EXECUTION COUNTERPART
CONNECTICUT ENERGY CORPORATION
and
BANKBOSTON, N.A. RIGHTS AGENT
RIGHTS AGREEMENT
Dated as of July 28, 1998
TABLE OF CONTENTS
Page
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Right Certificates 7
Section 4. Form of Right Certificates 9
Section 5. Countersignature and Registration 10
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates 11
Section 7. Exercise of Rights; Per Right Purchase Price; Full Share Purchase
Price; Expiration Date of Rights 13
Section 8. Cancellation and Destruction of Right Certificates 15
Section 9. Reservation and Availability of Shares of Common Stock 15
Section 10. Common Stock Record Date 17
Section 11. Adjustment of Per Right Purchase Price, Number of Shares or Number of Rights 17
Section 12. Certificate of Adjusted Per Right Purchase Price or Number of Shares 26
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 27
Section 14. Fractional Rights and Fractional Shares 29
Section 15. Rights of Action 30
Section 16. Agreement of Right Holders 31
Section 17. Right Certificate Holder Not Deemed a Shareholder 32
Section 18. Concerning the Rights Agent 32
Section 19. Merger or Consolidation or Change of Name of Rights Agent 33
Section 20. Duties of Rights Agent 34
Section 21. Change of Rights Agent 37
Section 22. Issuance of New Right Certificates 38
Section 23. Redemption and Termination 38
Section 24. Exchange 40
Section 25. Notice of Certain Events 41
Section 26. Notices 42
Section 27. Supplements and Amendments 42
Section 28. Successors 43
Section 29. Determinations and Actions by the Board of Directors 43
Section 30. Benefits of This Agreement 44
Section 31. Severability 44
Section 32. Governing Law 44
Section 33. Counterparts 45
Section 34. Descriptive Headings 45
Exhibit A - Form of Right Certificate
Form of Assignment
Certificate
Notice
Form of Election of Purchase
Exhibit B - Summary of Rights to Purchase Common Stock
RIGHTS AGREEMENT
Rights Agreement dated as of July 28, 1998 (as
supplemented or amended and in effect from time to time, the
"Agreement") between Connecticut Energy Corporation, a
Connecticut corporation (the "Company"), and BankBoston, N.A.
Rights Agent, as rights agent (in such capacity, together
with its successors in such capacity, the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company on July
28, 1998 (the "Rights Dividend Declaration Date") authorized and
declared a dividend distribution (the "Distribution") of one
Right for each outstanding share of Common Stock, par value
$1.00, of the Company (the "Common Stock") outstanding at the
close of business on September 18, 1998 (the "Record Date") and
has authorized the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section
11(i) hereof) for each share of Common Stock issued (whether
originally issued or delivered from the Company's treasury stock)
between the Record Date and the earlier of the Distribution Date
or the Expiration Date (as such terms are hereinafter defined),
each Right initially representing the right to purchase, under
certain circumstances, one-half of one share of Common Stock,
upon the terms and subject to the conditions hereinafter set
forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereto hereby
agree as follows:
Section 1. Certain Definitions. As used herein, the
following terms shall have the following meanings (all terms
defined in this Section 1 or in other provisions of this
Agreement in the singular to have the same meanings when used in
the plural and vice versa):
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of securities consti-
tuting a Substantial Block, but shall not include (i) the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or
any Person organized, appointed or established by the
Company or any Subsidiary of the Company for or pursuant to
the terms of any such plan; (ii) any Person who or which,
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of a Substantial Block solely
as a result of a change in the aggregate number of shares of
Voting Stock outstanding since the last date on which such
Person acquired Beneficial Ownership of any shares of the
Voting Stock constituting all or a portion of such
Substantial Block; and (iii) any Person who or which,
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of a Substantial Block in the
good faith belief that such acquisition would not (x) cause
such Person and its Affiliates and Associates to become the
Beneficial Owner of a Substantial Block and such Person
relied in good faith in computing the percentage of its
voting power on publicly filed reports or documents of the
Company which are inaccurate or out-of-date or (y) otherwise
cause a Distribution Date or the adjustment provided for in
Section 11(a) to occur. Notwithstanding clause (ii) or
(iii) of the immediately preceding sentence, if any Person
is excluded from the definition of "Acquiring Person" solely
due to such clause (ii) or (iii) and such person does not
cease to be the Beneficial Owner of a Substantial Block by
the close of business on the fifth Business Day after notice
from the Company (the date of notice being the first day)
that such Person is the Beneficial Owner of a Substantial
Block, such Person shall, at the end of such five Business
Day period, become an Acquiring Person (and such clause (ii)
or (iii) shall no longer apply to exclude such Person from
the definition of "Acquiring Person" hereunder). For
purposes of this definition of "Acquiring Person", the
determination of whether any Person acted in "good faith"
shall be conclusively determined by the Board of Directors
of the Company, acting by vote of those directors of the
Company whose approval would be required to redeem the
Rights under Section 23.
(b) "Act" shall have the meaning set forth in Section
9(c) hereof.
(c) "Adjustment Shares" shall have the meaning set
forth in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
(e) "Agreement" shall have the meaning set forth in
the preamble hereto.
(f) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates has, directly or indirectly,
the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon
the occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to
"beneficially own," (1) securities tendered pursuant to
a tender or exchange offer made by such Person or any
of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange, (2) securities issuable upon exercise of
Rights at any time prior to the occurrence of a
Triggering Event or (3) securities issuable upon
exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such
Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section
3(a) hereof ("Original Rights") or pursuant to Section
11(i) or Section 22 hereof in connection with an
adjustment made with respect to Original Rights; or
(ii) which such Person or any of such
Person's Affiliates or Associates has, directly or
indirectly, the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under
the Exchange Act), including pursuant to any agreement,
arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially
own," any security under this subparagraph (ii) if the
agreement, arrangement or understanding to vote such
security (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 Exchange
Act and applicable rules and regulations thereunder and
(2) is not then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
or
(iii) which are beneficially owned, directly
or indirectly, by any other Person with which such
Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (f)) or disposing
of any securities of the Company.
Notwithstanding the foregoing, nothing contained in this
paragraph (f) shall cause a Person ordinarily engaged in
business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any
securities acquired in a bona fide firm commitment
underwriting pursuant to an underwriting agreement with the
Company.
(g) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the Commonwealth of Massachusetts are authorized or obligated by law
or executive order to close.
(h) "Certification" shall have the meaning set forth
in Section 18 hereof.
(i) "close of business" on any given date shall mean
5:00 P.M., Eastern Standard Time ("EST"), on such date;
provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., EST, on the next succeeding
Business Day.
(j) "Common Stock" when used with reference to the
Company shall mean the shares of common stock, par value
$1.00, of the Company. "Common Stock" when used with
reference to any Person other than the Company shall mean
either the capital stock with the greatest voting power of
such other Person or, if such Person is a Subsidiary of
another Person, the equity securities or other equity
interest having power to control or direct the management of
such Person.
(k) "Common Stock Equivalent" shall have the meaning
set forth in Section 11(a)(iii).
(l) "Company" shall have the meaning set forth in the
preamble hereto.
(m) "Co-Rights Agent" shall have the meaning set forth
in Section 2 hereof.
(n) "Current Market Price" shall have the meaning set
forth in Section 11(d) hereof.
(o) "Current Value" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(p) "Distribution" shall have the meaning set forth in
the recitals hereto.
(q) "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.
(r) "Equivalent Common Stock" shall have the meaning
set forth in Section 11(b) hereof.
(s) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
(t) "Exchange Ratio" shall have the meaning set forth
in Section 24(a) hereof.
(u) "Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(v) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(w) "Full Share Purchase Price" shall have the meaning
set forth in Section 7(b) hereof.
(x) "Independent Director" shall mean (i) any member
of the Board of Directors of the Company who is not an
Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an
Acquiring Person or of any such Affiliate or Associate, and
who was a member of the Board of Directors of the Company
prior to the date hereof, and (ii) any successor to such
member of the Board of Directors of the Company who is not
an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an
Acquiring Person or of any such Affiliate or Associate, and
who is recommended or elected to succeed such member of the
Board of Directors of the Company by a majority of the
members of the Board of Directors of the Company who are
Independent Directors.
(y) "Original Rights" shall have the meaning set forth
in the definition of "Beneficial Owner" in paragraph (f)
above.
(z) "Per Right Purchase Price" shall have the meaning
set forth in Section 4(a) hereof.
(aa) "Person" shall mean any individual, firm,
corporation, partnership, trust or other entity, and shall
include any successor (by merger or otherwise) of such
entity.
(bb) "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
(cc) "Record Date" shall have the meaning set forth in
the recitals hereto.
(dd) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.
(ee) "Right Certificate" shall have the meaning set
forth in Section 3(a) hereof.
(ff) "Rights" shall have the meaning set forth in the
recitals hereto.
(gg) "Rights Agent" shall have the meaning set forth
in the preamble hereto.
(hh) "Rights Dividend Declaration Date" shall have the
meaning set forth in the recitals hereto.
(ii) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii).
(jj) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii).
(kk) "Section 13 Event" shall mean any event described
in Section 13(a).
(ll) "Shares Acquisition Date" shall mean the first
date of public announcement (which, for purposes of this
definition, includes a report filed pursuant to Section
13(d) of the Exchange Act) by the Company or any Person that
such Person has become an Acquiring Person.
(mm) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(nn) "Subsidiary" shall mean, with reference to any
Person, any corporation (or other entity) of which an amount
of voting securities (or comparable ownership interests)
sufficient to elect at least a majority of the directors (or
comparable individuals) of such corporation (or other
entity) is beneficially owned or otherwise controlled,
directly or indirectly, by such Person.
(oo) "Substantial Block" shall mean a number of shares
of Voting Stock which have 15% or more of the aggregate
voting power of all outstanding shares of Voting Stock.
(pp) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(qq) "Summary of Rights" shall have the meaning set
forth in Section 3(b) hereof.
(rr) "Trading Day" shall have the meaning set forth in
Section 11(d) hereof.
(ss) "Triggering Event" shall mean any Section
11(a)(ii) Event or Section 13 Event.
(tt) "Voting Stock" shall mean the outstanding shares
of Common Stock, par value $1.00, and any other shares of
capital stock of the Company which are entitled to vote
generally in the election of directors.
Section 2. Appointment of Rights Agent. The Company
hereby appoints BankBoston, N.A. Rights Agent to act as
rights agent for the Company in accordance with the terms and
conditions here-of, and Boston EquiServe Limited Partnership
hereby accepts such appointment. The Company may act as
co-rights agent and may from time to time appoint such other
co-rights agents (each, in such capacity, together with its
successors in such capacity, a "Co-Rights Agent") as it may deem
necessary or desirable, upon ten (10) days' prior written notice
to the Rights Agent. In no event shall the Rights Agent have
any duty to supervise or in any way be liable for the acts or
omissions of Co-Rights Agents.
Section 3. Issue of Right Certificates. (a) Until
the earlier of (i) the close of business on the tenth Business
Day after the Shares Acquisition Date (or, if the tenth Business
Day after the Shares Acquisition Date occurs before the Record
Date, the close of business on the Record Date) and (ii) the
close of business on the tenth Business Day (or such specified or
unspecified later date as may be determined by action of the
Board of Directors, including a majority of the Independent
Directors, of the Company) after the date of the commencement of,
or of the first public announcement of the intent of any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company or any Person organized, appointed or established by the
Company or any Subsidiary of the Company for or pursuant to the
terms of any such plan) to commence, a tender or exchange offer
if, upon consummation thereof, such Person would be an Acquiring
Person (the earlier of the dates in subsection (i) and (ii)
hereof being herein referred to as the "Distribution Date") (x)
the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common
Stock (which certificates for Common Stock shall be deemed also
to be Right Certificates) and not by separate Right Certificates,
and (y) the right to receive Right Certificates will be
transferable only in conjunction with the transfer of Common
Stock. As soon as practicable after receipt by the Rights Agent
of written notice from the Company of the Distribution Date, the
Rights Agent, at the Company's expense, will send by first-class,
postage prepaid mail, to each record holder of Common Stock as of
the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right
Certificate, in substantially the form of Exhibit A hereto,
evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. On and after the
Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) As soon as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase
Common Stock, in substantially the form attached hereto as
Exhibit B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Stock as of the
close of business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to
certificates for Common Stock outstanding as of the Record Date,
until but excluding the Distribution Date, the Rights will be
evidenced by such certificates for Common Stock, and the
registered holders of Common Stock shall also be the registered
holders of the associated Rights. Until but excluding the
Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any of the certificates
for Common Stock outstanding on the Record Date shall also
constitute the transfer of the Rights associated with Common
Stock represented by such certificate.
(c) Rights shall be issued in respect of all shares of
Common Stock issued after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date, or, in
certain circumstances provided in Section 22 hereof, after the
Distribution Date. Certificates representing such shares of
Common Stock shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as set
forth in the Rights Agreement dated as of
July 28, 1998 between Connecticut Energy
Corporation and BankBoston, N.A. Rights Agent
(as supplemented or amended and
in effect from time to time, the "Rights
Agreement"), the terms of which are hereby
incorporated herein by reference and a copy
of which is on file at the principal
executive offices of Connecticut Energy
Corporation. 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. Connecticut Energy
Corporation will mail to the holder of this
certificate a copy of the Rights Agreement as
in effect on the date of mailing without
charge within five Business Days after
receipt of a written request therefor. Under
certain circumstances set forth in the Rights
Agreement, Rights beneficially owned by an
Acquiring Person may become null and void.
Until but excluding the Distribution Date, the Rights associated
with Common Stock represented by certificates containing the
foregoing legend 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 Common
Stock represented by such certificates. In the event that the
Company purchases or acquires any shares of Common Stock after
the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed cancelled and
retired so that the Company shall not be entitled to exercise any
Rights associated with the shares of Common Stock which are no
longer outstanding. The failure to print the foregoing legend on
any such Common Stock certificate or any other defect therein
shall not affect in any manner whatsoever the application or
interpretation of the provisions of Section 7(e) hereof.
Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall be in sub-
stantially the form of Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. The
Right Certificates shall be in machine-printable format and in a
form reasonably satisfactory to the Rights Agent. Subject to the
provisions of Section 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the
Record Date, shall show the date of countersignature, and on
their face shall entitle the holders thereof to purchase such
number of shares of Common Stock (or following a Triggering
Event, other securities, cash or other assets, as the case may
be) as shall be set forth therein at the price set forth therein
(such exercise price per one half share of Common Stock, the "Per
Right Purchase Price"), but the number of such shares and the Per
Right Purchase Price shall be subject to adjustment as provided
herein.
(b) Any Right Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents Rights beneficially
owned by: (i) an Acquiring Person or any Affiliate or Associate
of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Affiliate or Associate) who becomes a transferee
after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Affiliate or Associate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding (whether or
not in writing) regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding
(whether or not in writing) which has as a primary purpose or
effect the avoidance of Section 7(e) hereof, and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof,
upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall contain (to
the extent feasible) the following legend, modified as applicable
to apply to such Person:
The Rights represented by this Right
Certificate are or were beneficially owned by
a Person who was or became an Acquiring
Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined
in the Rights Agreement). 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. The
Right Certificates shall be executed on behalf of the Company by
one of its authorized officers either manually or by facsimile
signature. The Right Certificates shall be countersigned by an
authorized signatory of the Rights Agent either manually or by
facsimile signature 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.
In case any authorized signatory of the Rights Agent
who shall have countersigned any of the Right Certificates shall
cease to be such signatory before delivery by the Company, such
Right Certificates, nevertheless, may be issued and delivered by
the Company with the same force and effect as though the person
who countersigned such Right Certificates had not ceased to be
such signatory; and any Right Certificates may be countersigned
on behalf of the Rights Agent by any person who, at the actual
date of the countersignature of such Right Certificate, shall be
a proper signatory of the Rights Agent to countersign such Right
Certificate, although at the date of the execution of this Rights
Agreement any such person was not such a signatory.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated for such
purpose, 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
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, the date of each of the Right Certificates and the
date of countersignature of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates. Subject to the provisions of Section
14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on
the Expiration Date, any Right Certificate or Right 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 Triggering Event, other securities, cash or other
assets, as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder (or, in the
case of a transfer, such former holder) to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates 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 office of the
Rights Agent designated for such purpose, along with a signature
guarantee and such other and further documentation as the Rights
Agent may reasonably request. 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, as the Company shall reasonably request, of
the identity of the Beneficial Owner, Affiliates or Associates of
such Beneficial Owner or holder, or of any other Person with
which such holder or any of such holder's Affiliates or
Associates has any agreement, arrangement or understanding
(whether or not in writing) for the purpose of acquiring,
holding, voting or disposing of securities of the Company.
Thereupon the Rights Agent shall, subject to Section 14 and
Section 20(k) hereof, 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 from a Right Certificates holder 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.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, along with a signature guarantee and such
other and further documentation as the Rights Agent may
reasonably request, and if requested by the Company,
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 make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the
registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Per Right Purchase
Price; Full Share Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein, including, without
limitation, the restrictions on exercisability set forth in
Sections 9(c), 11(a)(iii), 23(a) and 24(b) hereof) in whole or in
part at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent at
the designated office of the Rights Agent, together with payment
of the aggregate Per Right Purchase Price for the total number of
shares of Common Stock (or other securities, cash or other
assets, as the case may be) as to which the Rights are then
exercisable, at or prior to the earliest of (i) the close of
business on July 28, 2008 (the "Final Expiration Date"), or (ii)
the time at which the Rights are redeemed as provided in Section
23 hereof or (iii) the time at which all exercisable Rights are
exchanged as provided in Section 24 hereof (such earliest date
being herein referred to as the "Expiration Date").
(b) The Per Right Purchase Price for each one half
share of Common Stock pursuant to the exercise of a Right shall
initially be $45.00, shall be subject to adjustment from time
to time as provided in Sections ll and 13 hereof and shall be
payable in accordance with paragraph (c) below. The "Full Share
Purchase Price" shall be equal to (x) the Per Right Purchase
Price divided by (y) the number of shares of Common Stock for
which such Right is then exercisable (being initially one half of
one share of Common Stock).
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed and completed accompanied by payment of
the Per Right Purchase Price for the number of shares of Common
Stock (or other securities, cash or other assets, as the case may
be) to be purchased and an amount equal to any applicable
transfer tax, the Rights Agent shall thereupon, subject to
Section 20(k), promptly (i) requisition from the Company
certificates for the total number of shares of Common Stock to be
purchased, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14, (iii) promptly 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 (iv) when appropriate, after
receipt promptly deliver such cash to or upon the order of the
registered holder of such Right Certificate. The payment of the
Per Right Purchase Price must be made in cash or by certified
bank check or bank draft or money order payable to the order of
the Company or the Rights Agent. In the event that the Company
is obligated to issue securities, distribute property or pay cash
pursuant to Section 11(a)(iii) hereof, the Company will make all
arrangements necessary so that cash, property or securities are
available for issuance, distribution or payment by the Rights
Agent, if and when appropriate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of Section
14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Affiliate or Associate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding (whether or
not in writing) regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding
(whether or not in writing) which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and
void without any further action and no holder of such Rights
shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to insure 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 any of
its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner,
Affiliates or Associates of such Beneficial Owner or holder, or
of any other Person with which such holder or any of such
holder's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting or disposing of any securities of the
Company as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Right Certificates
to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of
Common Stock. (a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued shares of Common Stock (and following the occurrence of
a Triggering Event, out of its authorized and unissued other
securities), or out of its authorized and issued shares of Common
Stock (and, following the occurrence of a Triggering Event, out
of its authorized and issued other securities) held in its
treasury, the number of shares of Common Stock (and, following
the occurrence of a Triggering Event, other securities) that will
be sufficient to permit the exercise in full of all outstanding
Rights (it being understood that any of the foregoing shares or
securities may also be reserved for other purposes) or will take
such other steps as are appropriate to assure that the number of
such shares or securities (or their equivalents) sufficient to
permit the exercise in full of all outstanding Rights will be
available upon such exercise.
(b) So long as the shares of Common Stock (and,
following the occurrence of a Triggering Event, other securities)
issuable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable (but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i)
file, as soon as practicable following the first occurrence of a
Section 11(a)(ii) Event, or as soon as required by law, as the
case may be, a registration statement under the Securities Act of
1933, as amended (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, and (B) the Expiration Date. The Company
will also take such action as may be appropriate under the blue
sky laws of the various states. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of
this Section 9(c), the exercisability of the Rights in order to
prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall
issue a public announcement and shall give simultaneous written
notice to the Rights Agent stating that the exercisability of the
Rights has been temporarily suspended, as well as a public
announcement and notice to the Rights Agent at such time as the
suspension is no longer in effect. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite
qualifications in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of
Common Stock (and following the occurrence of a Triggering Event,
other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to
payment of the Per Right Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any shares
of the Common Stock (or other securities, as the case may be)
upon the exercise of Rights. The Company shall not, however, be
required (a) to pay any transfer tax which may be payable in
respect of any transfer involved in the transfer or delivery of
Right Certificates or the issuance or delivery of certificates
for Common Stock (or other securities, as the case may be) in a
name other than that of the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or (b) to
issue or deliver any certificates for a number of shares of
Common Stock (or other securities, as the case may be) 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.
Section 10. Common Stock Record Date. Each Person in
whose name any certificate for any number of shares of Common
Stock (or other securities, as the case may be) is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such whole and/or fractional
shares of Common Stock (or other securities, as the case may be)
represented thereby on, and such certificate shall be dated the
date upon which the Right Certificate evidencing such Rights was
duly surrendered and payment of the Per Right Purchase Price (and
any applicable transfer taxes) was made and shall show the date
of countersignature; provided, however, that if the date of such
surrender and payment is a date upon which Common Stock (or other
securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated,
the next succeeding Business Day on which the Common Stock (or
other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be entitled
to any rights of a shareholder of the Company with respect to
shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or
other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11. Adjustment of Per Right Purchase Price,
Number of Shares or Number of Rights. The Per Right Purchase
Price, the number of shares covered by each Right and the number
of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Common Stock payable in shares of the Common Stock, (B) subdivide
the outstanding Common Stock, (C) combine the outstanding Common
Stock into a smaller number of shares or (D) issue any shares of
its capital stock in a reclassification of Common Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Per Right Purchase
Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Common
Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive,
upon payment of the Per Right Purchase Price then in effect, the
aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date and
at a time when Common Stock (or other securities) transfer books
of the Company were open, he or she would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs
which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in
the event any Person, alone or together with its Affiliates and
Associates, becomes, at any time after the Rights Dividend
Declaration Date, an Acquiring Person except as the result of a
transaction set forth in Section 13(a) hereof (a "Section
11(a)(ii) Event"), then, prior to the later of (x) the date on
which the Company's rights of redemption pursuant to Section
23(a) expire and (y) five (5) days after the date of the first
occurrence of a Section 11(a)(ii) Event, proper provision shall
be made so that each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have a right to receive,
upon exercise thereof at the then current Per Right Purchase
Price in accordance with the terms of this Agreement, such number
of shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Full Share
Purchase Price by the number of shares of Common Stock for which
a Right is then exercisable and dividing that product by (y) 50%
of the Current Market Price per share of Common Stock of the
Company (determined pursuant to Section 11(d)) on the date of the
occurrence of the event described above in this subparagraph (ii)
(such number of shares is hereinafter referred to as the
"Adjustment Shares"), provided that the Per Right Purchase Price
and the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any events occurring after
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 certificate of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii), the Company shall (A) determine
the excess of (1) the value of the Adjustment Shares issuable
upon the exercise of a Right (the "Current Value") over (2) the
Per Right Purchase Price (such excess, the "Spread"), and (B)
with respect to each Right, make adequate provision to substitute
for the Adjustment Shares, upon exercise of the Rights and
payment of the applicable Per Right Purchase Price, (1) cash, (2)
a reduction in the Per Right Purchase Price, (3) other equity
securities of the Company (including, without limitation, shares
of preferred stock which a majority of the Independent Directors
and the Board of Directors of the Company have deemed to have the
same value as shares of Common Stock (such shares of preferred
stock, "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 a majority of
the Independent Directors and the Board of Directors of the
Company based upon the advice of an independent nationally
recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, that if the Company
shall not have made adequate provision to deliver value pursuant
to clause (B) above within thirty (30) days following the later
of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's rights of redemption pursuant to
Section 23(a) expire (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of
a Right and without requiring payment of the Per Right Purchase
Price, shares of Common Stock (to the extent available) and then,
if necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If 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 thirty (30)
day period set forth above may be extended to the extent
necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek
shareholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some
action need be taken pursuant to the first and/or second
sentences of this subparagraph (iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend
the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement and
shall give concurrent written notice to the Rights Agent stating
that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement and notice to the
Rights Agent at such time as the suspension is no longer in
effect. For purposes of this subparagraph (iii), the value of
the Common Stock shall be the Current Market Price (as determined
pursuant to Section ll(d) hereof) per share of Common Stock on
the Section 11(a)(ii) Trigger Date and the value of any Common
Stock Equivalent shall be deemed to be the same as the value of
Common Stock on such date. The Company shall give the Rights
Agent notice of the selection of any Common Stock Equivalent
under this subparagraph (iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common
Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Common
Stock (or securities having substantially the same rights,
privileges and preferences as the shares of Common Stock
("Equivalent Common Stock") or convertible into Common Stock or
Equivalent Common Stock) at a price per share of Common Stock or
Equivalent Common Stock (or having a conversion price per share,
if a security convertible into Common Stock or Equivalent Common
Stock) less than the Current Market Price (as defined in Section
11(d) per share of Common Stock or Equivalent Common Stock, as
the case may be) on such record date, the Per Right Purchase
Price to be in effect after such record date shall be determined
by multiplying the Per Right Purchase Price in effect immediately
prior to such record date by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares of Common Stock or
Equivalent Common Stock which the aggregate offering price of the
total number of shares of Common Stock or Equivalent Common Stock
so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at
such Current Market Price and of which the denominator shall be
the number of shares of Common Stock outstanding on such record
date plus the number of additional shares of Common Stock and/or
Equivalent Common Stock to be offered for subscription or
purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription
price may be paid by delivery of consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement 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,
options or warrants are not so issued, the Per Right Purchase
Price shall be adjusted to be the Per Right Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
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 continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular periodic cash dividend or a dividend
payable in Common Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Per Right
Purchase Price to be in effect after such record date shall be
determined by multiplying the Per Right 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)) on such record date, less the
fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of
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 Common Stock. Such adjustments shall
be made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the Per Right
Purchase Price shall again be adjusted to be the Per Right
Purchase Price which would then be in effect if such record date
had not been fixed.
(d) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii), the
"Current Market Price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined in this
paragraph (d)) immediately prior to such date and, for purposes
of computations made pursuant to Section 11(a)(iii) hereof, the
Current Market Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices per share
of such Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that in the
event that the Current Market Price per share of Common Stock is
determined during the period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on
such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other
than the Rights) or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the
expiration of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, after the ex-dividend date for such
dividend or distribution or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
Current Market Price shall be appropriately adjusted to take into
account ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of the Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities
exchange on which the shares of the Common Stock are listed or
admitted to trading or, if the shares of the Common Stock are not
listed or admitted to trading on any national securities
exchange, the last quoted price, or, if not so quoted, the
average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any such date the shares
of Common Stock are not quoted by such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in Common Stock
selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock,
the fair value of such shares on such date shall be as determined
in good faith by the Independent Directors if the Independent
Directors constitute a majority of the Board of Directors or, in
the event the Independent Directors do not constitute a majority
of the Board of Directors, by an independent nationally
recognized investment banking firm selected by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all
purposes. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities
exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on
which banking institutions in the State of Connecticut are not
authorized or obligated by law or executive order to close. If
the Common Stock is not publicly held or not so listed or traded,
"Current Market Price" per share shall mean the fair value per
share as determined in good faith by the Independent Directors if
the Independent Directors constitute a majority of the Board of
Directors or, in the event the Independent Directors do not
constitute a majority of the Board of Directors, by an
independent investment banking firm selected by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Per Right Purchase Price shall be required
unless such 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 ten-thousandth of a share of Common Stock.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the
transaction which mandates such adjustment or (ii) the Expiration
Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right
thereafter exercised shall become entitled to receive any shares
of capital stock other than shares of Common Stock, thereafter
the number of such other shares so receivable upon exercise of
any Right and the Per Right Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Section 11(a) through
(p), inclusive, and the provisions of Sections 7, 9, 10, 13 and
14 with respect to Common Stock shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Per Right Purchase Price
hereunder shall evidence the right to purchase, at the adjusted
Per Right Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Per Right Purchase Price as a result of the calculations made
in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Per Right Purchase Price,
that number of shares (calculated to the nearest tenth-
thousandth) obtained by (i) multiplying (x) the number of shares
covered by a Right immediately prior to this adjustment by (y)
the Per Right Purchase Price in effect immediately prior to such
adjustment of the Per Right Purchase Price and (ii) dividing the
product so obtained by the Per Right Purchase Price in effect
immediately after such adjustment of the Per Right Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Per Right 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 (calculated to the nearest ten-thousandth) obtained by
dividing the Per Right Purchase Price in effect immediately prior
to adjustment of the Per Right Purchase Price by the Per Right
Purchase Price in effect immediately after the adjustment of the
Per Right Purchase Price. The Company shall make a public
announcement and shall give simultaneous written notice to the
Rights Agent of its election to adjust the number of Rights,
indicating the record date for the adjustment to be made. This
record date may be the date on which the Per Right 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 subparagraph (i), the Company shall, as promptly as
practicable, cause to be distributed to holders of Right
Certificates on such record date Right Certificates evidencing,
subject to Section 14, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Per Right 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
Per Right Purchase Price or the number of shares of Common Stock
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Per
Right Purchase Price 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 Per Right Purchase Price below the then
par value, if any, of a share 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 nonassessable shares of such Common Stock at
such adjusted Per Right Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Per Right Purchase Price be made
effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record
date of 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 Per Right
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 shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Per Right Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that the Board of Directors of the Company shall determine
to be advisable in order that any consolidation or subdivision of
shares of Common Stock, issuance wholly for cash of any shares of
Common Stock at less than the Current Market Price, issuance
wholly for cash of the Common Stock or 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 by the
Company to holders of its Common Stock shall not be taxable to
such shareholders.
(n) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections
23, 24 and 27 hereof, take (nor will it permit any of its
Subsidiaries 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.
(o) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(n)), (ii) merge with
or into any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(n)), or (iii)
sell or transfer (or permit any of its Subsidiaries to sell or
transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies
with Section 11(n)) if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants
or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior
to, simultaneously with or immediately after such consolidation,
merger or sale, the shareholders of the Person who constitutes,
or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates.
(p) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date, the Company may, in
lieu of making any adjustment to the Per Right Purchase Price,
the number of shares of Common Stock eligible for purchase on
exercise of each Right or the number of Rights outstanding, which
adjustment would otherwise be required by Section 11(a)(i),
11(b), 11(c), 11(h) or 11(i), make such other equitable
adjustment or adjustments thereto as the Board of Directors
(whose determination shall be conclusive) deems appropriate in
the circumstances and not inconsistent with the objectives of the
Board of Directors in adopting this Agreement and such Sections.
Section 12. Certificate of Adjusted Per Right Purchase
Price or Number of Shares. Whenever an adjustment is made as
provided in Sections 11 and 13, the Company shall (a) promptly
prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment and the
adjusted Per Right Purchase Price, (b) promptly file with the
Rights Agent and with each transfer agent for the Common Stock a
copy of such certificate and (c) mail a brief summary thereof to
each holder of a Right Certificate in accordance with Section 26.
The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. (a) In the event that, following the
Shares Acquisition Date, directly or indirectly, (x) the Company
shall consolidate with, or merge with or into, any other Person
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(n)) and the Company shall not be the
continuing or surviving corporation of such consolidation or
merger, (y) any Person (other than a Subsidiary of the Company in
a transaction which complies with Section ll(n)) shall
consolidate, merge with or into the Company and the Company shall
be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger,
all or part of the Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or
cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one or more transactions, assets or
earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which complies
with Section 11(n) hereof), then, and in each such case, proper
provision shall be made so that (i) each holder of a Right
(except as provided in Section 7(e)) shall thereafter have the
right to receive, upon the exercise thereof at the then current
Per Right Purchase Price in accordance with the terms of this
Agreement, such number of validly issued, fully paid,
nonassessable and freely tradable shares of Common Stock of the
Principal Party (as hereinafter defined), not subject to any
liens, encumbrances, rights of call or first refusal, or other
adverse claims as shall be equal to the result obtained by (l)
multiplying the then current Full Share Purchase Price by the
number of shares of Common Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such
shares for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Full Share
Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the
first occurrence of a Section 13 Event, shall be referred to as
the "Full Share Purchase Price" for each Right and for all
purposes of this Agreement) by (2) 50% of the Current Market
Price per share of the Common Stock of such Principal Party
(determined in the manner described in Section 11(d)) on the date
of consummation of such consolidation, merger, sale or transfer;
(ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 11 shall thereafter apply to such Principal
Party, (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with Section
9) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13
Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction
described in (x) or (y) of the first sentence
of Section 13(a), the Person that is the
issuer of any securities into which shares of
Common Stock of the Company are converted in
such merger or consolidation and, if no
securities are so issued, the Person that is
the other party to the merger or
consolidation; and
(ii) in the case of any transaction
described in (z) of the first sentence in
Section 13(a), the Person that is the party
receiving the greatest portion of the assets
or earning power transferred pursuant to such
transaction or transactions; provided,
however, that in any such case, (x) if the
Common Stock of such Person is not at such
time and has not been continuously over the
preceding 12-month period registered under
Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of
another corporation the Common Stock of which
is and has been so registered, "Principal
Party" shall refer to such other corporation
and (y) if such Person is a Subsidiary,
directly or indirectly, of more than one
corporation, the Common Stocks of two or more
of which are and have been so registered,
"Principal Party" shall refer to whichever of
such corporations is the issuer of the Common
Stock having the greatest market value.
(c) The Company shall not consummate any Section 13
Event unless the Principal Party shall have a sufficient number
of authorized shares of its Common Stock which are neither
outstanding nor reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale
of assets mentioned in paragraph (a) of this Section 13, the
Principal Party
(i) will 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, will use its best efforts to cause
such registration statement to become effective as soon
as practicable after such filing and will use its best
efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights
historical financial statements for the Principal Party
and each of its Affiliates which comply in all respects
with the requirements for registration on Form 10 under
the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive Section 13 Events. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner
described in Section 13(a).
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 such fractional Rights, the
Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use, or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights, the fair
value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue
fractions of shares of Common Stock or Common Stock Equivalents
upon exercise or exchange of the Rights or to distribute
certificates which evidence fractional shares. In lieu of
fractional shares of Common Stock or Common Stock Equivalents,
the Company may pay to the registered holders of Right
Certificates at the time the Rights evidenced thereby are
exercised or exchanged as herein provided an amount in cash equal
to the same fraction of the current market value of Common Stock
or Common Stock Equivalents. For purposes of this Section 14(b),
the current market value of one share of Common Stock shall be
the closing price of a share of Common Stock (as determined
pursuant to Section 11(d)) for the Trading Day immediately prior
to the date of such exercise or exchange, as the case may be, and
the current market value of any Common Stock Equivalent shall be
the same as the current market value of the Common Stock on such
date.
(c) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise or exchange of a Right,
except as otherwise permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock); and any
registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific
performance of the obligations hereunder and 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 the
Common Stock;
(b) after the Distribution Date, the Right
Certificates will be transferable only on the registry books
of the Rights Agent if surrendered at the office of the
Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed, along
with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request;
(c) subject to Section 6 and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person
in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate)
is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the
associated Common Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent
shall be required to be affected by any notice to the
contrary;
(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, that 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
Shareholder. No holder, as such, of any Right Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the number of shares of Common Stock or any
other securities of the Company that may at any time be issuable
on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as
provided in Section 25), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised or exchanged for
Common Stock in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without gross negligence,
bad faith or willful misconduct on the part of the
Rights Agent (including the reasonable fees and expenses of
counsel), for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against
any claim of liability in the premises. The indemnity provided
for herein shall survive the expiration of the rights and the
termination of this Agreement. The cost and expenses incurred in
enforcing this right of indemnification shall be paid by the
Company.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate
for Common Stock or other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, instruction,
adjustment notice, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper
Person or Persons.
In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any
action taken or omitted by it in connection with its
administration of this Agreement in reliance upon (i) the proper
execution of the certification appended to the Form of Assignment
and the Form of Election to Purchase included as part of Exhibit
A hereto (the "Certification"), unless the Rights Agent shall
have actual knowledge that, as executed, the Certification is
untrue or (ii) the non-execution or failure to complete the
Certification including, without limitation, any refusal to honor
any otherwise permissible assignment or election by reason of
such non-execution or failure.
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21.
In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall
be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may
adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions and no implied duties or
obligations shall be read into this Agreement against the Rights
Agent, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from
acting, it may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action
hereunder, such fact or matter (including the Rights
becoming void pursuant to Section 7(e) hereof) (unless other
evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the
Chairman of the Board, the President, any Senior Vice
President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own gross negligence, bad faith or
willful misconduct. The issuance or non-issuance of a Right
Certificate or Common Stock or other security issued in lieu
of Common Stock in accordance with instructions given to the
Rights Agent by the Company pursuant to Section 20(k) hereof
or in accordance with the terms hereof shall not constitute
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor
shall it be responsible for any change in the exercisability
of Rights (including the Rights becoming void pursuant to
Section 7(e) hereof); nor shall it be responsible for any
adjustment required under the provisions of Section 11 or 13
or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates
after actual notice of any such adjustment or change); nor
shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued
pursuant to this Agreement or any Right Certificate or as to
whether any shares of Common Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or 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 and certificates delivered pursuant to
any provision hereof from any one of the Chairman of the
Board, the President, any Senior Vice President, any
Executive Vice President, any Vice President, the Secretary
or the Treasurer of the Company, and is authorized 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. An
application by the Rights Agent for instructions may set
forth in writing any action proposed to be taken or omitted
by the Rights Agent with respect to its duties and
obligations under this Agreement and the date on and/or
after which such action shall be taken, 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 one Business Day after the Company receives
such application) without the consent of the Company unless,
prior to taking or omitting such action, the Rights Agent
has received written instructions in response to an
application specifying the actions to be taken or omitted.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either by itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct;
provided, however, that reasonable care was exercised in the
selection 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 certificate attached to the form of assignment or form
of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response, the
Rights Agent shall not take any further action with respect
to such requested exercise or transfer without first
consulting the Company. The Company shall give the Rights
Agent prompt written instructions as to the action to be
taken regarding the Right Certificates involved. The Rights
Agent shall not be liable for acting in accordance with such
instructions.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company by registered or certified mail,
and, at the Company's expense, to the holders of the Right
Certificates by first class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon thirty (30) days'
notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the
Common Stock by registered or certified mail, and to the holders
of the Right Certificates by first class mail. If the Rights
Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by
the Company), then the Company shall become the temporary Rights
Agent and the registered holder of any Right Certificate may
apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the
United States or of the State of Connecticut (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 State
of Connecticut), in good standing, having a principal office in
the State of Connecticut, 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 $25 million. After appointment, the
successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall
file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock, and mail a notice
thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Per Right Purchase Price and the number or kind or
class of shares or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date
and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock so
issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that
(i) no such Right Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right
Certificate would be issued, and (ii) no such Right Certificate
shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination. (a) The
Board of Directors of the Company may, at its option, at any time
prior to the earlier of (x) the close of business on the tenth
day following the Shares Acquisition Date (or if the Shares
Acquisition Date shall have occurred prior to the Record Date,
the close of business on the tenth day following the Record
Date), or (y) the Final Expiration Date, redeem all but not less
than all of the then outstanding Rights at a redemption price of
$.01 per Right as appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to
as the "Redemption Price"), and the Company may, at its option,
pay the Redemption Price either in shares of its Common Stock
(valued at their Current Market Price as defined in Section 11(d)
on the date of the redemption), other securities, cash or other
assets; provided, however, that if the Board of Directors of the
Company authorizes redemption of the Rights in either of the
circumstances set forth in clauses (x) or (y) below then there
must be Independent Directors in office and such authorization
shall require the concurrence of a majority of the Independent
Directors: (x) such authorization occurs on or after the Shares
Acquisition Date or (y) such authorization occurs on or after the
date of a change (resulting from a proxy or consent solicitation)
in the composition of a majority of the Board of Directors of the
Company from the Board that was in office at the commencement of
such solicitation if any Person who is a participant in such
solicitation has stated (or if upon the commencement of such
solicitation a majority of the Board of Directors of the Company
has determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider
taking, any action which would result in such Person becoming an
Acquiring Person or which would cause the occurrence of a
Triggering Event. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11(a)(ii) Event until
such time as the Company's right of redemption hereunder has
expired.
(b In deciding whether or not to exercise the
Company's right of redemption hereunder, the Board of Directors
of the Company shall act in good faith, in a manner they
reasonably believe to be in the best interests of the Company and
with such care, including reasonable inquiry, skill and
diligence, as a person of ordinary prudence would use under
similar circumstances, and they may consider the long-term and
short-term effects of any action upon employees, suppliers,
customers and creditors of the Company or its Subsidiaries and
upon communities in which offices or other establishments of the
Company or its Subsidiaries are located, and all other pertinent
factors.
(c Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights,
and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right held. Within 10 days after the
action of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the
holders of the then outstanding Rights by mailing such notice to
the Rights Agent and to all such holders at their last addresses
as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that
specifically set forth in this Section 23, and other than in
connection with the repurchase of Common Stock prior to the
Distribution Date.
Section 24. Exchange. (a) The Board of Directors of
the Company may, at its option (provided that there are then
Independent Directors in office and a majority of the Independent
Directors concur), at any time and from time to time on or after
a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of
Section 7(e) hereof) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement (such
exchange ratio being hereinafter referred to as the "Exchange
Ratio").
(b Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange will be
effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 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 take all such
action as may be necessary to authorize additional shares of
Common Stock or for issuance upon exchange of the Rights.
(d In any exchange pursuant to this Section 24, the
Company, at its option, may substitute for any share of Common
Stock exchangeable for a Right (i) Common Stock Equivalents, (ii)
cash, (iii) debt securities of the Company, (iv) other assets, or
(v) any combination of the foregoing, having an aggregate value
which a majority of the Independent Directors and the Board of
Directors of the Company shall have determined in good faith to
be equal to the Current Market Price of one share of Common Stock
(determined pursuant to Section 11(d) hereof) on the Trading Date
immediately preceding the record date for determining those
Rights holders eligible to receive shares in exchange for their
Rights pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the
Company shall propose at any time following the Distribution Date
(a) to pay any dividend payable in stock of any class to the
holders of Common Stock or to make any other distribution to the
holders of Common Stock (other than a regular periodic cash
dividend), or (b) to offer to the holders of Common Stock rights
or warrants to subscribe for or to purchase any additional shares
of Common Stock or shares of stock of any class or any other
securities, rights or options, or (c) to effect any
reclassification of Common Stock (other than a reclassification
involving only the subdivision of outstanding Common Stock), or
(d) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(n) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies
with Section 11(n) hereof), 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 to 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 stock dividend, distribution of rights or
Rights, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation
therein by the holders of the 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 (20)
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 (20) days prior to the date of
the taking of such proposed action or the date of participation
therein by the holders of the Common Stock, whichever shall be
the earlier.
In case a Section 11(a)(ii) Event shall occur, then, in
any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and to each holder of a
Right, to the extent feasible and in accordance with Section 26,
a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights
under Section 11(a)(iii) and all references in the preceding
paragraph to Common Stock shall be deemed to thereafter refer to
other securities.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Connecticut Energy Corporation
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Right Certificate to or on the Rights
Agent shall be sent by registered or certified mail and shall be
deemed given upon receipt and addressed (until another address is
filed in writing with the Company) as follows:
BANKBOSTON, N.A.
c/o Boston EquiServe Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Client 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.
Section 27. Supplements and Amendments. Prior to the
earlier of the Distribution Date or the Shares Acquisition Date
and subject to the penultimate sentence of this Section 27, the
Company may from time to time supplement or amend this Agreement
without the approval of any holders of Right Certificates. From
and after the earlier of the Distribution Date or the Shares
Acquisition Date, and subject to the penultimate sentence of this
Section 27, the Company may from time to time 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 lengthen the time period during which the Rights may be
redeemed following the Shares Acquisition Date for up to an
additional twenty days beyond the time period set forth in
Section 23(a) (provided, however, that any such lengthening shall
be effective only if there are Independent Directors and shall
require the concurrence of a majority of such Independent
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 (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment unless the Rights
Agent shall have determined in good faith that such supplement or
amendment would adversely affect its interests under this
Agreement. Notwithstanding anything in this Agreement to the
contrary, no supplement or amendment shall be made on or after
the Distribution Date which changes the Redemption Price, the
Final Expiration Date, the Per Right Purchase Price, the Full
Share Purchase Price or the number of shares of Common Stock for
which a Right is then exercisable. Prior to the earlier of the
Shares Acquisition Date or the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors. For all purposes of this Agreement, any calculation
of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in
accordance with the provisions of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board
of Directors of the Company (and, where specifically provided for
herein, the Independent Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or the
Company (or, as expressly provided, the Independent Directors),
or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to
(i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to
redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations
(including, for the purpose of clause (ii) below, all omissions
with respect to the foregoing) which are done or made by the
Board (or, as provided for, by the Independent Directors) in good
faith, shall (i) be final, conclusive and binding on the Company,
the Rights Agent, the holders of the Right Certificates and all
other parties, and (ii) not subject the Board or the Independent
Directors to any liability to the holders of the Right
Certificates.
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
Common Stock) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision,
covenant, or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board of Directors of the Company
determines in its 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 Board of Directors.
Section 32. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Connecticut and for
all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made
and performed entirely within such State.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
[SEAL]
CONNECTICUT ENERGY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President and General Counsel
ATTEST:
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Assistant Secretary
[SEAL]
BANKBOSTON, N.A. RIGHTS AGENT
By: /s/ Xxxxx Xxxxxx-Xxxx
Name: Xxxxx Xxxxxx-Xxxx
Title: Administration Manager
ATTEST:
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Senior Account Manager
EXHIBIT A
[Form of Right Certificate]
Certificate No. R-
--------RIGHTS
NOT EXERCISABLE AFTER JULY 28, 2008 OR
EARLIER IF NOTICE OF REDEMPTION OR EXCHANGE
IS GIVEN. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS MAY NOT BE
EXERCISABLE AND THE RIGHTS AGREEMENT MAY BE
AMENDED WITHOUT THE APPROVAL OF THE RIGHTS
OWNERS.
CONNECTICUT ENERGY CORPORATION
Right Certificate
This certifies that [ _________ ], or registered as-
signs, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement dated as
of July 28, 1998 (as supplemented or amended and in effect from
time to time, the "Rights Agreement") between Connecticut Energy
Corporation, a Connecticut corporation (the "Company") and BankBoston,
N.A. Rights Agent (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.
(EST) on July 28, 2008 at the designated office of the Rights
Agent, or its successors as Rights Agent, in Canton,
Massachusetts, one-half of one fully paid, nonassessable share of
the Common Stock, par value $1.00 (the "Common Stock"), of the
Company, at a purchase price of $45.00 per one half share (the
"Per Right Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and
related certificate duly executed, along with a signature guaran-
tee and such other and further documentation as the Rights Agent
may reasonably request. The number of Rights evidenced by this
Right Certificate (and the number of shares which may be pur-
chased upon exercise thereof) set forth above, and the Per Right
Purchase Price per one half share set forth above, are the number
and Per Right Purchase Price as of September 18, 1998, based on
the Common Stock of the Company as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as
such term is defined in the Rights Agreement), if the Rights
evidenced by this Right Certificate are beneficially owned by (i)
an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agree-
ment), (ii) a transferee of any such Acquiring Person, Associate
or Affiliate, or (iii) under certain circumstances specified in
the Rights Agreement, a transferee of a person who after such
transfer, became an Acquiring Person, such Rights shall become
null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Per Right
Purchase Price and the number and kind of shares of Common Stock
(or, in certain circumstances, other securities) 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, including Triggering Events (as such
term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities here-
under of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file
at the above-mentioned office of the Rights Agent, and at the
executive offices of the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the
Rights Agent, along with a signature guarantee and such other and
further documentation as the Rights Agent may reasonably request,
may be exchanged for another Right Certificate or Right Certifi-
xxxxx 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,
along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request, 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 (a) may be redeemed by the
Company at its option at a redemption price of $.01 per Right
prior to the earlier of the close of business on (i) the tenth
day following the Shares Acquisition Date (as such term is
defined in the Rights Agreement) and (ii) the Final Expiration
Date (as such term is defined in the Rights Agreement) or (b) may
be exchanged in whole or in part for shares of Common Stock
and/or other securities, cash or other assets of the Company
deemed to have the same value as shares of Common Stock, at any
time after a Section 11(a)(ii) Event. The Rights Agreement may
be amended without the approval of the holders of the Rights as
and to the extent set forth therein.
No fractional shares of Common Stock will be issued
upon the exercise or exchange 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 shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of the 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 share-
holders 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 or exchanged for Common
Stock as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the manual or facsimile signature of the proper
officers of the Company and its corporate seal. Dated as of
September 18, 1998.
[SEAL]
ATTEST: CONNECTICUT ENERGY CORPORATION
By: By:
Name: Name:
Title: Title:
Countersigned:
BANKBOSTON, N.A. RIGHTS AGENT
as Rights Agent
By: _______________________________
Authorized Signature
Date:
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED hereby
___________________________
sells, assigns and transfers unto ___________________________
_____________________________________________________________
(please print name and address of transferee)
_____________________________________________________________
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ____________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full
power of substitution.
Dated:
__________________, ____
________________________
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate box that:
Exercising this Right Certificate will [ ] will not
[ ] enable the undersigned, its Affiliates, its Associates
and/or any other Person with which the undersigned or any of the
undersigned's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of securities
of the Company to obtain, individually or in the aggregate,
beneficial ownership of Common Stock or other securities that
have 15% or more of the aggregate voting power of the outstanding
shares of the Common Stock and other securities having voting
power.
Dated:____________ ______________________________
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
To Connecticut Energy Corporation:
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate
to purchase the shares of Common Stock issuable upon the exercise
of such Rights (or such other securities of the Company or of any
other Person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued
in the name of:
Please insert social security or
other taxpayer 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 taxpayer identifying number
_________________________________
[Please print name and address)
____________________________________________________________
Dated: _____________, ____
___________________________________
Signature
Dated: ____________, ____ ______________________________
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On July 28, 1998 the Board of Directors of Connecticut
Energy Corporation (the "Company") declared a dividend
distribution of one Right for each outstanding share of Common
Stock, par value $1.00, of the Company (the "Common Stock") to
shareholders of record at the close of business on September 18,
1998 (the "Record Date"). The Rights are to be issued pursuant
to a shareholder rights plan which was approved by the Board of
Directors on July 28, 1998. Each Right entitles the registered
holder to purchase from the Company one-half of one share of
Common Stock at a price of $90.00 per share (the "Full Share
Purchase Price"), being $45.00 per half share (the "Per Right
Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (as
modified or supplemented and in effect from time to time, the
"Rights Agreement") between the Company and BankBoston, N.A.
Rights Agent as Rights Agent (the "Rights Agent").
Distribution Date; Transfer of Rights
Until the earlier to occur of (i) ten Business Days
following the date (the "Shares Acquisition Date") of the public
announcement that a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of Common Stock or other
voting securities of the Company ("Voting Stock") that have 15%
or more of the voting power of the outstanding shares of Voting
Stock or (ii) ten Business Days (or such later time as may be
specified by the Board of Directors of the Company and the
Independent Directors) following the commencement or announcement
of an intention to make a tender offer or exchange offer the
consummation of which would result in such person acquiring, or
obtaining the right to acquire, beneficial ownership of Voting
Stock having 15% or more of the voting power of the outstanding
shares of Voting Stock of the Company (the earlier of such dates
being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Company's Common Stock
certificates outstanding as of the Record Date, by such Common
Stock certificate. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Company's Common Stock. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date upon transfer or new
issuance of the Company's Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any of the Company's
Common Stock certificates outstanding as of the Record Date 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, 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
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire at the close of business on July
28, 2008, unless earlier redeemed or exchanged by the Company as
described below. Exercise of Rights for Common Stock of the
Company
In the event that a Person becomes an Acquiring Person
at any time following the Distribution Date, each holder of a
Right will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two
times the Per Right Purchase Price of the Right then in effect.
Notwithstanding any of the foregoing, following the occurrence of
such event set forth in this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person will be null and
void.
Exercise of Rights for Shares of the Acquiring Company
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other similar business combination transaction, or (ii) 50% or
more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, Common Stock of the
acquiring company having a value equal to two times the Per Right
Purchase Price of the Right then in effect.
Adjustments to Per Right Purchase Price
The Per Right Purchase Price payable, and the number of
shares of Common Stock (or other securities, as the case may be)
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 or
purchase shares of the Common Stock or convertible securities at
less than the then 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 or dividends payable in the Common Stock) or of
subscription rights or warrants (other than those referred to
above). Prior to the Distribution Date, the Board of Directors
of the Company may make such equitable adjustments as it deems
appropriate in the circumstances in lieu of any adjustment
otherwise required by the foregoing.
With certain exceptions, no adjustment in the Per Right
Purchase Price will be required until the earlier of (i) three
years from the date of the event giving rise to such adjustment
or (ii) the time at which cumulative adjustments require an
adjustment of at least 1% in such Per Right Purchase Price. No
fractional shares of Common Stock will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market
price of the Common Stock on the last trading date prior to the
date of exercise.
Redemption and Exchange of Rights
At any time prior to 5:00 P.M. EST on the tenth day
following the Shares Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). Under certain circumstances set forth
in the Rights Agreement, the decision to redeem shall require the
concurrence of a majority of the Independent Directors.
Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights with, if required, the
concurrence of the Independent Directors, the Company shall make
announcement thereof, and upon such action, 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 the occurrence of the event set forth
under the heading "Exercise of Rights for Common Stock of the
Company" above, the Board of Directors (with the concurrence of a
majority of the Independent Directors) may exchange the Rights
(other than Rights owned by an Acquiring Person, which have
become void), in whole or in part, at an exchange ratio of one
share of Common Stock, and/or other securities, cash or other
assets deemed to have the same value as one share of Common
Stock, per Right, subject to adjustment.
Until a Right is exercised or exchanged for Common
Stock, 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,
shareholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable
for Common Stock or other consideration of the Company or for the
stock of the Acquiring Person as set forth above, or are
exchanged as provided in the preceding paragraph.
Amendments to Terms of the Rights
Any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company without the
consent of the holders of the Rights prior to the Distribution
Date. Thereafter, the provisions of the Rights Agreement may be
amended by the Board of Directors in order to cure any ambiguity,
defect or inconsistency, or to make changes which do not
adversely affect the interests of holders of Rights (excluding
the interest of any Acquiring Person); provided, however, that no
supplement or amendment may be made on or after the Distribution
Date which changes those provisions relating to the principal
economic terms of the Rights. The Board of Directors may also,
with the concurrence of a majority of the Independent Directors,
extend the redemption period for up to an additional 20 days.
The term "Independent Directors" means any member of
the Board of Directors of the Company who was a member of the
Board prior to the date of the Rights Agreement, and any person
who is subsequently elected to the Board if such person is
recommended or approved by a majority of the Independent
Directors, but shall not include an Acquiring Person or any
representative thereof.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A dated [ ______ __,] 1998. A
copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is hereby incorporated herein by
reference.
