EXHIBIT 4.1
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COMMON STOCK RIGHTS AGREEMENT
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This Agreement, dated as of July 23, 1998 between Providence Energy
Corporation, a Rhode Island corporation (the "Company"), and The Bank of New
York (the "Rights Agent").
W I T N E S S E T H
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WHEREAS, on July 23, 1998, the Board of Directors of the Company authorized
the issuance of rights (collectively, the "Rights", and individually a "Right")
to purchase, on the terms and subject to the provisions of this Agreement, one
share of the Company's Common Stock; and
WHEREAS, on July 23, 1998, the ("Declaration Date") the Board of Directors
of the Company authorized and declared a dividend distribution of one Right for
every share of Common Stock of the Company outstanding at the close of business
on the Dividend Record Date as designated by the Board of Directors, and
authorized the issuance of, and agreed to issue, one Right (as such number may
be adjusted in accordance with Section 11(i) or 11(n) hereof) for every share of
Common Stock of the Company (i) issued between the Dividend Record Date and the
Distribution Date and (ii) reserved for issuance as of the Distribution Date and
issued on or after the Distribution Date and prior to the earliest of the
occurrence of a Common Stock Event, redemption of the Rights or the Expiration
Date; and
WHEREAS, on July 23, 1998, the Board of Directors designated August 17,
1998 as the Dividend Record Date;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS
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For purposes of this Agreement, the following terms shall have the meanings
indicated:
(a) The term "Acquiring Person" shall mean any Person who or which,
together with all Affiliates of such Person, shall be the Beneficial Owner of
10% or more of the outstanding shares of Common Stock of the Company; provided,
however, that none of the Company, any Subsidiary of the Company, or any
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employee benefit plan of the Company or of any Subsidiary of the Company, or any
trustee in respect thereof acting in such capacity, shall be an "Acquiring
Person" for any purpose of this Agreement.
(b) The term "Affiliate," with respect to any Person, shall mean any other
Person who is, or would be deemed to be, an "affiliate" or an "associate" of
such Person within the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as such Rule was in effect on the Declaration
Date.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own", any securities:
(i) which such Person or any of such Person's Affiliates has
"beneficial ownership" of within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act (or any
successor rule);
(ii) which such Person or any of such Person's Affiliates has,
directly or indirectly, (A) the right to acquire (whether such
right is exercisable immediately or after the passage of time)
pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion, exchange
or other rights (other than the Rights), warrants or options, or
otherwise; provided, however, that for purposes of this Section
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1(c) a Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own", securities tendered pursuant to a tender
or exchange offer made by such Person or any of such Person's
Affiliates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding (whether or not in
writing) (except as hereinafter provided in the first proviso to
this Section 1(c)); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate of such Person with which such
Person or any of such Person's Affiliates has any agreement,
arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the first proviso to this Section
1(c)) or disposing of any securities of the Company;
provided, however, that for purposes of this Section 1(c) a Person shall not be
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deemed the "Beneficial Owner" of, or to "beneficially own", any security if such
agreement, arrangement or understanding (1) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable proxy solicitation rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report);
provided, further, that nothing in this Section 1(c) shall cause a person
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engaged in business as an underwriter of securities to be the "Beneficial Owner"
of or to "beneficially own" any securities acquired through such person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.
(d) The term "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obliged by law or executive order to close.
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(e) The term "close of business" on any day shall mean 5:00 P.M.,
Providence time, on such day; provided, however, that if such day is not a
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Business Day it shall mean 5:00 P.M., Providence time, on the next succeeding
Business Day.
(f) The term "Common Stock" shall mean the Common Stock, $1.00 par value,
of the Company, or any of the shares of the capital stock of the Company into
which such stock shall be reclassified or changed except that the term "Common
Stock" when used with respect to any Person other than the Company shall mean
the common stock with the greatest voting power or the equity securities or
other equity interests having the power to control or direct the management and
affairs of such Person, or if such Person is a Subsidiary of another Person, the
Person who ultimately controls such first mentioned Person and which has
outstanding such Common Stock (or such other equity securities or interests).
(g) The term "Common Stock Event" shall mean the occurrence of any event
described in (i) Section 11(a)(ii) hereof or (ii) clauses (a), (b) or (c) of the
first sentence of Section 13 hereof.
(h) The term "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 of an Acquiring Person and (ii) either
was (A) a member of the Board of Directors of the Company on the Declaration
Date or (B) nominated for his or her initial term of office by a majority of the
Continuing Directors in office at the time of such nomination.
(i) The term "Disqualified Transferee" shall mean any Person who is a
direct or indirect transferee of any Rights from an Acquiring Person or an
Affiliate of an Acquiring Person and became such a transferee (x) after an
Acquiring Person has become such or (y) prior to or concurrently with the
Acquiring Person becoming such and received such Rights pursuant to a transfer
(whether or not for value) (A) from the Acquiring Person to holders of its
Common Stock or other equity securities or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) which a majority of the Continuing Directors determine
is part of a plan, arrangement or understanding which has as a primary purpose
or effect, the avoidance of Section 7(e) hereof.
(j) The term "Distribution Date" shall mean the date which is the earlier
of (x) the 10th Business Day following the Stock Acquisition Date or (y) the
10th Business Day following the Offer Commencement Date; provided, however, that
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if such earlier date occurs prior to the 10th Business Day preceding the
Dividend Record Date, the "Distribution Date" shall be the Dividend Record Date.
(k) The term "Offer Commencement Date" shall mean the date that a tender or
exchange offer by any Person, other than the Company, a Subsidiary of the
Company or any employee benefit plan of the Company or of any Subsidiary of the
Company or any Person organized, appointed or established by the Company or a
Subsidiary pursuant to the terms of any such plan, is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act, if upon consummation thereof such Person and Affiliates
thereof would be the Beneficial Owner of 10% or more of the then outstanding
shares of Common
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Stock (including any such date which is after the date of this Agreement and
prior to the issuance of the Rights).
(l) The term "Person" shall mean a corporation, association, partnership,
limited liability company, joint venture, trust, organization, business,
individual or government or any governmental agency or political subdivision
thereof.
(m) The term "Stock Acquisition Date" shall mean the date of the first
public announcement by the Company or an Acquiring Person (or an Affiliate
thereof) that an Acquiring Person has become such (including the first date on
which any filing with any governmental authority disclosing that an Acquiring
Person has become such becomes available to the public).
(n) The term "Subsidiary" shall mean any Person of which the Company (or
other specified parent) now or hereafter shall at the time own directly, or
indirectly through a Subsidiary or Subsidiaries, at least a majority of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally, or holds at least a majority of partnership or similar
interests, or is a general partner. The term "Wholly Owned Subsidiary" shall
mean any Subsidiary of which all of the outstanding capital stock (or other
shares of beneficial interest) entitled to vote generally other than directors'
qualifying shares, is owned by the Company (or other specified Person) directly,
or indirectly through one or more Wholly Owned Subsidiaries.
(o) The following terms defined elsewhere in this Agreement in the Sections
set forth below shall have the respective meanings therein defined:
Term Definition
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"Act" Section 9(e)
"Closing Price" Section 11(d)
"Common Stock Equivalents" Section 11(a)(iii)
"Company" Preamble
"Current Market Price" Section 11(d)
"Current Value" Section 11(a)(iii)
"Declaration Date" Preamble
"Dividend Record Date" Preamble
"Excess Value" Section 11(a)(iii)
"Exchange Act" Section 1(b)
"Expiration Date" Section 7
"Officers' Certificate" Section 20(b)
"Other Consideration" Section 6(a)
"Principal Office" Section 5
"Purchase Price" Section 7(b)
"Redemption Price" Section 23
"Right Certificate" Section 3(a)
"Rights" Preamble
"Rights Agent" Preamble; Section 21
"Substitution Period" Section 11(a)(iii)
"Summary of Rights" Section 3(b)
"Trading Day" Section 11(d)
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SECTION 2. APPOINTMENT OF RIGHTS AGENT.
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The Company hereby appoints the Rights Agent to act as agent for the
Company and the Rights Agent hereby accepts such appointment upon the terms and
conditions hereof. The Company may from time to time appoint such Co-Rights
Agents as it may deem necessary or desirable upon ten (10) days' prior written
notice to the Rights Agent. The Rights Agent shall have no duty to supervise,
and shall in no event be liable for the acts or omissions of any such Co-Rights
Agent.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
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(a) Until the Distribution Date (i) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates representing
shares of the Common Stock registered in the names of the holders of the Common
Stock (which certificates shall be deemed also to be certificates for the
associated Rights) and not by separate Right Certificates and (ii) the Rights
will be transferable only in connection with the transfer of the associated
shares of Common Stock. As soon as practicable after the Distribution Date, the
Rights Agent will send, by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a right certificate, in substantially the form of Exhibit A hereto (a
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"Right Certificate"), evidencing that number of Rights to which such holder is
entitled in accordance with the provisions of this Agreement. In the event that
an adjustment in the number of Rights per share of Common Stock has been made
pursuant to Sections 11(i) or 11(n) hereof, at the time of distribution of the
Right Certificates, the Company shall make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that Right
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates. The
Rights are exercisable only in accordance with the provisions of Section 7
hereof and are redeemable only in accordance with Section 23 hereof.
(b) As soon as practicable after the date hereof the Company will cause a
copy of a Summary of Common Stock Purchase Rights, in substantially the form
attached hereto as Exhibit B (the "Summary of Rights"), to be sent by first-
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class, postage prepaid mail, to each record holder of the Common Stock as of the
close of business on the Dividend Record Date, at the address of such holder
shown on the stock transfer records of the Company. With respect to
certificates for the Common Stock outstanding as of the Dividend Record Date,
the Rights will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the surrender for transfer of any of
the certificates representing shares of the Common Stock outstanding on the
Dividend Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
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(c) Subject to Subsection (d) below, Rights shall be issued in respect of
all shares of Common Stock issued after the Dividend Record Date but prior to
the earliest of (i) the Distribution Date, (ii) the Expiration Date or (iii) the
redemption of the Rights. Certificates representing such shares of Common Stock
shall be deemed also to be certificates for the associated Rights, and shall
bear the following legend (or a legend substantially in the form thereof):
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Common Stock Rights Agreement, dated
as of July 23, 1998, (the "Rights Agreement") between the issuer and
The Bank of New York, as Rights Agent (the "Rights Agent"), the terms
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the Corporation and the
principal stock transfer office of the Rights Agent. 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 Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge within five
days 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 thereof (as each such term is defined in the Rights
Agreement), whether currently held by or on behalf of such Person or
by certain subsequent holders, may become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date (or the earlier redemption, expiration or termination of
the Rights), the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
(d) In addition, the Company agrees to issue one Right (as such number may
be adjusted in accordance with Sections 11(i) or 11(n) hereof) in conjunction
with the issuance of any shares of Common Stock reserved for issuance on the
Distribution Date (other than shares reserved for issuance upon exercise of the
Rights) and issued (i) on or after the Distribution Date and (ii) prior to the
earliest of (A) the occurrence of a Common Stock Event, (B) the Expiration Date
or (C) the redemption of the Rights (such Rights to be issued to the Person to
whom such shares of Common Stock are issued).
SECTION 4. FORM OF RIGHT CERTIFICATES.
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(a) The Right Certificates (and the form of assignment and the form of
exercise notice and certificate to be printed on the reverse thereof) shall each
be substantially in the form set forth in 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 applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of
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any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Sections 11 and 22 hereof, the
Right Certificates, whenever distributed, shall be dated as of the Dividend
Record Date, and on their face shall entitle the holders thereof to purchase
such number of shares of Common Stock as shall be set forth therein at the
Purchase Price (as hereinafter defined), but the amount and type of securities
issuable upon the exercise of each Right and the Purchase Price shall be subject
to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Sections 3(a) or 22 hereof
that represents Rights beneficially owned by (i) any Acquiring Person or any
Affiliate of an Acquiring Person or (ii) any Disqualified Transferree, and any
other Right Certificate issued pursuant to Section 6 or 11 hereof upon the
transfer, exchange, replacement or adjustment of any such Right Certificate
shall contain (to the extent feasible) 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 of an Acquiring Person (as each such term is defined
in the Rights Agreement). Accordingly, this Right Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
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The Right Certificates shall be executed on behalf of the Company by its
President, Senior Vice President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The 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 of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at that office of the Rights Agent at which it conducts its shareholder
services affairs (its "Principal Office"), 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 of the Right Certificates and the date of
countersignature thereof by the Rights Agent.
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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
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RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
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CERTIFICATES.
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(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any
time after the close of business on the Distribution Date, and at or prior to
the earlier of the close of business on the Expiration Date or the redemption of
the Rights, 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 a like number of shares of Common
Stock (or, following a Common Stock Event, Common Stock and/or such other
securities, cash or other assets as shall be issuable in respect of the Rights
in accordance with the terms of this Agreement (such other securities, cash or
other assets being referred to herein as "Other Consideration")) 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 or Right
Certificates to be transferred, split up, combined or exchanged at the Principal
Office of the Rights Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate 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 thereof as the Company shall reasonably request. Thereupon, subject
to Sections 4(b) and 7(e) hereof, the Company shall execute and the Rights Agent
shall countersign and deliver to the person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates which the Company is not required to pay in
accordance with Section 9(d) hereof.
(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 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 countersignature and 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
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DATE OF RIGHTS.
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(a) Except as otherwise provided herein, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby in whole or in part at any
time from and after the Distribution Date and at or prior to the close of
business on August 17, 2008 (the "Expiration Date")(or the earlier redemption of
the Rights). At the Expiration Date, all Rights will be extinguished and all
Right Certificates shall become
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null and void. To exercise Rights, the registered holder of the Right
Certificate evidencing such Rights shall surrender such Right Certificate, with
the form of election to purchase on the reverse side thereof duly executed, to
the Rights Agent at the Principal Office of the Rights Agent, together with
payment in cash, or by certified check or bank check, of the Purchase Price with
respect to the total number of shares of Common Stock (or, after a Common Stock
Event, Common Stock and/or Other Consideration) as to which the Rights are
exercised (which payment shall include any additional amount payable by such
Person in accordance with Section 9(d) hereof). The Rights Agent shall promptly
deliver to the Company all payments of the Purchase Price received in respect of
Right Certificates accepted for exercise.
(b) The purchase price for each share of Common Stock issuable pursuant to
the exercise of a Right (the "Purchase Price") shall initially be $70.00, shall
be subject to adjustment as provided in Section 11 hereof and shall be payable
in lawful money of the United States of America.
(c) Upon receipt of a Right Certificate representing the Rights, with the
form of election to purchase set forth on the reverse side thereof and the
certificate contained therein duly executed, accompanied by payment of the
Purchase Price, the Rights Agent, subject to Sections 7(e) and 7(g), Section
11(a)(iii) and Section 20(k) hereof, shall thereupon promptly (i) requisition
from any transfer agent of the Common Stock (or from the Company if there shall
be no such transfer agent, or make available if the Rights Agent is such
transfer agent) certificates for the total number of shares of Common Stock to
be purchased and the Company hereby irrevocably authorizes such transfer agent
to comply with any such request, (ii) after receipt of such certificates, 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 (iii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of a fractional share in accordance with
Section 14 hereof and after receipt promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate. After the occurrence
of a Common Stock Event, the Company will make all necessary arrangements so
that any Other Consideration then deliverable in respect of the Rights is
available for distribution by the Rights Agent. For purposes of this Section 7,
the Rights Agent shall be entitled to rely, and shall be protected in relying,
on an Officers' Certificate from the Company to the effect that the Distribution
Date has occurred.
(d) Subject to Sections 4(b), 7(e) and 14 hereof, 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 executed and delivered by the Company to
the Rights Agent and countersigned and delivered by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Common Stock Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate of an Acquiring Person or (ii)
a Disqualified Transferee shall become null and void without any further action,
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all
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reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any holder
of Right Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates or
Disqualified Transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of any Right Certificate upon the occurrence of
any purported exercise thereof 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 evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates thereof as the
Company shall reasonably request.
(g) Notwithstanding any other provision of this Agreement, in the event
that compliance with the Company's Articles of Incorporation would prohibit the
Company from issuing shares or similar units of the Company's capital stock or
other securities to the holder of any Rights upon exercise thereof, then, upon
such holder's presentation of the Rights Certificates therefor to the Rights
Agent, so long as such Rights shall not have become null and void pursuant to
Section 7(e) hereof, the Company, at its option, (i) may call a meeting of
stockholders to authorize same or (ii) to the extent required by its Articles of
Incorporation, in lieu of issuing any such shares or similar units to such
holder, the Company at its option may (A) cause the Rights Agent to deliver such
Rights Certificates to the Company, and the Company shall sell, or cause to be
sold, the Rights represented thereby for the account of such holder and promptly
remit the net proceeds thereof to such holder or, (B) provide fair value to such
holder.
SECTION 8. CANCELLATION OF RIGHT CERTIFICATES.
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All Right Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Rights Agent), 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 any of the provisions of this Agreement. The
Rights Agent shall deliver all cancelled Right Certificates to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON
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STOCK; OTHER COVENANTS.
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(a) The Company covenants and agrees as long as any of the Rights are
outstanding, it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock, the number of shares of Common
Stock that, except as provided in Section 11(a)(iii) hereof, would then be
sufficient to permit the exercise in favor of all outstanding Rights.
(b) The Company covenants and agrees that on and after the Distribution
Date so long as the Common Stock and/or Other Consideration following the
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occurrence of a Common Stock Event issuable upon the exercise of Rights may be
listed or the subject of unlisted trading privileges on any national securities
exchange, the Company shall use its best efforts to cause all shares (or similar
units) reserved for such issuance to be listed or to become the subject of
unlisted trading privileges on such exchange upon official notice of issuance
upon such exercise.
(c) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that each share of Common Stock or similar unit of
Common Stock and/or other securities delivered upon exercise of Rights shall at
the time of delivery of the certificates for such shares (or units), subject to
payment of the Purchase Price, be duly and validly authorized and issued and
fully paid and non-assessable.
(d) The Company covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any shares
of Common Stock or all shares or similar units of Common Stock and/or Other
Consideration upon the exercise of Rights; provided, however, that the Company
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shall not be required to pay any transfer tax which may be payable in respect or
any transfer involved in the transfer or delivery of Right Certificates or in
the issuance or delivery of certificates for any shares of Common Stock or
shares or similar units of Common Stock and/or Other Consideration 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 for
shares of Common Stock and all shares or similar units of Common Stock and/or
Other Consideration 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) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Common
Stock Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act of 1933 (the
"Act"), with respect to the securities purchasable upon exercise of the Rights
on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities or (B) the date
of the expiration of the Rights. The Company will also take such action as may
be appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(e), the exercisability of the Rights in order to prepare and file such
registration statement or to permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. The Company shall
thereafter issue a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this
11
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained.
SECTION 10. COMMON STOCK RECORD DATE; ETC.
-----------------------------
Each person in whose name any certificate for any shares of Common Stock
(or, following the occurrence of a Common Stock Event, shares or similar units
of Common Stock and/or other securities) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
shares of Common Stock (or such shares and similar units of Common Stock and/or
Other Consideration, as the case may be) represented thereby, and such
certificate shall be dated the date which is the later of (i) the date upon
which the Right Certificate evidencing such rights was duly surrendered or (ii)
the date upon which payment of the Purchase Price (and any applicable transfer
taxes) in respect thereof was made; provided, however, that if such date is a
-------- -------
date upon which the relevant transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such shares (or
units) on, and such certificate shall be dated, the next succeeding Business Day
on which such transfer books of the Company are open; provided, further, that
-------- -------
the Company covenants and agrees that it shall not close such transfer books for
a period exceeding ten consecutive days. Prior to the exercise of the Rights
evidenced thereby (which shall be deemed to have occurred on the date such
certificate shall be dated in accordance with this Section 10), the holder of a
Right Certificate, as such, shall not be entitled to any rights of a security
holder of the Company with respect to shares (or units) for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as expressly provided herein.
SECTION 11. ANTIDILUTION ADJUSTMENTS.
------------------------
The Purchase Price and the number and kind of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Stock payable
in shares of Common Stock, (B) subdivide the outstanding Common Stock, (C)
combine the outstanding Common Stock into a smaller number of shares or (D)
issue, change or alter any shares of its capital stock in a
reclassification or recapitalization (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and 7(e) hereof, then, and in each such case, the Purchase
Price in effect at the time of the record date for such dividend or the
effective time of such subdivision, combination, reclassification or
recapitalization, and the number and kind of shares of capital stock
issuable at such time, 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 Common Stock or other capital stock
which, if such Right had been exercised immediately prior to such time and
at a time when the Common Stock transfer books of the Company
12
were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination,
reclassification or recapitalization. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided 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
(A) any Acquiring Person or any Affiliate of any Acquiring
Person, at any time after the date of this Agreement, directly or
indirectly, shall (1) merge into the Company or otherwise combine with
the Company, and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Stock of the
Company shall remain outstanding and unchanged, (2) in one or more
transactions, transfer any assets to the Company in exchange (in whole
or in part) for shares of any class of its equity securities or for
securities exercisable for or convertible into shares of any such
class or otherwise obtain from the Company, with or without
consideration, any additional shares of any such class or securities
exercisable for or convertible into shares of any such class (other
than as part of a pro rata distribution to all holders of such class),
(3) sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose (in one transaction or a series of transactions),
to, from or with the Company or any of the Company's Subsidiaries,
assets on terms and conditions less favorable to the Company than the
Company would be able to obtain through arm's-length negotiation with
an unaffiliated third party, (4) engage in any transaction with the
Company not in the ordinary course of the Company's business involving
the sale, purchase, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) of
assets having an aggregate fair market value of more than $1,000,000,
(5) receive any compensation from the Company or any of the Company's
Subsidiaries other than compensation for full-time employment as a
regular employee at rates in accordance with the Company's (or such
Subsidiary's) past practices or (6) receive the benefit (except
proportionately as a stockholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or tax
advantage provided by the Company or any of its Subsidiaries; or
(B) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any combination
thereof), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries, or any
repurchase by the Company or any of its Subsidiaries of shares of
Common Stock of the Company, or any other class or series of
securities issued by the Company, or any other transaction or series
of transactions involving the Company which reclassification,
recapitalization, merger or consolidation, repurchase or other
transaction or series of transactions is not effected with the
approval of a
13
majority of the Continuing Directors then in office (whether or not
with or into or otherwise involving an Acquiring Person or any
Affiliate of an Acquiring Person), which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of
the outstanding shares of any class of equity securities or securities
exercisable for or convertible into any class of equity securities of
the Company or any of its Subsidiaries which is directly or indirectly
owned by any Acquiring Person or any Affiliate of an Acquiring Person;
or
(C) during such time as there is an Acquiring Person, (1)
there shall be any reduction in the annual rate of dividends paid on
shares of Common Stock which is not effected with the approval of a
majority of the Continuing Directors then in office (except as
necessary to reflect any subdivision of the shares of Common Stock or
as required under the laws of the Company's jurisdiction of
incorporation), or (2) there shall be a failure to increase the annual
rate of dividends as necessary to reflect any reclassification
(including any reverse stock split), recapitalization, reorganization
or any similar transaction which has the effect of reducing the number
of outstanding shares of Common Stock which is not effected with the
approval of a majority of the Continuing Directors then in office
(except to the extent such increase in rate of dividends would be
prohibited under the laws of the Company's jurisdiction of
incorporation); or
(D) any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan), alone or together with its Affiliates, shall, at
any time after the Declaration Date, become the Beneficial Owner of
10% or more of the shares of Common Stock then outstanding, unless the
event causing the 10% threshold to be crossed is a transaction set
forth in clause (a), (b) or (c) of Section 13 hereof, or is an
acquisition of shares of Common Stock pursuant to a tender offer or an
exchange offer for all outstanding shares of Common Stock at a price
and on terms determined by at least a majority of the members of the
Board of Directors who are not officers of the Company and who are not
representatives, nominees or Affiliates of an Acquiring Person, after
receiving advice from one or more investment banking firms, to be (a)
at a price which is fair to stockholders (taking into account all
factors which such members of the Board deem relevant including,
without limitation, prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to
realize maximum value) and (b) otherwise in the best interests of the
Company and its stockholders, then, and in each such case, proper
provision shall be made so that each holder of a Right, except as
provided in Section 7(e) and Section 7(g) hereof, shall thereafter
have the right to receive, upon exercise thereof at the Purchase Price
in effect at the time of exercise in accordance with the terms of this
Agreement, such number of shares of
14
Common Stock of the Company as shall equal the result obtained by (x)
multiplying an amount equal to the then current Purchase Price by an
amount equal to the number of shares of Common Stock for which a Right
was exercisable immediately prior to the first occurrence of any such
event, and dividing that product by (y) 50% of the current market
price per share of the Common Stock of the Company (as defined in
Section 11(d) hereof) determined as of the date of such first
occurrence.
(iii) In the event that the number of shares of Common Stock
which are authorized by the Company's Articles of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with Section 11(a)(ii) hereof, the Company shall (A)
determine an amount (the "Excess Value") equal to the excess of (1) the
value (the "Current Value") of the shares of Common Stock issuable upon the
exercise of a Right in accordance with Section 11(a)(ii) hereof, over (2)
the Purchase Price and (B) with respect to each Right, make adequate
provision to substitute for such shares of Common Stock, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Stock or other equity securities of the Company
(including, without limitation, shares or units of preferred stock which
the Board of Directors of the Company has deemed in good faith to have the
same value as a share of Common Stock (such shares of preferred stock are
hereinafter referred to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets or (6) any combination of the
foregoing having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the
Company in good faith based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors of the Company;
provided, however, subject to the provisions of Section 9(e), if the
-------- -------
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within 30 days following the first occurrence of a Common
Stock Event described in Section 11(a)(ii) hereof, then the Company shall
be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, securities and/or
assets which in the aggregate are equal to the Excess Amount. If the Board
of Directors of the Company shall determine in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the 30-day period set forth
above may be extended to the extent necessary, but not more than 90 days
following the first occurrence of such a Common Stock Event, in order that
the Company may seek shareholder approval for the authorization of such
additional shares (such 30-day period, as it may be extended to 90 days, is
referred to herein as the "Substitution Period"). To the extent that the
Company determines that some action is to be taken pursuant to the first
and/or second sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Sections 7(e) and 7(g) hereof, that such action shall
apply uniformly to all outstanding Rights which shall not have become null
and void and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to
be
15
made pursuant to such first sentence and to determine the value thereof.
In the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended. The Company shall thereafter issue a public
announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock shall be
the current market price per share of the Common Stock (as determined
pursuant to Section 11(d) hereof) on the date of the first occurrence of
such a Common Stock Event and the value of any Common Stock Equivalent
shall be deemed to have the same value as the Common Stock on such date.
(b) In the event the Company shall after the Dividend Record Date fix a
record date for the issuance of any options, warrants or other rights to all
holders of Common Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Common Stock or
securities convertible into Common Stock at a price per share of Common Stock
(or having a conversion price per share of Common Stock, if a security is
convertible into Common Stock) less than the current market price per share of
Common Stock (determined in accordance with Section 11(d) hereof) determined as
of such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate minimum offering price of the
total number of shares of Common Stock so to be offered (and/or the aggregate
minimum conversion price of such convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the
maximum number of additional shares of Common Stock to be offered for
subscription or purchase (or the maximum number of shares into which such
convertible securities so to be offered are convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
shall be in a form other than cash, for purposes of this Section 11(b) the value
of such consideration shall be the fair market value thereof as determined in
good faith by the Board of Directors of the Company (which determination shall
be described in an Officers' Certificate filed with the Rights Agent). Shares
of Common Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed (subject, however, to such other adjustments as
are provided herein).
(c) In the event that the Company shall after the Dividend Record Date fix
a record date for the making of a distribution to all holders of Common Stock
(including any such distribution made in connection with a consolidation or
merger in which the Company is the surviving or continuing corporation) of
evidences of indebtedness, cash (other than cash dividends paid out of the
earnings or retained earnings of the Company), other property (other than a
dividend payable in shares of Common Stock, but including any dividend payable
in stock other than Common Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase
16
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 current market price per share of
Common Stock (as defined in Section 11(d) hereof) determined as of such record
date, less the fair market value, as determined in good faith by the Board of
----
Directors of the Company (which determination shall be described in an Officers'
Certificate filed with the Rights Agent) of that portion of such evidences of
indebtedness, such other property and/or such subscription rights or warrants
applicable to one share of Common Stock and of which the denominator shall be
such current market price per share of the Common Stock. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event 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 (subject, however, to such other adjustments as are provided herein).
(d) Except as otherwise provided to the contrary in this Agreement, for the
purpose of any computation hereunder, the "current market price" per share (or
unit) of any security on any date shall be deemed to be the average of the daily
Closing Price of such security for the 20 consecutive Trading Days immediately
prior to such date; provided, however, that in the event that the current market
-------- -------
price per share of such security is determined during a period following the
announcement by the issuer of such security of (i) a dividend or distribution on
such security payable in shares (or units) of such security or securities
convertible into shares (or units) of such security or (ii) any subdivision,
combination or reclassification of such security, and prior to the expiration of
20 Trading Days after (A) the ex-dividend date for such dividend or
distribution, or (B) the record date for such subdivision, combination or
reclassification, as the case may be, then, and in each such case, the "current
market price" shall be the Closing Price of such security on the last day of
such 20 Trading Day period. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which such security is listed or
admitted to trading is open for the transaction of business or, if such security
is not listed or admitted to trading on any national securities exchange, a day
which is a Business Day. For purposes of this Agreement, the "Closing Price" of
any security on any day shall be the last sale price, regular way, with respect
to shares (or units) of such security, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, with
respect to such security, 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 such security is 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 such security is
listed or admitted to trading; or, if such security is not so listed or admitted
to trading, the last quoted price with respect to shares (or units) of such
security, or, if not so quoted, as the average of the high bid and low asked
prices in the over-the-counter market with respect to shares (or units) of such
security, as reported by the Nasdaq Stock Market, Inc. or such other similar
system then in use; or, if on any such date such security is not quoted by any
such organization, the average of the closing bid and asked prices with respect
to shares (or units) of such security, as furnished by a professional market
maker making a market in such security selected by the Board of Directors of the
Company in good faith; or, if no such market maker is available, the fair market
value
17
of shares (or units) of such security as of such day as determined in good
faith by the Board of Directors of the Company (which determination shall be
described in an Officers' Certificate filed with the Rights Agent).
(e) No adjustment in the Purchase Price shall be required unless adjustment
would require an increase or decrease of at least 1% in such price; provided,
--------
however, that any adjustments which by reason of this Section 11(e) are not
-------
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest (x) ten-thousandth of a share (or similar
unit) of Common Stock or securities. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 hereof shall be made
no later than the earlier of (i) three years from the date of the transaction
which mandates the adjustment or (ii) the date of the expiration of the right to
exercise the Rights.
(f) In the event that at any time, as a result of an adjustment made in
respect of a Common Stock Event, 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 the shares of the Common Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the provisions
of Sections 7, 9, 10, 11(d) and 13 hereof with respect to the shares of Common
Stock shall apply on like terms to any such other shares.
(g) All Right Certificates originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights represented
thereby, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made pursuant to Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest ten-thousandth) obtained by
(i) multiplying (x) the number of shares covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment 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 of Common Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights
18
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price by
the Purchase Price in effect immediately after such 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 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the 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 of Common Stock issuable upon exercise of such 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.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the number of shares of
Common Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue such number of fully paid and
non-assessable shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the number
of shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of shares of
Common Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
-------- -------
holder a due xxxx or other appropriate instrument evidencing such holder's right
to receive such additional securities upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those
19
adjustments expressly required by this Section 11, as and to the extent that it,
by means of a resolution of the Board of Directors acting in good faith (which
resolution shall be conclusive on all concerned if approved by a majority of the
Continuing Directors), shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, issuance wholly for cash of
any Common Stock at less than the current market price thereof, issuance wholly
for cash of Common Stock (or other securities which by their terms are
convertible into or exchangeable for Common Stock), stock dividends or issuance
of rights, options or warrants referred to hereinabove in this Section 11,
hereafter made or declared by the Company to the holders of its Common Stock,
shall not be taxable to such holders.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as otherwise provided herein or permitted hereby, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
SECTION 12. CERTIFICATE OF ADJUSTMENTS.
---------------------------
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall (a) promptly prepare an Officers' Certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Stock a copy of such Officers' Certificate and (c) mail a brief summary
thereof to each registered holder of a Right Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in relying on any
such Officers' Certificate and on any adjustment therein contained, and shall
not be deemed to have knowledge of any such adjustment unless and until it shall
have received such an Officers' Certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
--------------------------------------------
ASSETS OR EARNING POWER.
-----------------------
In the event that, on or after the Stock Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person, (b) any Person shall consolidate, merge with and into the Company,
the Company shall be the continuing or surviving corporation of such merger and,
in connection with such merger, all or part of the Common Stock of the Company
shall be changed or otherwise transformed into stock or other securities of any
other Person or the Company or cash or any other property, or (c) the Company
shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related transactions,
more than 50% of (A) the assets (taken at net asset value as stated on the books
of the Company and determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied) to any other
Person or Persons, then, from and after such event, proper provision shall be
made so that (i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise thereof at
the Purchase Price in effect at the time of such exercise in accordance with the
terms of this Agreement, such number of shares of validly authorized and issued,
fully paid, non-assessable and freely tradeable Common Stock of such other
Person (or, in the case of a transaction or series of transactions described in
clause (c)
20
above, the Person receiving the greatest amount of the assets or earning power
of the Company, or if the Common Stock of such Person is not and has not been
continuously registered under Section 12 of the Exchange Act for the preceding
12-month period and such Person is a direct or indirect subsidiary of another
Person, the Common Stock of which is and has been so registered, that other
Person, or if such Person is a direct or indirect subsidiary of more than one
other Person, the Common Stock of two or more of which are and have been so
registered, such other Person whose issued Common Stock has the greatest
aggregate value), free and clear of any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result obtained by (x)
multiplying the Purchase Price in effect immediately prior to the first
occurrence of any Common Stock Event by the number of shares of Common Stock for
which a Right is exercisable immediately prior to such first occurrence (and
without taking into account any prior adjustment made pursuant to 11(a) (ii))
and dividing that product by (y) 50% of the current market price per share (as
defined in Section 11(d) hereof) of the Common Stock of such other Person
determined as of the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Stock 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; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer, it being
specifically intended that the provisions of Section 11 hereof (other than
Section 11(a) (ii) hereof) shall apply only to such issuer following the first
occurrence of a Common Stock Event under this Section 13; (iv) such issuer shall
take such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock) 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; and (v) the
provisions of Section 11(a) (ii) hereof shall be of no effect following the
first occurrence of any Common Stock Event described in clauses (a), (b) or (c)
of this Section 13. The Company shall not consummate any such consolidation,
merger, sale or transfer unless (i) such issuer shall have a sufficient number
of authorized shares of its Common Stock which have not been issued or reserved
for issuance as will permit the exercise in full of the Rights in accordance
with this Section 13 and (ii) prior thereto the Company and such issuer shall
have executed and delivered to the Rights Agent a supplemental agreement so
providing and further providing that as soon as practicable after the date of
any Common Stock Event described above in this Section 13 such issuer will (A)
prepare and file a registration statement under the Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such registration
statement to (i) become effective as soon as practicable after such filing and
(ii) remain effective (with a prospectus at all times meeting the requirements
of the Act) until the Expiration Date and (B) will deliver to holders of the
Rights historical financial statements of such issuer and each of its Affiliates
which comply in all respects with the requirements for registration on Form 10
under the Exchange Act. Furthermore, in case the Person which is to be party to
a transaction referred to in this Section 13 has any provision in any of its
authorized securities or in its charter or by-laws or other agreement or
instrument governing its affairs, which provision would have the effect of
causing such Person to issue, in connection with, or as a consequence of, the
consummation of a Common Stock Event described in Clauses (a), (b) or (c) of
this Section 13, shares of Common Stock of such Person at less than the then
current
21
market price per share thereof (as defined in Section 11(d) hereof), or
to issue securities exercisable for, or convertible into, Common Stock of such
Person at less than such then current market price; then, in such event, the
Company hereby agrees with each holder of the Rights that it shall not
consummate any such transaction unless prior thereto the Company and such Person
shall have executed and delivered to the Rights Agent a supplemental agreement
providing that such provision in question shall have been cancelled, waived or
amended so that it will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction. The provisions of this Section
13 shall similarly apply to successive mergers or consolidations or sales or
other transfers. In the event that a Common Stock Event described in this
Section 13 shall occur at any time after the occurrence of a Common Stock Event
described in Section 11(a) (ii) hereof, the Rights which have not therefore been
exercised shall thereafter become exercisable in the manner described in this
Section 13.
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. In lieu of
issuing such fractional Rights, at the election of the Company, there shall be
paid to the registered holders of the Rights 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.
(b) The Company shall not be required to issue fractions of shares of its
capital stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares. In lieu of fractional shares, at the election of
the Company, there shall be paid to the registered holders of Rights at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share of such capital stock. For
purposes of this Section 14(b), the current market value of a share of such
capital stock shall be the Closing Price of such capital stock for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or (except as provided in Section
14(b) hereof) any fractional share upon exercise of a Rights.
SECTION 15. RIGHTS OF ACTION.
----------------
Excepting the rights of action given the Rights Agent under Section 18
hereof, all rights of action in respect of this Agreement are vested in the
respective registered holders of the Rights; and any registered holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Right, may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights in the manner provided in such Right Certificate and in
this Agreement, and the Company hereby agrees to reimburse such registered
holder for all expenses (including reasonable attorneys' fees) incurred by such
22
registered holder in connection therewith. 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 the obligations hereunder, and shall be entitled to injunctive relief
against actual or threatened violations of the obligations hereunder 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;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the Principal
Office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the Rights
Agent may deem and treat the person in whose name a 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, prior to the Distribution Date, the associated Common Stock
certificates, 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; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have any
-------- -------
such order, decree or ruling lifted or otherwise overturned as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.
-------------------------------------------------
No holder, as such, of any Right shall be entitled to vote, receive
dividends or otherwise be deemed for any purpose the holder of any shares of
Common Stock or the shares or similar units of any other securities of the
Company which may 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
stockholder of the Company or any right to vote in the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate
23
action, or to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 25), or to receive dividends or preemptive
rights, or otherwise, until the time specified in Section 10 hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
---------------------------
The Company agrees to pay to the Rights Agent such compensation as shall be
agreed in writing from time to time between the Company and the Rights Agent for
all services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements 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 (including reasonable attorney's
fees and expenses) of defending against any claim of liability in the premises.
Neither the Rights Agent nor the Company shall be liable to the other for
consequential damages under any provision of this Agreement for any act or
failure to act hereunder.
The Rights Agent shall be protected against 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 any shares of Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed by the proper Person or Persons and, where necessary,
to be verified or acknowledged. The provisions of this Section 18 shall survive
the expiration of the Rights and the termination of this Agreement.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
--------------------------------------------
RIGHTS AGENT.
------------
Any corporation into which the Rights Agent or any successor thereto may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent shall be a party, or any
corporation succeeding to all or substantially all the shareholder services
business of the 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 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement and 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
24
such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
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 such 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 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 only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Rights Agent may consult with legal counsel of its selection (who
may be legal counsel to the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) 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 (an "Officers' Certificate") signed by a person believed by the
Rights Agent to be the President or any Vice President and by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such Officers' 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 on such Rights Certificate) 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
25
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 Sections 11 or 13 hereof or
responsible for the manner, method or amount of any such adjustment or
procedures or the ascertaining of the existence of facts that would require any
such adjustment or procedure (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a certificate describing any
such adjustment or procedures); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any Common Stock or other securities to be issued pursuant to this Agreement or
any Right Certificate or as to whether any shares of Common Stock, or any shares
or similar units of other securities, will, when issued, be validly authorized
and issued, fully paid and non-assessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the President or any Vice President or
the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent with respect to its duties or obligations under this Rights Agreement and
the date on and/or after which such action shall be taken or omitted and the
Rights Agent shall not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after the date specified
therein (which date shall not be less than three business days after the date
any such officer actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other 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
26
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) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certification appearing on the reverse side
thereof following the form of election to purchase has either not been completed
or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to such requested exercise
of transfer without first consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT.
----------------------
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice in writing mailed to
the Company and to each transfer agent of the Common Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' notice in writing, mailed to the Rights Agent, to each
transfer agent of the Common Stock by registered or certified 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 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the Rights Agent or 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,
The Commonwealth of Massachusetts, the State of Rhode Island or the State of New
York (or of any other State of the United States so long as such corporation is
authorized to do business as a banking institution in The Commonwealth of
Massachusetts, the State of Rhode Island or the State of New York), in good
standing, having a Principal Office in The Commonwealth of Massachusetts, the
State of Rhode Island or the State of New York, which is authorized under such
laws to exercise corporate trust 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
$50,000,000. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose; and,
except as the context herein otherwise requires, such successor Rights Agent
shall be deemed to be the "Rights Agent" for all purposes of this Agreement.
Not later than the effective date of any such appointment
27
the Company shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
SECTION 22. ISSUANCE OF NEW 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 the Board of Directors of
the Company to reflect any adjustment or change in the Purchase Price per share
and the number or kind or class of shares of stock or other securities or
property purchasable under the Rights Certificate made in accordance with the
provisions of this Agreement.
SECTION 23. REDEMPTION AND TERMINATION.
--------------------------
The Board of Directors of the Company may, at its option and as provided
herein, 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, combination of shares or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price") at any time before the close of business on the tenth
business day following the Stock Acquisition Date; provided, however, if the
-------- -------
Board of Directors of the Company authorizes redemption of the Rights after the
time that any Person becomes an Acquiring Person, then there must be Continuing
Directors then in office and such authorization shall require the concurrence of
a majority of such Continuing Directors, provided, further, that if, following
-------- -------
the occurrence of a Stock Acquisition Date and following the expiration of the
right of redemption hereunder but prior to any Common Stock Event, (i) a Person
who is an Acquiring Person shall have transferred or otherwise disposed of a
number of shares of Common Stock in one transaction or series of transactions,
not directly or indirectly involving the Company or any of its Subsidiaries,
which did not result in the occurrence of a Common Stock Event such that such
Person is thereafter a Beneficial Owner of 10% or less of the outstanding shares
of Common Stock, and (ii) there are no other Persons, immediately following the
occurrence of the event described in clause (i), who are Acquiring Persons, then
the right of redemption shall be reinstated and thereafter be subject to the
provisions of this Section 23. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the "current market
price", as defined in Section 11(d) hereof, of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors. Immediately upon the taking of such action ordering the
redemption of all of the Rights, evidence of which shall have been filed with
the Rights Agent, and without any further action and without any notice, the
right to exercise the Rights so redeemed will terminate and the only right
thereafter of the holders of such Rights so redeemed shall be to receive the
Redemption Price (without the payment of any interest thereon). Within 10 days
after such action ordering the redemption of all of 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
28
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
SECTION 24. EXCHANGE.
--------
(a) By the vote of a majority of the Board of Directors (upon approval by a
majority of the Continuing Directors), 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 which
have become void pursuant to Section 7(e) hereof) for shares of Common Stock at
an exchange rate of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of any class of voting stock
of the Company then outstanding.
(b) Without any further action and without any notice, the right to
exercise the Rights to be so exchanged will terminate at the effective time of
the action of the Board of Directors and the Continuing Directors ordering the
exchange and the only right thereafter of each 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 notice of the exchange to the holders of such Rights then
outstanding by mailing such notice to all such holders at their last addresses
as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice; provided, however, that
the failure to give, or any defect in, any such notice shall not affect the
validity of such exchange. Each such notice shall state the method by which the
exchange for Rights will be effected and, in the event of a partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
either take such action as may be necessary to authorize additional Common Stock
for issuance upon exchange of the Rights or, alternatively, by the vote of a
majority of the Board of Directors (upon approval by a majority of the
Continuing Directors) with respect to each Right (i) pay cash in an amount equal
to the Exercise Price, in lieu of issuing Common Stock in exchange therefor, or
(ii) issue debt or equity securities, or a combination thereof, having a value
equal to the Current Value (as hereinafter defined) of the Common Stock
exchangeable for each such Right, where the value of such securities shall be
determined in good faith by the Board of Directors (upon approval by a majority
of the Continuing Directors), or (iii) deliver any combination of
29
cash, property, Common Stock and/or other securities having a value equal to the
Current Value in exchange for each Right. The term "Current Value," for purposes
of this Section 24, shall mean the product of the per share current market price
of the Common Stock (determined pursuant to Section 11(d) on the date of the
occurrence of the event described in Section 24 (a)), multiplied by the number
of shares of Common Stock for which the Right otherwise would be exchangeable if
there were sufficient shares available. To the extent that the Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii)
of this Section 24(c), the Board of Directors (upon approval by a majority of
the Continuing Directors) may temporarily suspend the exercisability of the
Rights for a period of up to sixty (60) days following the date on which the
event described in Section 24(a) shall have occurred, in order to seek any
authorization of additional Common Stock, to decide the appropriate form of
distribution to be made pursuant to the above provision and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock the Company
shall pay to each registered holder of a Rights Certificate with regard to which
a fractional share of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the fair market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the fair market value of
a whole share of Common Stock shall be the current market price of a share of
Common Stock (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF PROPOSED ACTIONS.
--------------------------
In case the Company shall after the Distribution Date propose (a) to pay
any dividend payable in stock of any class to the holders of its Common Stock or
to make any other distribution to the holders of its Common Stock (other than a
regular periodic cash dividend out of earnings or the retained earnings of the
Company), or (b) to offer to the holders of its Common Stock rights or warrants
to subscribe for or to purchase any additional shares of Common Stock or shares
of stock of any class or any other securities, rights or options, or (c) to
effect any reclassification of the Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock), or (d) 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 transaction or a series of related transactions, of more
than 50% of (i) the assets (taken at net asset value as stated on the books of
the Company and determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) or (ii) the earning power
of the Company and its Subsidiaries (determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied)
to any other Person or Persons or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
the Rights Agent and each holder of a Right, in accordance with Section 26, a
notice of such proposed action, which shall specify the record date for the
purposes of such
30
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a) or
(b) above at least twenty days prior to the record date for determining holders
of the Common Stock 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 whichever shall be the earlier. The failure to give notice required by
this Section 25 or any defect therein shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action.
In case any Common Stock Event described in Section 11(a)(ii) hereof shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such Common
Stock Event, which shall specify such event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
SECTION 26. NOTICES.
-------
Any notice or demand authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to 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:
PROVIDENCE ENERGY CORPORATION
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Secretary
Subject to the provisions of Sections 19 and 21 hereof, 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:
THE BANK OF NEW YORK
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to 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.
31
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
--------------------------
Prior to the Distribution Date, the Company may in its sole and absolute
discretion, and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date, 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 Person
becomes an Acquiring Person, shall be effective only if there are Continuing
Directors and shall require the concurrence of a majority of such Continuing
Directors), or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Right Certificates; provided,
--------
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 27, the Rights Agent shall execute such supplement or
amendment. Notwithstanding any other provision hereof the Rights Agent's
consent must be obtained regarding any amendment or supplement pursuant to this
Section 27 which alters the Rights Agent's rights or duties. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
SECTION 28. SUCCESSORS.
----------
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 29. DETERMINATION AND ACTIONS BY THE BOARD OF
-----------------------------------------
DIRECTORS; ETC.
--------------
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 the Board of Directors, or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below
all omissions with respect to the foregoing) which are done or made by the Board
of Directors in good faith and with the concurrence of a majority of the
Continuing Directors shall (x) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Rights and all other parties and (y) not
subject any director to any liability to the holders of the Rights.
32
SECTION 30. BENEFITS OF THIS AGREEMENT.
--------------------------
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the associated shares of
Common Stock) any legal or equitable right, remedy or claim under this Agreement
or the Rights; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Rights (and,
prior to the Distribution Date, the associated Common Stock).
SECTION 31. 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 Rhode Island and for all
purposes shall be governed by and construed in accordance with the laws of said
State applicable to contracts to be made and performed entirely within said
State, provided, however, that the rights and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 32. 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 33. DESCRIPTIVE HEADINGS.
--------------------
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
SECTION 34. SEVERABILITY.
------------
The invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of any other term or provision hereof;
provided, however, that notwithstanding anything in this Agreement to the
-------- -------
contrary, if any such term or provision is held by any court or authority to be
invalid, void or unenforceable and the Continuing Directors of the Company
determine in their good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the tenth day following the date
of such determination by the Continuing Directors.
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PROVIDENCE ENERGY CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------------
Title: Senior Vice President, Chief
Financial Officer and Treasurer
Attest:
By: /s/ Xxxxxx X. Xxxx
-----------------------
Title: Vice President,
General Counsel and
Secretary
THE BANK OF NEW YORK, AS RIGHTS AGENT
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------
Title: Vice President
Attest:
By: /s/ Xxxxx Xxxxx
-----------------------
Title: Vice President
34
EXHIBIT A
---------
FORM OF RIGHT CERTIFICATE
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER AUGUST 17, 2008 OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS
REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OF AN ACQUIRING PERSON (AS
EACH SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT]*
PROVIDENCE ENERGY CORPORATION
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 Common
Stock Rights Agreement dated as of July 23, 1998 (the "Rights Agreement")
between Providence Energy Corporation, a Rhode Island corporation (the
"Company"), and The Bank of New York (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M. (Providence time) on August 17, 2008
(the "Expiration Date") at the Principal Office (as such term is defined in the
Rights Agreement) of the Rights Agent, or its successor as Rights Agent, in New
York, New York, one fully paid non-assessable share of the Common Stock, $1.00
par value ("Common Stock"), of the Company per each Right represented hereby, at
a purchase price of $70.00 per share (the "Purchase Price") upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
set forth on the reverse side hereof and the certificate contained therein duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of shares which may be purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above, are the number and Purchase
Price as of August 17, 1998, based on the shares of Common Stock of the Company
as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Common Stock 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.
In the circumstances described in Section 13 of the Rights Agreement, the
securities issuable upon the exercise of the Rights evidenced hereby, shall be
the common stock or similar equity securities or equity interests of an entity
other than the Company.
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
35
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. Copies of the Rights Agreement are on file at the Principal
Office of the Rights Agent and may be obtained by the holder of any Rights upon
written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the Principal Office of the Rights Agent, may be exchanged for
another Rights Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Rights evidenced by the 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 (i) may be redeemed by the Company at any time prior to the
Expiration Date, at a redemption price of $.01 per Right (which amount is
subject to adjustment as provided in the Rights Agreement) or (ii) may be
exchanged in whole or in part for shares of the Company's Common Stock or other
consideration as determined by the Company.
No fractional shares of Common Stock (or other securities) will be issued
upon the exercise of any Right or Rights evidenced hereby, but in lieu thereof a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Stock or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this 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.
36
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of August 17, 1998.
PROVIDENCE ENERGY CORPORATION
By:
--------------------------
Title:
-----------------------
ATTEST:
(Seal)
----------------------------
Secretary
Countersigned:
THE BANK OF NEW YORK
By:
-------------------------
Authorized Officer
Date of Countersignature:
37
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise the Right Certificate.)
To Providence Energy Corporation:
The undersigned hereby irrevocably elects to exercise Rights
----------------
represented by this Right Certificate to purchase the shares of Common Stock (or
other securities) 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:
38
(Form of Reverse Side of Right Certificate)
FORM FOR 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)
--------------------------------------------------------------------------------
whose social security or tax identification number, is: the
----------------
Rights evidenced by this Right Certificate, together with all right, title and
interest herein, and does hereby irrevocably constitute and appoint
Attorney, to transfer the within Right Certificate on the books
----------------
of the within-named Company, with full power of substitution.
Dated: , .
------------------ ---
------------------------------------
Signature
Signature Guaranteed:
NOTICE
------
The signature to the foregoing Assignment 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.
39
Certificate
-----------
The undersigned hereby certifies 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 of any such Acquiring Person (as each such term is
defined in the Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
after the occurrence of a Common Stock Event (as such term is defined in the
Rights Agreement) from any Person who is, was or became an Acquiring Person or
an Affiliate of an Acquiring Person.
Dated: ,
------------- --- ------------------------------------
Signature
40
EXHIBIT B
---------
PROVIDENCE ENERGY CORPORATION
SUMMARY OF COMMON STOCK PURCHASE RIGHTS
Providence Energy Corporation (the "Company") has declared a dividend
distribution of one common stock purchase right (a "Right"; collectively, the
"Rights") for every outstanding share of Common Stock, $l.00 par value (the
"Common Stock"), of the Company. The distribution is payable on August 17, 1998
(the "Dividend Record Date") to the shareholders of record as of the close of
business on the Dividend Record Date. The description and terms of the Rights
are set forth in a Common Stock Rights Agreement (the "Rights Agreement")
between the Company and The Bank of New York, as Rights Agent (the "Rights
Agent"). The Rights Agreement contemplates the issuance of one Right for every
share of Common Stock issued between the Dividend Record Date and the
Distribution Date (as that term is defined below). The Rights Agreement also
contemplates the issuance of one Right for each share of Common Stock which is
reserved for issuance as of the Distribution Date (e.g., shares reserved under
employee benefit plans) and which is issued on or after the Distribution Date
and prior to the occurrence of a Common Stock Event (as that term is defined
below). Each Right entitles the registered holder to purchase from the Company
one share of Common Stock at a price of $70.00 per share (the "Purchase Price"),
subject to adjustment.
Initially, the Rights will attach to all outstanding shares of Common
Stock, and no separate Right Certificates will be issued. The Rights will
separate from the Common Stock upon the earlier to occur of (i) the date which
is the 10th business day following a public announcement that a person or
affiliate or associates of such person (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership (determined as provided in
the Rights Agreement) of 10% or more of the outstanding shares of Common Stock
(the "Stock Acquisition Date") or (ii) the 10th business day following the
commencement or announcement of an intention to make a tender offer or exchange
offer which would result in any person or its affiliates and associates owning
10% or more of the outstanding Common Stock (the earlier of such dates being
called the "Distribution Date"). Until the Distribution Date (or earlier
redemption or expiration of the Rights), (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after the Dividend
Record Date upon transfer or new issuance of the Company's Common Stock will
contain a notation incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any of the Company's Common Stock certificates will
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, if any, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Company's Common Stock
as of the close of business on the Distribution Date and such separate
41
Right Certificates alone will evidence the Rights. The Rights are not
exercisable until the Distribution Date. The Rights will expire on August 17,
2008 (the "Expiration Date").
The Purchase Price payable, and the number of shares of the Common Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Common
Stock, (ii) upon the grant to holders of the Common Stock of certain rights or
warrants to subscribe for shares of the Common Stock or convertible securities
at less than the current market price of the Common Stock or (iii) upon the
distribution to holders of the Common Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of the earnings or
retained earnings of the Company and dividends payable in shares of Common
Stock) or of subscription rights or warrants (other than those referred to
above).
In the event that, at any time following the Stock Acquisition Date, the
Company were acquired in a merger or other business combination (other than a
merger described in the following sentence) or 50% or more of its assets or
earning power were sold, proper provision shall be made so that, except as
described in the last sentence of this paragraph, each holder of a Right shall
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
the acquiring company (or, in the event of a transfer of assets or earning power
involving more than one acquiring company, the acquiring company receiving the
greatest portion of the assets or earning power transferred) which at the time
of such transaction would have a market value of two times the exercise price of
the Right. In the event that, at any time following the Distribution Date, (i)
the Company were the surviving corporation in a merger with an Acquiring Person
and its Common Stock were not changed or exchanged, (ii) an Acquiring Person
engages in one of the self-dealing transactions specified in the Rights
Agreement or (iii) during such time as there is an Acquiring Person, (A) an
event occurs which results in such Acquiring Person's proportionate ownership
interest being increased by more than 1% or (B) there shall be a reduction in
the annual rate of dividends paid on the shares of Common Stock (except as
approved by a majority of the "Continuing Directors"), proper provision shall be
made so that, except as described in the following sentence, each holder of a
Right will thereafter have the right to receive upon exercise that number of
shares of the Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a market value of two times the exercise
price of the Right. In the circumstances described in the Rights Agreement, if
the Company would be prohibited under its articles of incorporation from issuing
Common Stock or other securities to certain holders of the Rights upon exercise
thereof, among other things, such Rights may be sold by the Company for the
account of such holder, and the net proceeds of such sale delivered to such
holder. The term "Continuing Directors" is defined in the Rights Agreement as a
director of the Company who is not an affiliate or associate of an Acquiring
Person and who was a member of the Board of Directors of the Company on July 23,
1998 or recommended for election by a majority of the Continuing Directors in
office at the time of nomination. Upon the occurrence of any of the events
described in this paragraph (as defined in the Rights Agreement, a "Common Stock
Event"), any Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person shall
immediately become null and void.
42
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of any securities will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market price of
such securities on the last trading date prior to the date of exercise.
At any time on or prior to the close of business on the tenth day after the
Stock Acquisition Date, the Company may redeem the Rights in whole, but not in
part, at a price of $.01 per Right (the "Redemption Price"), provided that if
the Board of Directors authorizes redemption after a Person becomes an Acquiring
Person, then such redemption must have the approval of the majority of the
Continuing Directors. Immediately upon the action of the Directors of the
Company electing to redeem the Rights, the Company shall make a public
announcement thereof, and upon such election, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
At any time after a Person (or group of affiliated or associated persons)
becomes an Acquiring Person and prior to the acquisition by any such person or
group of 50% or more of any class of outstanding voting stock of the Company,
the Board of Directors of the Company (with the approval of a majority of the
Continuing Directors) may exchange the Rights (other than Rights owned by such
Person or group which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock (or other consideration having equivalent
market value) per Right (subject to adjustment).
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends.
While the distribution of the Rights will not be taxable to shareholders or
to the Company, and while the Company believes that the subsequent separation of
the Rights on the Distribution Date should not be so taxable, shareholders may,
depending upon the circumstances, recognize taxable income upon the occurrence
of a Common Stock Event.
Prior to the Distribution Date, the Rights Agreement may be amended at the
discretion of the Company without the approval of any holders of Common Stock.
From and after the Distribution Date, the Rights Agreement may be amended
without the approval of any holders of Common Stock in order to cure any
ambiguity, to make changes which do not adversely affect the interests of
holders of Rights or, subject to certain limitations, to shorten or lengthen any
time period under the Rights Agreement. After the Stock Acquisition Date,
amendments require the approval of a majority of the Continuing Directors.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to Form 8-K. A copy of the Rights Agreement
is available free of charge from the Rights Agent. This summary description of
the Rights does not purport to be complete, and is qualified in its entirety by
reference to the Rights Agreement, which is hereby incorporated herein by
reference.
43
