SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1998
CALIFORNIA WATER SERVICE GROUP
(Exact name of registrant as specified in its charter)
California 77-0448994
State of Incorporation Commission File No. IRS Employer ID Number
1720 North First Street, San Jose, CA 95112
Address, including Zip code, of registrant's principal executive office
(408) 367-8200
Registrant's telephone number, including area code
Former name or former address, if changed since last report
Item 5. Other Events
On January 28, 1998, the Board of Directors of California Water Service
Group (the "Company") declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of common stock, no par value, of the
Company (the "Common Shares"). The dividend is payable on February 18, 1998
to stockholders of record on February 6, 1998. Each Right
entitles the registered holder to purchase from the Company one one-hundredth
of a share of a Series D Preferred Stock, no par value, of the Company (the
"Preferred Shares") at a price of $120.00 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and BankBoston, N.A., as Rights Agent (the "Rights Agent"),
dated as of February 12, 1998.
Initially, the Rights will be attached to all certificates representing Common
Shares then outstanding, regardless of whether any such certificate has a copy
of this summary of or other reference to the Rights attached thereto, and no
separate Right Certificates will be distributed. The Rights will separate from
the Common Shares and a Distribution Date will occur upon the earlier of (i) 10
days following a public announcement that a person or group of affiliated or
associated persons (other than the Company, any subsidiary of the Company,
any employee benefit plan or dividend reinvestment plan of the Company or of
any subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such employee benefit plan or as administrator
of such dividend reinvestment plan) have either acquired beneficial ownership
of 15% or more of the outstanding Common Shares or have obtained beneficial
ownership of 10% of the outstanding Common Shares and have been determined by
the Board of Directors to pose a threat of a material adverse impact on the
Company (either, an "Acquiring Person") or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such
time as any Person becomes an acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of such outstanding Common Shares (unless the Company's
Board of Directors has approved the offer).
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares 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 certificates
for Common Shares outstanding as of the Record Date will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Rights Certificates alone will evidence
the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on February 11, 2008, unless earlier redeemed or exchanged by the
Company in each case as described below. Until a Right is exercised, the
holder thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
The Purchase Price payable and the number of Preferred Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain
rights or warrants to subscribe for Preferred Shares or convertible securities
at less than the current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends out of earnings or retained
earnings or dividends payable in Preferred Shares) or of subscription rights
or warrants (other than those referred to above). The number of outstanding
Rights associated with each Common Share is also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred or Common Shares will be issued
(other than fractions of Preferred Shares which are integral multiples of one
one-hundredth of a Preferred Share, which may, at the election of the Company,
be evidenced by depositary receipts) and in lieu thereof, a payment in cash
will be made based on the market price of the Preferred or Common Shares on
the last trading date prior to the date of exercise.
In the event that any person or group becomes an Acquiring Person (a "Trigger
Event"), each holder of a Right, other than the Acquiring Person (Whose
Rights will thereafter be void), will thereafter have the right to receive upon
exercise at its then current exercise price that number of Common Shares (or,
in the event there are insufficient authorized Common Shares, substitute
consideration such as cash, property or other securities of the Company, such
as Preferred Shares) having a market value of two times the Purchase Price of
the Right.
In the event that, after a person or group has become an Acquiring Person,
the Company is acquired in a merger or other business combination transaction
or 50% or more of its consolidated assets or earning power are sold, each
holder of a Right (other than an Acquiring Person, whose Rights will become
void) will thereafter have the right to receive, upon the exercise of the
Right at its then current exercise price, that number of shares of common
stock of the acquiring person having a market value of two times the exercise
price of the Right.
At any time until ten days following a Trigger Event, the Company may
redeem the Rights in whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"). Immediately upon the action of the Board of Directors
ordering redemption of the Rights, 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 any person becomes an Acquiring Person the Board of
Directors of the Company, may, at its option, exchange all or part of the then-
outstanding and exercisable Rights (excluding Right of an Acquiring Person that
have become void) for Common Shares at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof. Notwithstanding the
foregoing the Board of Directors shall not be empowered to effect such
exchange at any time after any Acquiring Person becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding. In lieu of Common
Shares, the Board of Directors may elect to substitute Preferred Shares for
any such exchange.
For so long as the Rights are then redeemable, the Company may amend the
Rights in any manner. After the Rights are no longer redeemable, the Company
may amend the Rights in any manner that does not adversely affect the interests
of holders of the Rights.
Preferred Shares purchased upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to an aggregate dividend of
100 times the dividend declared per Common Share. In the event of liquidation,
the holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each Preferred Share
will have 100 votes, voting together with the Common Shares. Finally, in the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive 100 times the
amount received per Common Share. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth of a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
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 and
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.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
4. Rights Agreement between California Water Service Group and BankBoston,
N.A. dated as of February 12, 1998, including Form of Right Certificate
attached thereto as Exhibit B.
99. Press release issued by the Company on February 13, 1998.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this current report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: February 13, 1998 California Water Service Group
By: /s/ Peter C. Nelson
Peter C. Nelson
President and Chief Executive Officer
Sequential
Page
Item Number
1. Rights Agreement between California Water Service Group and
BankBoston, N.A. dated as of February 12, 1998, including
Form of Right Certificate attached thereto as Exhibit B. 8
2. Press release issued by the Company on February 13, 1998. 58
CALIFORNIA WATER SERVICE GROUP
and
BANKBOSTON, N.A.
Rights Agent
Rights Agreement
Dated as of February 12, 1998
RIGHTS AGREEMENT
This Rights Agreement (this "Agreement") is dated as of February 12, 1998
between California Water Service Group, a California corporation (the
"Company"), and BankBoston, N.A. (the "Rights Agent").
On January 28, 1998, the Board of Directors of the Company authorized and
declared a dividend of one preferred share purchase right (a "Right") for
each Common Share of the Company outstanding on February 6, 1998 (the "Record
Date"), each Right representing the right to purchase one one-hundredth of a
Preferred Share, upon the terms and subject to the conditions set forth in this
Agreement, and further authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding between the Record
Date and the Expiration Date.
Accordingly, in consideration of the premises and the mutual agreements set
forth in this Agreement, the parties agree as follows:
Section 1. Certain Definitions
For purposes of this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean an Adverse Person or any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of fifteen percent (15%) or more of the Common Shares of the
Company then outstanding, but shall not include any Excluded Party.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to fifteen percent (15%) or more of the
Common Shares of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of fifteen percent (15%) or more of
the Common Shares of the Company then outstanding by reason of share purchases
by the Company and shall, after such share purchases by the Company, become
the Beneficial Owner of any additional Common Shares of the Company, (other
than pursuant to a dividend or distribution paid or made by the Company on the
outstanding Common Shares in Common Shares or pursuant to a split or
subdivision of the outstanding Common Shares), then such Person shall be
deemed to be an Acquiring Person unless, upon becoming the Beneficial Owner
of such additional Common Shares of the Company, such Person does not
beneficially own fifteen percent (15%) or more of the Common Shares
of the Company then outstanding. Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person who would
otherwise be an "Acquiring Person", as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (i) such Person was unaware that it
beneficially owned a percentage of the Common Shares that would otherwise
cause such Person to be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), or (ii) such Person was aware of
the extent of the Common Shares it beneficially owned but had no actual
knowledge of the consequences of such beneficial ownership under this
Agreement) and without any intention of changing or influencing control of
the Company, and if such Person divested or divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be
or to have become an "Acquiring Person" for any purposes of this
Agreement.
(b) "Adjustment Shares" shall have the meaning set forth in Section 11(a)(ii).
(c) "Adverse Person" shall mean any Person declared to be an Adverse Person by
the Board of Directors upon determination that the criteria set forth in
Section 11(a)(ii)(B) apply to such Person.
(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.
(e) 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
beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or Associates has
(A) the right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2)
is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); 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 (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section l(e)(ii)(B)) or disposing of
any securities of the Company; provided, however, that in no case shall an
officer or director of the Company be deemed the Beneficial Owner of
securities held of record by the trustee of any employee benefit plan of the
Company or any Subsidiary of the Company for the benefit of any employee of
the Company or any Subsidiary of the Company, other than the officer or
director, by reason of any influence that such officer or director may have
over the voting of the securities held in the employee benefit plan.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such
Person would be deemed to own beneficially pursuant to this Agreement.
(f) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in the State of California are authorized
or obligated by law or executive order to close.
(g) "Certificate for Common Shares" shall include certificates for common
shares of California Water Service Group which evidence Common Shares.
(h) "Close of business" on any given date shall mean 5:00 P.M., Massachusetts
time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Massachusetts time, on the next succeeding
Business Day.
(i) "Common Shares" when used with reference to the Company shall mean the
shares of common stock, no par value, of the Company. "Common Shares" when
used with reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
(j) "Current Per Share Market Price" shall have the meaning set forth in
Section 11(d)(i).
(k) "Current Value" shall have the meaning set forth in Section 11(a)(iv).
(l) "Distribution Date" shall mean the earlier of the close of business on (i)
the tenth day after the Shares Acquisition Date, (ii) the tenth Business Day
(or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date
of the commencement by any Person (other than an Excluded Party) of, or of
the first public announcement of the intention of any Person (other than an
Excluded Party) to commence, a tender or exchange offer the consummation of
which would result in any Person becoming the Beneficial Owner of Common
Shares aggregating fifteen percent (15%) or more of the then-outstanding
Common Shares (irrespective of whether any Common Shares are actually purchased
pursuant to such offer) (including any such date which is after the date of
this Agreement and prior to the issuance of the Rights), or (iii) the tenth
day after the Board of Directors determines, pursuant to the criteria set
forth in Section 11(a)(ii)(B), that a Person is an Adverse Person.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
(n) "Exchange Ratio" shall have the meaning set forth in Section 24(a).
(o) "Excluded Party" shall mean the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, the
dividend reinvestment plan of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such employee benefit plan or as
administrator of the dividend reinvestment plan.
(p) "Expiration Date" shall have the meaning set forth in Section 7(a).
(q) "Final Expiration Date" shall have the meaning set forth in Section 7(a).
(r) "Nasdaq" shall have the meaning set forth in Section 11(d)(i).
(s) "Person" shall mean any individual, firm, partnership, limited liability
company, joint venture, corporation or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(t) "Preferred Shares" shall mean shares of Series D Preferred Stock, no par
value, of the Company having the rights and preferences set forth in the
Certificate of Designation, Preferences and Rights of Series D Preferred
Stock attached hereto as Exhibit A.
(u) "Principal Party" shall have the meaning set forth in Section 13(b).
(v) "Purchase Price" shall have the meaning set forth in Section 4.
(w) "Record Date" shall have the meaning set forth in the Recitals.
(x) "Redemption Date" shall have the meaning set forth in Section 7.
(y) "Redemption Price" shall have the meaning set forth in Section 23(a).
(z) "Registered Common Shares" shall have the meaning set forth in Section
13(b).
(aa) "Right" shall have the meaning set forth in the Recitals.
(bb) "Rights Certificate" shall have the meaning set forth in Section 3(a).
(cc) "Section 11(a)(ii) Event" shall have the meaning set forth in
Section 11(a)(ii).
(dd) "Section 13 Event" shall mean any event described in clauses (i), (ii),
(iii) or (iv) of Section 13(a).
(ee) "Securities Act" shall mean Securities Act of 1933, as amended.
(ff) "Shares Acquisition Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include a report filed pursuant
to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such or such earlier date as a majority
of the directors of the Company shall become aware of the existence of an
Acquiring Person.
(gg) "Spread" shall have the meaning set forth in Section 11(a)(iv).
(hh) "Subsidiary" of any Person shall mean any corporation or other entity of
which securities or other ownership interests having ordinary voting power
sufficient to elect a majority of the Board of Directors or other persons
performing similar functions are beneficially owned, directly or indirectly,
by such Person and any corporation or other entity that is otherwise controlled
by such Person.
(ii) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iv).
(jj) "Summary of Rights" shall have the meaning set forth in Section 3(b).
(kk) "Trading Day" shall have the meaning set forth in Section 11(d)(i).
(ll) A "Trigger Event" shall be deemed to have occurred at the moment in which
any Person (other than an Excluded Party), together with all Affiliates and
Associates of such Person, becomes an Acquiring Person.
Section 2. Appointment of Rights Agent
The Company hereby appoints the Rights Agent to act as agent for the Company
in accordance with the terms and conditions of this Agreement, and the Rights
Agent hereby accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable upon ten
(10) days' prior written notice to the Rights Agent. The Rights Agent
shall have no duty to supervise and in no event be liable for the acts or
omissions of any such co-Rights Agent.
Section 3. Issue of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject
to the provisions of Section 3(b)) by the certificates for Common Shares
registered in the names of the holders of the certificates (which certificates
shall also be deemed to be Rights Certificates) and not by separate Rights
Certificates, and (ii) the right to receive Rights Certificates will be
transferable only in connection with the transfer of Common Shares. As soon
as practicable after the Distribution Date, the Company will prepare and
execute, the Rights Agent will countersign, and the Company will send or
cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company, a Rights
Certificate, in substantially the form of Exhibit B hereto (a "Rights
Certificate"), evidencing one Right for each Common Share so
held, subject to adjustment as provided herein.
(b) On the Record Date, or as soon as practicable thereafter, the Company will
send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares
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
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders of the certificates regardless of whether a copy of the Summary of
Rights is attached thereto. Until the Distribution Date (or the earlier of
the Redemption Date or the Final Expiration Date), the surrender for transfer
of any certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby.
(c) Certificates for Common Shares which become outstanding (including
reacquired Common Shares referred to in the last sentence of this paragraph
(c)) after the Record Date but prior to the earliest of the Distribution Date,
the Redemption Date or the Final Expiration Date 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 A RIGHTS
AGREEMENT BETWEEN CALIFORNIA WATER SERVICE GROUP
AND BANKBOSTON, N.A., DATED AS OF FEBRUARY 12, 1998 (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
CALIFORNIA WATER SERVICE GROUP. 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.
CALIFORNIA WATER SERVICE GROUP WILL MAIL TO THE
HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS
AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES, AS SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR
HELD BY, ANY PERSON WHO BECOMES AN ACQUIRING PERSON
OR AN AFFILIATE OR ASSOCIATE THEREOF (AS DEFINED IN THE
RIGHTS AGREEMENT) AND CERTAIN RELATED PERSONS,
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH
PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL
AND VOID.
(d) With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after
the Record Date but prior to the Distribution Date, the Company shall not be
entitled to exercise any Rights associated with such Common Shares while they
are not outstanding.
Section 4. Form of Rights Certificates
(a) The Rights Certificates (and the forms of election to purchase Preferred
Shares and of assignment to be printed on the reverse of the Rights
Certificates), when issued separately, shall be substantially the same as
Exhibit B 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 or other organization on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the provisions
of Section 22, the Rights Certificates shall entitle the holders to purchase
such number of one one-hundredths of a Preferred Share as shall be set
forth therein at the price per one one-hundredth of a Preferred Share set
forth therein (the "Purchase Price"), but the number of such one one-hundredths
of a Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22 that
represents Rights beneficially owned by: (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such
and receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(e), and any Rights Certificate
issued pursuant to Section 6 or Section 11 upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred
to in this sentence, shall contain (to the extent feasible) the following
legend:
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME, OR MAY ALREADY HAVE BECOME, NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF
SUCH AGREEMENT.
Section 5. Countersignature and Registration
(a) The Rights Certificates, when issued separately, shall be executed on
behalf of the Company by its Chairman of the Board of Directors, its Chief
Executive Officer, its President, or any of its Vice Presidents, either
manually or by facsimile signature, shall have affixed thereto the
Company's seal or a facsimile thereof, and shall be attested by the Secretary
or an Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually countersigned by the
Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal office, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date
of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates
(a) Subject to the provisions of Section 4(b), Section 7(e) or Section 14, at
any time after the close of business on the Distribution Date, and at or prior
to the close of business on the Expiration Date, any Rights Certificate or
Rights Certificates (other than Rights Certificates representing Rights
that have become void pursuant to Section 11(a)(ii) or that have been exchanged
pursuant to Section 24) may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase a like number of one one-hundredths of a
Preferred Share (or, following a Trigger Event, Common Shares, other
securities, cash or other assets, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender
the Rights Certificate or Rights Certificates to be transferred, split up,
combined or exchanged at the principal office of the Rights Agent. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial
Owner) or Affiliates or Associates thereof as the Company shall reasonably
request. Thereupon, the Rights Agent, subject to Section 4(b),
Section 7(e) and Section 14, shall countersign and deliver to the
person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.
(b) Subject to the provisions of Section 4(b), Section 7(e) and Section 14,
upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a
Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
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 Rights Certificate if mutilated, the Company will make and deliver
a new Rights Certificate of like tenor to the Rights Agent for delivery to
the registered holder in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights
(a) Subject to Section 7(e), the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as otherwise provided
herein) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent, together with payment of the Purchase Price for
each one one-hundredth of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the close of business on
February 11, 2008 (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 (the "Redemption Date"), (iii)
the time at which such Rights are exchanged as provided in Section 24; or
(iv) the time at which a transaction contemplated by Section 13(e) is
consummated (the earliest of (i), (ii), (iii) and (iv) is hereby referred to
as the "Expiration Date".
(b) The Purchase Price for each one one-hundredth of a Preferred Share pursuant
to the exercise of a Right shall initially be $120.00, shall be subject to
adjustment from time to time as provided in Sections 11 and 13, and shall be
payable in lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt, after the Distribution Date, of a Rights Certificate
representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Rights Certificate in accordance with Section 9 by
wire transfer, cash, certified check, cashier's check or money order payable
to the order of the Company, the Rights Agent shall thereupon promptly (i) (A)
requisition from any transfer agent of the Preferred Shares certificates for
the number of Preferred Shares to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests,
or (B) requisition from the depositary agent depositary receipts representing
such number of one one-hundredths of a Preferred Share as are to be purchased
(in which case certificates for the Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the depositary agent)
and the Company hereby directs the depositary agent to comply with such
request, (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) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder and (iv) when appropriate, after
receipt, deliver such cash to or upon the order of the registered holder of
such Rights Certificate. In the event that the Company
is obligated to issue other securities (including Common Shares) of the
Company, pay cash and/or distribute other property pursuant to
Section 11(a)(iv), the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate.
The Company reserves the right to require, prior to the
occurrence of a Trigger Event, that upon any exercise of Rights, a number of
Rights be exercised so that only whole Preferred Shares would be issued.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, from and after
the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and 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 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 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
ensure that the provisions of this Section 7(e) and Section 4(b) are
complied with, but neither the Company nor the Rights Agent shall have any
liability to any holder of Rights Certificates or other Person as a result
of the Company's failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
The Company may require (or cause the Rights Agent or any transfer agent of
the Company to require) any Person who submits a Rights Certificate (or a
certificate representing Common Shares that evidences, or but for the
provisions of this Section 7(e) would evidence, Rights)
for transfer on the registry books or to exercise the Rights represented
thereby to establish to the satisfaction of the Company in its sole
discretion that such Rights have not become null and void
pursuant to the provisions of this Section 7(e).
Section 8. Cancellation and Destruction of Rights Certificates
All separate Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in canceled form, or, if surrendered to
the Rights Agent, shall be canceled by it, and no Rights 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 Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such canceled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares
(a) The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares (and, following
the occurrence of a Trigger Event, out of its authorized and unissued Common
Shares and/or other securities or out of its authorized and issued shares
held in its treasury) or any Preferred Shares held in its treasury, the
number of Preferred Shares that will be sufficient to permit the exercise in
full of all outstanding Rights in accordance with this Agreement.
(b) So long as the Preferred Shares (and, following the occurrence of a Trigger
Event, Common Shares and/or other securities) issuable and deliverable upon the
exercise of the 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 earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii), a registration statement under the Act, with respect to
the securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to remain
effective (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, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this Section 9(c),
the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction shall not have been obtained, the exercise thereof shall not be
permitted under applicable law or a registration statement (if required) shall
not have been declared effective.
(d) The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all Preferred Shares delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued, 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 Rights Certificates
or of any Preferred Shares upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of certificates or depositary
receipts for the Preferred Shares in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise
or to issue or to deliver any certificates or depositary receipts for
Preferred Shares upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established
to the Company's reasonable satisfaction that no such tax is due.
Section 10. Preferred Shares Record Date
Each person in whose name any certificate for Preferred Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Preferred Shares represented thereby on, and such
certificate shall be dated, the later of (a) the date on which the Rights
Certificate evidencing such Rights was duly surrendered and (b) the date on
which payment of the Purchase Price (and any applicable transfer taxes) was
made; provided, however, that if the date of such surrender and payment is a
date upon which the Preferred Shares 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 Preferred Shares transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including the
right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights
The Purchase Price, the number of Preferred 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 Preferred Shares payable in Preferred
Shares, (B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of Preferred
Shares, or (D) issue any shares of its capital stock in a reclassification of
the Preferred Shares (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), the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of Preferred Shares 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 Purchase Price then in effect, the
aggregate number and kind of Preferred Shares or capital stock, as the case
may be, which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company
were open, he 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
(A) any Person (other than an Excluded Party), alone or together with its
Affiliates and Associates, shall, at any time after the Record Date, become an
Acquiring Person, unless such person becomes an Acquiring Person pursuant to a
Section 13 Event, or
(B) subject to the provisions of this Section 11(a)(ii) set forth below, the
Board of Directors shall declare any Person to be an Adverse Person, upon (1) a
determination that such Person, alone or together with its Affiliates and
Associates, has, at any time after the date of this Agreement, become the
Beneficial Owner of ten percent (10%) or more of the Common Shares and (2) a
determination by at least a majority of the members of the Board of Directors
who are not officers of the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person, after reasonable inquiry and
investigation, including consultation with such persons as such directors
shall deem appropriate, that (x) such Beneficial Ownership by such Person is
intended to cause, is reasonably likely to cause or will cause the
Company to repurchase Common Shares beneficially owned by such Person or to
cause pressure on the Company to take action or enter into a transaction or
series of transactions which would provide such Person with short-term
financial gain under circumstances where the Board of Directors determines
that the best long-term interests of the Company and its shareholders, but
for the actions and possible actions of such Person, would not be served by
taking such action or entering into such transactions or series of
transactions at that time, or (y) such Beneficial Ownership is
causing or reasonably likely to cause a material adverse impact (including
impairment of relationships with customers or impairment of the Company's
ability to maintain its competitive position) on the business or prospects of
the Company, (the earlier to occur of the events described in subsections
(A) or (B) above being referred to herein as a "Section 11(a)(ii) Event"),
then, promptly following the occurrence of such Section 11(a)(ii) Event,
proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e)) shall thereafter have the right to
receive, upon exercise thereof at the then-current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one
one-hundredths of a Preferred Share, such number of Common Shares of the
Company (such number of shares being referred to herein as the
"Adjustment Shares") as shall equal the result obtained by (x) multiplying
the then-current Purchase Price by the then number of one one-hundredths of
a Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event, and (y) dividing that
product (which, following such first occurrence, shall thereafter be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined pursuant to Section
11(d)(i)) per Common Share on the date of such first occurrence.
Notwithstanding the provisions of Section 11(a)(ii)(B), the Board of
Directors of the Company may not declare a Person to be an Adverse Person if,
prior to the time that such Person acquired ten percent (10%) or more of the
Common Shares, such Person provided to the Board of Directors in
writing a statement of such Person's purpose and intentions in connection with
the proposed acquisition of Common Shares, together with any other information
reasonably requested of such Person by the Board of Directors, and the Board
of Directors, based on such statement and reasonable
inquiry and investigation, including consultation with such persons as such
directors shall deem appropriate, determines to notify and notifies such
Person in writing that it will not declare such Person
to be an Adverse Person; provided, however, that the Board of Directors may
expressly condition in any manner a determination not to declare a Person an
Adverse Person on such conditions as the Board
of Directors may select, including such Person's not acquiring more than a
specified amount of Common Shares and/or on such Person's not taking actions
inconsistent with the purposes and intentions disclosed by such Person in the
statement provided to the Board of Directors. In the event that the Board of
Directors should at any time determine, upon reasonable inquiry and
investigation, including consultation with such persons as such directors
shall deem appropriate, that such Person has not met or complied with any
condition specified by the Board of Directors pursuant to the preceding
sentence, the Board of Directors may at any time thereafter declare such
Person to be an Adverse Person pursuant to the provisions of this Section
11(a)(ii).
(iii) The right to buy Common Shares of the Company pursuant to subparagraph
(ii) of this paragraph (a) shall not arise as a result of any Person becoming
an Acquiring Person through a purchase of Common Shares pursuant to a tender
offer made in the manner prescribed by Section 14(d) of the Exchange Act and
the rules and regulations promulgated thereunder; provided, however,
that such tender offer shall provide for the acquisition of all of the
outstanding Common Shares held by any Person other than such Person and its
Affiliates or Associates at a price and on terms determined by at least a
majority of the members of the Board of Directors who are not officers of the
Company and who are not representatives, nominees, Affiliates or Associates
of an Acquiring Person, after receiving advice from one or more investment
or financial advisers, to be (A) fair to shareholders (taking into account
all factors which such members of the Board of Directors deem relevant
including prices which could reasonably be achieved if the Company or its
assets were sold on an orderly basis designed to realize maximum value) and
(B) otherwise in the best interests of the Company and its shareholders,
employees, customers and communities in which the Company does business.
(iv) Subject to such limitations existing as of the date hereof as are
necessary to prevent a default under any agreement to which the Company is a
party, in the event that the number of Common Shares which are authorized by
the Company's Articles of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), 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 Purchase Price (such excess
being hereinafter referred to as the "Spread"), and (B) with respect to each
Right, make adequate provision to substitute for such unavailable Adjustment
Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Common Shares or other equity
securities of the Company, including Preferred Shares, (4) debt securities of
the Company, (5) other assets, or (6) any combination of the foregoing,
having, together with the Adjustment Shares issued upon exercise of such
Right, an aggregate value equal to the Current Value, where such aggregate
value has been determined by the Board of Directors of the Company based
upon the advice of a nationally recognized investment banking firm selected
by the Board of Directors of the Company; provided, however, if the
Company shall have not made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the date of the occurrence
of a Section 11(a)(ii) Event, then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment
of the Purchase Price, Common Shares (to the extent such shares are 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 Common Shares
could be authorized for issuance upon exercise in full of the Rights, the
30-day period set forth above may be extended to the extent necessary, but
not more than ninety (90) days following the date of the occurrence of a
Section 11(a)(ii) Event, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such period, as it
may be extended, hereinafter referred to as the "Substitution Period"). To
the extent that the Company determines that action need be taken
pursuant to the first and/or second sentences of this Section 11(a)(iv), the
Company (x) shall provide, subject to Section 11(a)(ii), 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 stating that
the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iv), the value of the
Common Shares shall be the Current Per Share Market Price (as determined in
accordance with Section 11(d)(i)) per Common Share on the date of the
occurrence of a Section 11(a)(ii) Event.
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Shares entitling them to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than
the then-Current Per Share Market Price of the Preferred Shares (as determined
in accordance with Section 11(d)(i)) on such record date, the Purchase Price
to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of Preferred Shares
which the aggregate offering price of the total number of Preferred Shares
and/or equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered)
would purchase at such current market price and the denominator of which
shall be the number of Preferred Shares outstanding on such record date plus
the number of additional Preferred Shares and/or equivalent preferred shares
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 in a 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.
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such record date is fixed; and in the
event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price 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 the Preferred Shares (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, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a regular
quarterly cash dividend or a dividend payable in Preferred Shares, but
including any dividend payable in stock other than Preferred Shares) or
subscription rights or warrants (excluding those referred to in Section 11(b)),
the Purchase Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the then-Current
Per Share Market Price of the Preferred Shares on such record date, less the
fair market value (as determined in accordance with Section 11(d)(i)) of the
portion of the assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one Preferred
Share, and the denominator of which shall be such Current Per Share Market
Price of the Preferred Shares. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, the "Current Per Share
Market Price" of any security (a "Security" for the purpose of this Section
11(d)(i)) on any date shall be deemed to be the average of the daily closing
prices per share of such Security for the twenty (20) consecutive Trading
Days immediately prior to such date; provided, however, that in the event
that the Current Per Share Market Price of the Security is determined during
a period following the announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares of such Security
or securities convertible into such shares, or (B) any subdivision,
combination or reclassification of such Security and prior to the expiration
of twenty (20) Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Per Share Market
Price shall be appropriately adjusted to reflect the current market price
per share equivalent of such Security. 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 Security is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed
or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last reported trade in the
over-the-counter market, as reported by the Nasdaq National Market ("Nasdaq")
or such other system then in use, or, if on any such date the Security is 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
Security selected by the Board of Directors of the Company. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for
the transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day. If the Common
Shares are 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 Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "Current Per Share
Market Price" of the Preferred Shares shall be determined in accordance with
the method set forth in Section 11(d)(i). If the Preferred Shares are not
publicly traded, the "Current Per Share Market Price" of the Preferred Shares
shall be conclusively deemed to be the Current Per Share Market Price of the
Common Shares as determined in accordance with Section 11(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly held or
so listed or traded, "Current Per Share Market Price" shall mean the fair
value per share 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.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments 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. 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 (3) years
from the date of the transaction which requires 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 of
the Company other than Preferred Shares, thereafter the number of such other
shares so receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares contained in
Section 11(a), (b), (c), (e), (g), (h), (i), (j) and (l), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder shall evidence the right to purchase,
at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (i) multiplying (x)
the number of one one-hundredths of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such adjustment
of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share 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 one
one-hundredths of a Preferred Share 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
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the Company shall,
as promptly as practicable, cause to be distributed to holders of record of
Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution
and replacement for the Rights Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company,
new Rights Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a Preferred Share issuable upon the exercise
of the Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Rights Certificates
issued hereunder.
(k) In any case in which this Section 11 shall require that an adjustment in
the Purchase Price be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event the issuing
to the holder of any Right exercised after such record date of the Preferred
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preferred Shares and other capital stock
or securities of the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment;
provided, however that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Purchase Price, in addition
to those adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares, dividends
on Preferred Shares payable in Preferred Shares or issuance of rights, options
or warrants referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
(m) The Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(n)), (ii) permit or cause any Person to consolidate with the
Company, or merge with and into the Company (other than a Subsidiary of the
Company in a transaction that complies with Section 11(n)), or (iii) sell or
otherwise transfer (or permit any Subsidiary to sell or transfer), in one or
more transactions, assets or earning power aggregating fifty percent (50%) or
more 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 at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or
securities outstanding or agreements in effect that would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights.
(n) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23, Section 24 or Section 27, take
(or permit any Subsidiary of the Company to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(o) In the event that at any time after the date of this Agreement and prior
to the Distribution Date, the Company shall (i) declare or pay any dividend
on the Common Shares payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or
otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case (A) the number of one
one-hundredths of a Preferred Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredths of a Preferred Share so purchasable immediately prior to such
event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is
the number of Common Shares outstanding immediately after such event, and
(B) each Common Share outstanding immediately after such event shall have
issued with respect to it that number of Rights which each Common Share
outstanding immediately prior to such event had issued with respect to it.
The adjustments provided for in this Section 11(o) shall be made successively
whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall promptly (a) prepare a certificate setting forth such adjustment, and
a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with Section 25.
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) If, following the Distribution Date, directly or indirectly, (i) the
Company shall consolidate with, or merge with and into, any other Person and
the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (ii) any Person shall consolidate with the Company,
or merge with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all
or part of the Common Shares shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any other
property, (iii) any Person shall acquire all or a majority of the Common Shares
pursuant to a statutory plan of exchange, or (iv) 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 fifty percent (50%) or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any other Person other
than the Company or one or more of its wholly-owned Subsidiaries, then, and
in each such case, proper provision shall be made so that (A) each holder of
a Right (except as provided in Section 7(e)) shall thereafter have the right
to receive, upon the exercise thereof at a price equal to the then-current
Purchase Price multiplied by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in lieu of Preferred Shares, such number of
validly authorized and issued, fully paid, non-assessable and freely tradable
Common Shares of the Principal Party, not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall equal the
result obtained by (1) multiplying the then-current Purchase Price by the
number of one one-hundredths of a Preferred Share 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 one-hundredths of a
share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product by (2)
fifty percent (50%) of the then-Current Per Share Market Price of the Common
Shares (determined in accordance with Section 11(d)(i)) of such Principal
Party on the date of consummation of such Section 13 Event; provided, that
the Purchase Price and the number of Common Shares of such Principal Party
issuable upon exercise of each Right shall be further adjusted as provided
in Section 11(f) to reflect any events occurring in respect of such Principal
Party after the date of such Section 13 Event; (B) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (C) the term "Company" shall thereafter be deemed
to refer to such Principal Party, it being specifically intended
that the provisions of Section 11 shall apply only to such Principal Party
after the first occurrence of a Section 13 Event; (D) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with Section 9) in
connection with such consummation as may be necessary to assure that the
provisions of this Agreement shall thereafter be applicable, as nearly as
reasonably may be, in relation to the Common Shares thereafter deliverable
upon the exercise of the Rights; and (E) the provisions of Section 11(a)(ii)
shall be of no further effect following the first occurrence of a Section 13
Event.
(b) "Principal Party" shall mean:
(i) in the case of a Section 13 Event, (A) the Person that is the issuer of
any securities into which Common Shares of the Company are converted in such
merger, consolidation or for which they are exchanged in such statutory plan
of exchange, or, if there is more than one such issuer, the issuer of Common
Shares that has the highest aggregate current market price (determined in
accordance with Section 11(d)(i)) and (B) if no securities are so issued, the
Person that is the other party to such merger, consolidation or statutory
plan of exchange, or, if there is more than one such Person, the Person the
Common Shares of which has the highest aggregate current market price
(determined in accordance with Section 11(d)(i)); and
(ii) in the case of any transaction described in clause (iv) of Section 13(a),
the Person that is the party receiving the largest portion of the assets or
earning power transferred pursuant to such transaction or transactions, or,
if each Person that is a party to such transaction or transactions receives
the same portion of the assets or earning power transferred pursuant to such
transaction or transactions or if the Person receiving the largest portion of
the assets or earning power cannot be determined, the Person whose Common
Shares have the highest aggregate current market price (determined in
accordance with Section 11(d)(i));
provided, however, that in any such case, (A) if the Common Shares of such
Person are not at such time and have not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act
("Registered Common Shares"), or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person that has
Registered Common Shares outstanding, "Principal Party" shall refer to such
other Person; (B) if the Common Shares of such Person are not Registered
Common Shares or such Person is not a corporation, and such Person is
a direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Shares
outstanding, "Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person; (C) if the Common Shares of such Person are not
Registered Common Shares or such Person is not a corporation, and such Person
is directly or indirectly controlled by more than one Person, and one or more
of such other Persons has Registered Common Shares outstanding, "Principal
Party" shall refer to whichever of such other Persons is the issuer of the
Registered Common Shares having the highest aggregate current market price
(determined in accordance with Section 11(d)(i)); and (D) if the Common
Shares of such Person are not Registered Common Shares or such Person is not
a corporation, and such Person is directly or indirectly controlled by more
than one Person, and none of such other Persons have Registered
Common Shares outstanding, "Principal Party" shall refer to whichever
ultimate parent entity is the corporation having the greatest shareholders'
equity or, if no such ultimate parent entity is a corporation, shall refer
to whichever ultimate parent entity is the entity having the greatest net
assets.
(c) The Company shall not consummate any such consolidation, merger,
statutory plan of exchange, sale or transfer unless prior thereto the
Company and the Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement confirming that (i) such Principal Party
shall, upon consummation of such consolidation, merger, statutory plan of
exchange or sale or transfer of assets or earning power, assume this
Agreement in accordance with Section 13, (ii) all rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of
such Principal Party upon exercise of outstanding Rights have been waived,
(iii) any provision of the authorized securities of such Principal Party or
of its charter, bylaws or other instruments governing its corporate affairs
which would obligate such Principal Party to issue in connection with, or as
a consequence of, the consummation of a Section 13 Event, Common Shares of
such Principal Party at less than the then-Current Per Share Market Price
(determined in accordance with Section 11(d)(i)) or securities
exercisable for, or convertible into, such Common Shares at less than such
then-Current Per Share Market Price (other than to the holders of Rights
pursuant to this Section 13) have been waived or canceled, and (iv) such
transaction shall not result in a default by such Principal Party under this
Agreement and further providing that, as soon as practicable after the date
of any consolidation, merger, statutory plan of exchange or sale or transfer
of assets or earning power referred to in Section 13(a), such Principal Party
will:
(A) prepare and file a registration statement under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and
use its best efforts to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities
Act) until the Final Expiration Date of the Rights, and similarly comply with
applicable state securities laws:
(B) use its best efforts to list (or continue the listing of) the Rights and
the securities purchasable upon exercise of the Rights or to meet the
eligibility requirements for quotation of the Rights and such securities on
Nasdaq or other system then in use;
(C) deliver to holders of the Rights historical financial statements for such
Principal Party which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act; and
(D) obtain waivers of any rights of first refusal or preemptive rights in
respect of the Common Shares of the Principal Party subject to purchase upon
exercise of outstanding Rights.
In the event that, at any time after the occurrence of an event described in
Section 11(a)(ii), some or all of the Rights shall not have then been
exercised at the time of the occurrence of a Section 13 Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable in
the manner described in Section 13(a) (without taking into account any prior
adjustment required by Section 11(a)(ii)).
(d) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
(e) Notwithstanding anything in this Agreement to the contrary, this Section 13
shall not be applicable to a Section 13 Event if: (i) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant to
a tender offer described in Section 11(a)(iii) (or with a wholly-owned
Subsidiary of any such Person or Persons), (ii) the price per Common Share
offered in such transaction is not less than the price per Common Share paid
to all holders of Common Shares whose shares were purchased pursuant to such
tender or exchange offer, and (iii) the form of consideration
being offered to the remaining holders of Common Shares pursuant to such
transaction is the same as the form of consideration paid pursuant to such
tender offer. Upon consummation of a Section 13 Event, all Rights shall
expire.
Section 14. Fractional Rights and Fractional Shares
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights 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 reported trade 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 Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions
which are integral multiples of one one-hundredth of a Preferred Share).
Fractions of Preferred Shares in integral multiples of one one-hundredth of
a Preferred Share may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it; provided, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to
the second sentence of Section 11(d)(i)) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of a Trigger Event, the Company shall not be
required to issue fractions of Common Shares upon exercise of the Rights or
to distribute certificates which evidence fractional Common Shares. In lieu
of fractional Common Shares, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
one (1) Common Share. For purposes of this Section 14(c), the current market
value of one Common Share shall be the closing price of one Common Share (as
determined pursuant to Section 11(d)(i)) for the Trading Day immediately
prior to the date of such exercise.
(d) 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
of a Right (except as provided above).
Section 15. Rights of Action
All rights of action in respect of this Agreement, excepting the rights of
action given to the Rights Agent under Section 18, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Shares), without the consent of the holder of any other
Rights Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders
Every holder of a Right, by accepting the same, consents and agrees with the
Company and 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 Shares;
(b) after the Distribution Date, the Rights Certificates are transferable only
on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company may deem and treat the person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificates or the associated Common Shares certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
Section 17. Rights Certificate Holder Not Deemed a Shareholder
No holder of any Rights Certificate, by reason of being a holder of such Rights
Certificate, shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
by reason of being a holder of such Rights Certificate, 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 Rights Certificate
shall have been exercised in accordance with the provisions of this Agreement.
Section 18. Concerning the Rights Agent
(a) The Company agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without gross negligence,
bad faith or willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises (including
reasonable attorneys' fees and expenses).
(b) The Rights Agent shall be protected and shall incur no liability for, or
in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Rights Certificate
or certificate for the Preferred Shares or Common Shares or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice
of counsel as set forth in Section 20.
Section 19. Merger or Consolidation or Change of Name of Rights Agent
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer or 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 Rights Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver
such Rights Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates
either in the name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either in its prior
name or in its changed name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
Section 20. Duties of Rights Agent
The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel
for the Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights
Agent shall deem it necessary or desirable that any fact or matter be proved
or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by any one of the Chairman of the
Board of Directors, the Chief Executive Officer, the President, any Executive
Vice President, or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own gross negligence, bad faith or willful misconduct.
Anything in this Agreement to the contrary notwithstanding, in no event
shall the Rights Agent be liable for special, indirect or consequential loss
or damage of any kind whatsoever (including, but not limited to, lost
profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage and regardless of the form of action.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (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 Rights 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 Rights Certificate; nor shall
it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii)) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Agreement or any Rights Certificate or as to whether
any Preferred Shares 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 from any one of the
Chairman of the Board of Directors, the Chief Executive Officer, the President,
any Executive Vice President, or the Secretary of the Company,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered by
it in good faith in accordance with instructions of any such officer or for
any delay in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of
the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised
in the selection and continued employment thereof.
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 and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon thirty (30) days' 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 Shares or Preferred Shares by registered
or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such appointment within
a period of thirty (30) days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or any state of the
United States so long as such corporation is authorized to do business as a
banking institution, is authorized under such laws to
exercise corporate trust or stock transfer powers, is in good standing, and
is subject to supervision or examination by federal or state authority, and
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 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 with the predecessor Rights Agent and each transfer
agent of the Common Shares or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New Rights Certificates
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement.
Section 23. Redemption
(a) The Board of Directors of the Company, at its option, at any time prior to
the earlier of (i) the close of business on the tenth Business Day following
the Shares Acquisition Date and (ii) the Expiration Date, may redeem all but
not less than all of the then-outstanding Rights at a redemption
price of $0.001 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date of this
Agreement (such redemption price being hereinafter referred
to as the "Redemption Price"); provided, however, that if, following the
occurrence of a Shares Acquisition Date and following the expiration of the
right of redemption hereunder but prior to a Section 11(a)(ii) Event or a
Section 13 Event, (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of Common Shares in one
transaction or series of transactions, not directly or indirectly involving
the Company or any of its Subsidiaries, which did not
result in a Section 11(a)(ii) Event or a Section 13 Event such that such
Person is thereafter a Beneficial Owner of ten percent (10%) or less of the
outstanding Common Shares, and (ii) there are no other
Persons, immediately following the occurrence of the event described in
clause (i), who are Acquiring Persons, then the right of redemption shall be
reinstated and thereafter be subject to the provisions of
this Section 23. The redemption of the Rights by the Board of Directors may
be made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish. The Company may, in
its discretion, round up the redemption price to be paid to any holder
of Rights to the nearest whole cent.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, 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. Within ten (10)
days after such action of the Board of Directors ordering the redemption of
the Rights, the Company shall mail a notice of redemption to all the holders
of the then-outstanding Rights at their last addresses as they appear upon
the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed given, whether
or not the holder receives the notice. Each such notice of redemption will
state the method by which the payment of the Redemption Price will be made.
Section 24. Exchange
(a) The Board of Directors of the Company may, at its option, at any time after
any Person becomes an Acquiring Person, exchange all or part of the
then-outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii))
for Common Shares at an exchange ratio of one Common Share 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"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than an Excluded Party),
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of fifty percent (50%) or more of the Common
Shares then outstanding.
(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 Common Shares equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the Common
Shares for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii)) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its option,
may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b)) for Common Shares exchangeable for Rights,
at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted
to reflect adjustments in the voting rights of the Preferred Shares pursuant
to the terms thereof, so that the fraction of a Preferred Share delivered in
lieu of each Common Share shall have the same voting rights as one
Common Share.
(d) In the event that there shall not be sufficient Common Shares or Preferred
Shares 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 use its best efforts to cause all such action to be taken as
may be necessary to authorize additional Common Shares or Preferred
Shares for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Common Shares or to
distribute certificates which evidence fractional Common Shares. In lieu of
such fractional Common Shares, the Company shall pay to the registered
holders of the Rights Certificates with regard to which such fractional
Common Shares would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole Common Share. For the purposes
of this paragraph (e), the current market value of a whole Common Share shall
be the closing price of a Common Share (as determined pursuant to the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events
(a) In case the Company shall propose (i) to pay any dividend payable in stock
of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger into or with,
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of fifty percent (50%) or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to, any other Person,
(v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Shares payable
in Common Shares or to effect a subdivision, combination or consolidation of
the Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Rights Certificate, in accordance with
Section 26, a notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above at
least ten (10) days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such
other action, at least ten (10) days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of
the Common Shares and/or Preferred Shares, whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii) shall occur, then
the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, in accordance with Section 26, a notice of the occurrence
of such event, which notice shall describe such event and the consequences of
such event to holders of Rights under Section 11(a)(ii).
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 Rights 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:
California Water Service Group
1720 North First Street
San Jose, CA 95112
Attn: 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
Rights Certificate to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
BankBoston, N.A.
c/o Boston Equiserve Limited Partnership
150 Royall Street
Canton, MA 02021
Attn: 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 Rights 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
The Company may from time to time supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provisions herein, or to make any
other provisions with respect to the Rights which the Company may deem
necessary or desirable, any such supplement or amendment to be evidenced by
a writing signed by the Company and the Rights Agent; provided, however, that
from and after such time as any Person becomes an Acquiring Person, this
Agreement shall not be amended in any manner which would adversely affect
the interests of the holders of Rights. Without limiting the foregoing, the
Company may at any time prior to such time as any Person becomes an Acquiring
Person amend this Agreement to lower the thresholds set forth in Section l(a)
to not less than the greater of (i) any percentage greater than the
largest percentage of the outstanding Common Shares then known by the Company
to be beneficially owned by any Person (other than an Excluded Party) and
(ii) ten percent (10%).
Section 28. Determinations and Actions by the Board of Directors
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including
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 to
not redeem the Rights or to amend the Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board of Directors in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
Section 29. 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 30. Benefits of this Agreement
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the Common Shares).
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 shall be
reinstated and shall not expire until the close of business on the tenth
Business Day following the date of such determination by the Board of
Directors. Without limiting the foregoing, if any provision requiring that
a determination be made by less than the entire Board of Directors (or at a
time or with the concurrence of a group of directors consisting of less than
the entire Board of Directors) is held by a court of competent jurisdiction
or other authority to be invalid, void or unenforceable, such
determination shall then be made by the Board of Directors in accordance with
applicable law and the Company's Articles of Incorporation and Bylaws.
Section 32. Governing Law
This Agreement and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of California and for all
purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely
within such State.
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; Interpretation
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 of this Agreement. The use of the
term "include," "including" or a similar term shall, in all cases in this
Agreement, be deemed to include the words "without limitation."
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested, all as of the day and year first above written.
Attest:
/s/ Paul G. Ekstrom
Paul G. Ekstrom, Corporate Secretary
CALIFORNIA WATER SERVICE GROUP
By /s/ Peter C. Nelson
Peter C. Nelson
President and Chief Executive Officer
BANKBOSTON, N.A.
By /s/ Geoffrey Anderson
Title Director
By /s/ Carl Statkiewcz
Title Account Manager
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 5
Section 3. Issue of Right Certificates. 5
Section 4. Form of Right Certificates 6
Section 5. Countersignature and Registration 7
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights 9
Section 8. Cancellation and Destruction of Right Certificates 10
Section 9. Availability of Preferred Shares 11
Section 10. Preferred Shares Record Date 12
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights 12
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares 19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 20
Section 14. Fractional Rights and Fractional Shares 23
Section 15. Rights of Action 24
Section 16. Agreement of Right Holders 24
Section 17. Right Certificate Holder Not Deemed a Stockholder 24
Section 18. Concerning the Rights Agent 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent 25
Section 20. Duties of Rights Agent 26
Section 21. Change of Rights Agent 27
Section 22. Issuance of New Right Certificates 28
Section 23. Redemption 28
Section 24. Exchange 29
Section 25. Notice of Certain Events 30
Section 26. Notices 31
Section 27. Supplements and Amendments 31
Section 28. Determinations and Actions by the Board of Directors 32
Section 29. Successors 32
Section 30. Benefits of this Agreement 32
Section 31. Severability 32
Section 32. Governing Law 33
Section 33. Counterparts 33
Section 34. Descriptive Headings 33
EXHIBIT A
CERTIFICATE OF DETERMINATION
SERIES D PARTICIPATING PREFERRED SHARES
OF
CALIFORNIA WATER SERVICE GROUP
Pursuant to Section 401 of the California Corporations Code of the State of
California:
We, Peter C. Nelson, President and Chief Executive Officer, and Paul Ekstrom,
Secretary, of California Water Service Group, a corporation organized and
existing under the laws of California (hereinafter called the "Corporation"),
do hereby certify as follows:
1. On January 28, 1998, the Board of Directors of the Corporation adopted a
resolution designating 221,000 shares of Preferred Stock as Series D
Participating Preferred Stock.
2. No shares of Series D Participating Preferred Stock have been issued.
3. Pursuant to the authority conferred upon the Board of Directors by the
Articles of Incorporation of the Corporation, the following resolution
was duly adopted by the Board of Directors on January 28, 1998 creating
the series of Preferred Stock designated as Series D Participating
Preferred Stock:
RESOLVED FURTHER, That the Board of Directors, pursuant to the authority
vested in the Board of Directors of this Corporation in accordance with the
provisions of its Articles of Incorporation, a series of Preferred Stock of
the Corporation be and hereby is created, and that the determination and
amount thereof and the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
"Series D Participating Preferred Stock:
Paragraph 1. Designation and Amount. The shares of such series shall be
designated as "Series D Participating Preferred Stock" (the "Series D
Preferred Stock") and the number of shares constituting the Series D
Preferred Stock shall be 221,000. Such number of shares may be increased
or decreased by resolution of the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series D Preferred Stock to a
number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by
the Corporation convertible into Series D Preferred Stock.
Paragraph 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series D Preferred Stock with respect to dividends, the holders of shares of
Series D Preferred Stock, in preference to the holders of Common Stock, no
par value (the "Common Stock"), of the Corporation, and of any other junior
stock, shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, dividends payable
in cash (each payment date determined by the Board of Directors being referred
to herein as a "Dividend Payment Date"), commencing on the first Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series D Preferred Stock, in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of the Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Dividend Payment
Date or, with respect to the first Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series D Preferred Stock.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount to which holders of shares of Series D
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series D
Preferred Stock as provided in paragraph (A) of this Paragraph 2 immediately
after it declares a dividend or distribution on the Common Stock (other than
a dividend payable in shares of Common Stock).
(C) The Board of Directors may fix a record date for the determination of
holders of shares of Series D Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not less
than 10 nor more than 60 days prior to the date fixed for the payment thereof.
Paragraph 3. Voting Rights. The holders of shares of Series D Preferred Stock
shall have the following voting rights:
(A)Subject to the provision for adjustment hereinafter set forth, each share
of Series D Preferred Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the shareholders of the Corporation. In
the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision
or combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series D
Preferred Stock were entitled immediately prior to such an event shall be
adjusted by multiplying such number by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Amendment to the Articles of Incorporation or Certificate of Determination
creating a series of Preferred Stock or any similar stock, or by law, the
holders of shares of Series D Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of shareholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders of
Series D Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
Paragraph 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions payable
on the Series D Preferred Stock as provided in Paragraph 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series D Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series D Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series D Preferred Stock,
except dividends paid ratably on the Series D Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series D Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series D Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series D Preferred Stock, or any shares of stock ranking on a parity
with the Series D Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Paragraph
4, purchase or otherwise acquire such shares at such time and in such manner.
Paragraph 5. Reacquired Shares. Any shares of Series D Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Articles of Incorporation, or in any other Certificate
of Amendment to the Articles of Incorporation or Certificate of Determination
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Paragraph 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(1) to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series D Preferred
Stock unless, prior thereto, the holders of shares of Series D Preferred
Stock shall have received a minimum of $100.00 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the holders of
shares of Series D Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (2) to the holders of shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series D Preferred Stock, except distributions made
ratably on the Series D Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case
the aggregate amount to which holders of shares of Series D Preferred Stock
were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Paragraph 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share
of Series D Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
a dividend in shares of Common Stock into a greater or lesser number of
shares of Common Stock), then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares
of Series D Preferred Stock shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Paragraph 8. No Redemption. The shares of Series D Preferred Stock shall not be
redeemable.
Paragraph 9. Rank. The Series D Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all other series
of the Corporation's Preferred Stock.
Paragraph 10. Amendment. The Articles of Incorporation shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Series D Preferred Stock so as to affect them adversely
without, in addition to any other vote of shareholders required by law, the
affirmative vote of the holders of at least a majority of the outstanding
shares of Series D Preferred Stock, voting together as a single class.
Paragraph 11. Fractional Shares. The Series D Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of the Series D Preferred Stock."
4. We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and
correct of our own knowledge.
Executed on February 12, 1998, at San Jose, California.
/s/ Peter C. Nelson
Peter C. Nelson
President and Chief Executive Officer
/s/ Paul Ekstrom
Paul Ekstrom
Secretary
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- Rights
NOT EXERCISABLE AFTER FEBRUARY 11, 2008 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
RIGHTS CERTIFICATE
CALIFORNIA WATER SERVICE GROUP
This certifies that ___________________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of February 12, 1998 (the "Rights Agreement"),
between California Water Service Group, a California corporation (the
"Company"), and BankBoston, N.A. (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., Massachusetts time, on February 11,
2008, at the principal office of the Rights Agent, one one-hundredth of a
fully paid non-assessable share of Series D Preferred Stock, no par value
(the "Preferred Shares") of the Company, at a purchase price of $120.00 per
one-hundredth of a Preferred Share (the "Purchase Price") payable as
provided in the Rights Agreement, upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Rights Certificate (and the number of
Preferred Shares which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as
of February 18, 1998, based on the Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number
of Preferred Shares which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the Rights
Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered would have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Rights Certificate (i) may be redeemed by the Company at a redemption price of
$0.001 per Right or (ii) may be exchanged in whole or in part for shares of
Common Stock of the Company.
No fractional Preferred Shares will be issued upon the exercise of any Right or
Rights evidenced hereby, (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except
as provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of _______________, ______.
ATTEST: CALIFORNIA WATER SERVICE GROUP:
By:
Secretary President
Countersigned:
BANKBOSTON, N.A.
By:
Authorized Signature
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Rights Certificate.)
FOR VALUE RECEIVED _________________________________________________
hereby sells, assigns and transfers unto ___________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ________________________,
Attorney, to transfer the within _______________ Rights Certificate on the
books of the within-named Company, with full power of substitution.
Dated: _______________, _____.
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
Signature
Form of Reverse Side of Rights Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights Certificate.)
To California Water Service Group:
The undersigned hereby irrevocably elects to exercise _______________ Rights
represented by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights and requests that certificates for
such Preferred Shares be issued in the name of:
Please insert social security or other identifying number:
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
(Please print name and address)
Dated: _______________, ______.
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Form of Reverse Side of Rights Certificate -- continued
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
Signature
NOTICE
The signature in the foregoing Forms of Assignment and Election must conform
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment
or Election to Purchase will not be honored.
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On January 28, 1998, the Board of Directors of California Water Service Group
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, no par value, of the
Company (the "Common Shares"). The dividend is payable on February 18, 1998
to shareholders of record on February 6, 1998 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company one one-hundredth
of a share of a Series D Preferred Stock, no par value, of the Company (the
"Preferred Shares") at a price of $120.00 per one one-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and BankBoston, N.A., as Rights Agent (the "Rights Agent"),
dated as of February 12, 1998.
Initially, the Rights will be attached to all certificates representing Common
Shares then outstanding, regardless of whether any such certificate has a copy
of this Summary of Rights attached thereto, and no separate Right Certificates
will be distributed. The Rights will separate from the Common Shares and a
Distribution Date which occurs upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(other than the Company, any subsidiary of the Company, any employee benefit
plan or dividend reinvestment plan of the Company or of any subsidiary of the
Company, including, without limitation, the Company's Dividend Reinvestment
and Stock Purchase Plan) or any entity holding Common Shares for or pursuant
to the terms of any such employee benefit plan or as administrator of any such
dividend reinvestment plan) have either acquired beneficial ownership of
15% or more of the outstanding Common Shares, or have obtained beneficial
ownership of 10% of the outstanding Common Shares and been determined by the
Board of Directors to pose a threat of a material adverse impact on the
Company (either, an ''Acquiring Person'') or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of such outstanding Common
Shares (unless the Company's Board of Directors has approved the offer).
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares 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 certificates
for Common Shares outstanding as of the Record Date will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Rights Certificates") will be
mailed to holders of record of the Common Shares as of the close of business
on the Distribution Date and such separate Rights Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on February 11, 2008, unless earlier redeemed or exchanged by the
Company in each case as described below. Until a Right is exercised, the
holder thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price. No fractional Preferred or Common Shares will be issued
(other than fractions of Preferred Shares which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts) and in lieu thereof, a
payment in cash will be made based on the market price of the Preferred or
Common Shares on the last trading date prior to the date of exercise.
In the event that any person or group becomes an Acquiring Person (a "Trigger
Event"), each holder of a Right, other than the Acquiring Person (whose Rights
will thereafter be void), will thereafter have the right to receive upon
exercise at its then current exercise price that number of Common Shares (or,
in the event there are insufficient authorized Common Shares, substitute
consideration such as cash, property or other securities of the Company, such
as Preferred Shares) having a market value of two times the Purchase Price of
the Right.
In the event that, after a person or group has become an Acquiring Person, the
Company is acquired in a merger or other business combination transaction or
50% or more of its consolidated assets or earning power are sold, each holder
of a Right (other than an Acquiring Person, whose Rights will become void)
will thereafter have the right to receive, upon the exercise of the Right at
its then current exercise price and in lieu of Preferred Shares, that number
of shares of common stock of the acquiring person having a market value of
two times the Purchase Price of the Right.
At any time until ten days following a Trigger Event, the Company may redeem
the Rights in whole, but not in part, at a price of $.001 per Right (the
"Redemption Price"). Immediately upon the action of the Board of Directors
ordering redemption of the Rights, 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 any person becomes an Acquiring Person, the Board of
Directors of the Company may, at its option, exchange all or part of the
then-outstanding and exercisable Rights (excluding Rights of an Acquiring
Person that have become void) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof.
Notwithstanding the foregoing, the Board of Directors shall not be empowered
to effect such exchange at any time after any Acquiring Person becomes the
Beneficial Owner of 50% or more of the Common Shares then outstanding. In
lieu of Common Shares, the Board of Directors may elect to substitute
Preferred Shares for any such exchange.
For so long as the Rights are then redeemable, the Company may amend the Rights
in any manner. After the Rights are no longer redeemable, the Company may
amend the Rights in any manner that does not adversely affect the interests
of holders of the Rights.
Preferred Shares purchased upon exercise of the Rights will not be redeemable.
Each Preferred Share will be entitled to an aggregate dividend of 100 times
the dividend declared per Common Share. In the event of liquidation, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment of $100 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each Preferred Share
will have 100 votes, voting together with the Common Shares. Finally, in the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive 100 times the
amount received per Common Share. These rights are protected by customary
antidilution provisions.
The Purchase Price payable and the number of Preferred Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for Preferred Shares or convertible
securities at less than the current market price of the Preferred Shares or
(iii) upon the distribution to holders of the Preferred Shares of evidences
of indebtedness or assets (excluding regular periodic cash dividends
out of earnings or retained earnings or dividends payable in Preferred Shares)
or of subscription rights or warrants (other than those referred to above).
The number of outstanding Rights associated with each Common Share is also
subject to adjustment in the event of a stock split of the Common Shares or
a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring,
in any such case, prior to the Distribution Date.
Because of the nature of the Preferred Shares' dividend, liquidation and voting
rights, the value of the one one-hundredth of a Preferred Share purchasable
upon exercise of each Right should approximate the value of one Common Share.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8-A. A copy of
the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
CALIFORNIA WATER SERVICE GROUP LOGO WAS PLACED IN TOP LEFT CORNER OF THIS
PRESS RELEASE. THE LOGO SHOWS A SUNRISE IN THE MOUNTAINS.
A LOGO INDICATING THAT CALIFORNIA WATER SERVICE GROUP IS NYSE LISTED
COMPANY WAS PLACED IN TOP RIGHT CORNER OF THIS PRESS RELEASE.
NEWS RELEASE
CALIFORNIA WATER SERVICE GROUP
1720 North First Street
San Jose, CA 95112-4598
February 13, 1998
98 GO 2
Contact:
Gerald Feeney (408) 451-8216
For Immediate Release
CALIFORNIA WATER SERVICE GROUP
ADOPTS SHAREHOLDER RIGHTS PLAN
SAN JOSE, Calif. - As part of the overall effort to enhance shareholder value,
the Board of Directors of California Water Service Group (Group) adopted a
shareholder rights plan (Rights Plan) at their January 28 meeting.
The purpose of the Rights Plan is to provide shareholders with protection in
the event of an attempted hostile acquisition of the Group. The Board
believes that certain takeover tactics may not be in the best interests of
shareholders. These tactics deprive the Board of any real opportunity to
represent the shareholders in negotiations. The Rights Plan is not intended
to prevent an acquisition, nor to prevent substantial investments in the
Group on terms that are favorable and fair to all shareholders. The
intention is to encourage a potential acquirer to negotiate with the Board
as the shareholders' elected representatives.
The Board did not adopt the Rights Plan in response to any specific acquisition
proposal. Instead, the Board concluded that the Rights Plan should be adopted
now so it would be in place to protect shareholder interests in the future.
It does not in any way weaken the financial strength of the Group, nor dilute
shareholder value.
In connection with adoption of the Rights Plan, one Right is being distributed
February 18, 1998 as a dividend to each outstanding share of common stock to
shareholders of record as of February 6, 1998. When and if the Right becomes
exercisable, each Right entitles the registered holder to purchase from the
Group one one-hundredth (1/100th) of a share of Series D Participating
Preferred Stock, no par value (Preferred Share), for a purchase price of
$120.00. Generally, each one one-hundredth of a Preferred Share will have
the same economic and voting rights as one share of common stock.
Initially, no separate Rights certificates will be issued. Instead, the Rights
are attached to and trade with the common stock. Regardless of whether stock
certificates indicate the Rights are attached, the common stock and Rights
trade as a single unit. The Rights will separate from the common stock if a
person or group, referred to as an Acquiring Person:
- - were to accumulate more than 15% of the Group's outstanding common stock
without first presenting an offer to the Board or the Board found an offer
not to be fair to all shareholders; or
- - 10% or more of the Group's outstanding common stock was held by an Acquiring
Person, which the Board deemed to pose a threat of an adverse impact to the
Group's shareholders.
Once there is an Acquiring Person, separate Rights certificates would be mailed
to common stock shareholders. The Rights certificates alone will then be
evidence of the Rights. The Rights certificates will separate from the
common stock and trade or be transferred independently.
The Rights are not exercisable until there is an Acquiring Person. If there
is an Acquiring Person, all shareholders, except the Acquiring Person, will
have the right to receive upon exercise of a Right the number of Group
common shares having a market value of two times the exercise price of the
Right. In other words, each Right will allow its owner to purchase $240.00
worth of common stock (or equivalent securities, such as the Preferred Shares)
for $120.00. For example, if the market price of The Group common stock were
$30.00 per share, each Right would entitle its holder to purchase
eight shares of common stock (or equivalent securities, such as 1/100th of a
preferred share) for $120.00.
Until exercised, a Right confers no voting or other shareholder rights. The
Rights have a ten-year life, expiring on February 11, 2008. The Board may
redeem the Rights before their expiration date at a price of $0.001 per Right.
Redemption of the Rights may occur if the Board determined that an acquisition
offer were in the best interests of shareholders. By redeeming the Rights,
the Board could, in effect, allow an acquisition offer to proceed.
There is no need for shareholders to make any decisions or take any action
regarding the Rights at this time. There is no need for shareholders to
exchange their common share certificates. The Rights are not now exercisable
and will not be exercisable unless there is an Acquiring Person. Because of
the dilutive effect the Rights Plan would have on the shares of an Acquiring
Person, the Board does not expect the Rights will separate from the common
stock and actually become exercisable. The Right's primary purpose is their
deterrent effect on potential aggressive investors.
By adopting the Rights Plan, the Board has expressed its confidence in the
Group's future and its determination that shareholders be given every
opportunity to participate fully in the Group's future.
California Water Service Group is the parent company of California Water
Service Company (Company) and CWS Utility Services. The Company is the
largest investor-owned water utility in California and the third largest in
the country. Since 1926, the Company has provided Californians with
high-quality domestic water service. Its 21 operating districts serve
approximately 1.5 million people in 57 California communities.
CWS Utility Services is a new company formed to provide nonregulated water
related services. The Group's common stock trades on the New York Stock
Exchange under the symbol CWT. Additional information is available at our
Web site: www.calwater.com.
