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Junior Preference Stock, or any shares of stock ranking on a
parity with the Junior Preference 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 and equitable treatment among the respective series or
classes.
(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 IV, purchase or otherwise acquire such shares at such time and in
such manner.
V. REACQUIRED SHARES
-----------------
Any shares of Junior Preference 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 Preference Stock and may
be reissued as part of a new series of Preference Stock subject to the
conditions and restrictions on issuance set forth herein, in the Articles of
Incorporation or as otherwise required by law.
VI. LIQUIDATION, DISSOLUTION OR WINDING UP
--------------------------------------
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Junior Preference Stock unless, prior thereto, the holders of shares of
Junior Preference Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the holders of shares
of Junior Preference Stock shall be entitled to receive an aggregate amount
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per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to holders
of shares of Common Stock, or (2) to the holders of shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding
up) with the Junior Preference Stock, except distributions made ratably on the
Junior Preference Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount
to which holders of shares of Junior Preference Stock were entitled immedi-
ately prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
VII. 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 changed into other stock or securities, cash and/or any other
property, then in any such case each share of Junior Preference Stock shall at
the same time be similarly exchanged or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Junior Preference Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
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55
VIII. REDEMPTION
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The shares of Junior Preference Stock shall not be redeemable.
IX. RANK
----
The Junior Preference Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Corporation's Preference Stock or Preferred Stock.
X. AMENDMENT
---------
The Articles of Incorporation of the Corporation shall not be amended
in any manner which would alter or change the powers, preferences or special
rights of the Junior Preference Stock so as to affect them adversely without
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of Junior Preference Stock, voting together as a single class.
* * * *
The undersigned officers further certify that the number of shares of
Preference Stock the Corporation is authorized to issue is 2,000,000 shares,
and that the number of shares constituting the series designated Junior
Participating Preference Stock, none of which has been issued, is 2,000,000
shares.
Dated:_________________ _________________________
President
_________________________
Secretary
Each of the undersigned declares under penalty of perjury that the matters set
forth in the foregoing Certificate of Determination are true and correct.
Executed at Las Vegas, Nevada this ___________ day of ___________________,
19___.
____________________________ ____________________________
President Secretary
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