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FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
CONNECTICUT WATER SERVICE, INC.
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(Exact name of registrant as specified in its charter)
Connecticut 06-0739839
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(State of incorporation or organization) (IRS Employer Identification No.)
93 West Main Street, Clinton, Connecticut 06413-0562
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(Address of principal executive offices) (Zip Code)
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A. (c), check the following box. [ ]
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A. (d), check the following box. [X]
Securities Act registration statement file
number to which this form relates:
-----------------------------------
(If applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Rights to purchase Series A Junior Participating Preference Stock, $1 par value
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(Title of class)
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Item 1. Description of Registrant's Securities to be Registered.
On August 12, 1998, the Board of Directors of Connecticut Water
Service, Inc. (the "Company") declared a dividend of one preference share
purchase right (a "Right") for each outstanding share of common stock, without
par value, of the Company (the "Common Stock"). The dividend is payable on
October 11, 1998 (the "Record Date") to the shareholders of record on that date.
Subject to certain terms and conditions, each Right shall entitle the registered
holder to purchase from the Company one one-hundredth of a share of Series A
Junior Participating Preference Stock, $1 par value (the "Preference Stock"), of
the Company at a price of $90 per one one-hundredth of a share of Preference
Stock (the "Purchase Price), subject to adjustment. The description and terms of
the Rights are set forth in a Rights Agreement dated as of August 12, 1998 as
the same may be amended from time to time (the "Rights Agreement"), between the
Company and State Street Bank and Trust Company, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (with
certain exceptions, an "Acquiring Person") have acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock 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 or group of affiliated persons 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 the
outstanding shares of Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificates together with a copy of the Summary of Rights sent to holders
of such Common Stock on the Record Date (the "Summary of Rights").
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
after the Record Date upon transfer or new issuances of Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for shares of Common Stock, even
without such notation or a copy of the Summary of Rights, will also constitute
the transfer of the Rights associated with the shares of Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on October 11, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or
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extended or unless the Rights are earlier redeemed or exchanged by the Company,
in each case as described below.
The Purchase Price payable, and the number of shares of Preference
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preference Stock, (ii) upon the grant to holders of the Preference Stock of
certain rights or warrants to subscribe for or purchase Preference Stock at a
price, or securities convertible into Preference Stock with a conversion price,
less than the then-current market price of the Preference Stock or (iii) upon
the distribution to holders of the Preference Stock of evidences of indebtedness
or assets (excluding regular periodic cash dividends or dividends payable in
Preference Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights is also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, after August 12,
1998 and prior to the Distribution Date; provided, however, that no such
adjustment shall be made with respect to any such dividend or subdivision
approved by the Board of Directors of the Company on August 12, 1998.
Shares of Preference Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preference Stock will be entitled, when, as and
if declared, to a minimum preferential quarterly dividend payment of $1 per
share but will be entitled to an aggregate dividend of 100 times the dividend
declared per share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preference Stock will be entitled
to a minimum preferential liquidation payment of $100 per share (plus any
accrued but unpaid dividends) but will be entitled to an aggregate payment of
100 times the payment made per share of Common Stock. Each share of Preference
Stock will have 100 votes, voting together with the Common Stock. Finally, in
the event of any merger, consolidation or other transaction in which shares of
Common Stock are converted or exchanged, each share of Preference Stock will be
entitled to receive 100 times the amount received per share of Common Stock.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preference Stock's dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a share of
Preference Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right at the then
current exercise price of the Right, that number of shares of Common Stock
having a market value of two times the exercise price of the Right.
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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,
proper provision will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person, which will have become void) will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the person with whom the Company has engaged in the foregoing transaction (or
its parent), which number of shares at the time of such transaction will have a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock or the occurrence of an event described in
the prior paragraph, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group, which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or one one-hundredth of a share of Preference Stock (or of a share of a class or
series of the Company's preference stock or preferred stock having equivalent
rights, preferences and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preference Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of Preference Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preference Stock on the last
trading day prior to the date of exercise.
At any time prior to the earlier of (i) the close of business on the
tenth day following the first public announcement by the Company or an Acquiring
Person that an Acquiring Person has become such or such earlier date as a
majority of the Board of Directors shall become aware of the existence of an
Acquiring Person, subject to extension by the Board, or (ii) the close of
business on the Final Expiration Date, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights 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. Immediately upon any 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.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner. After the
Rights are no longer redeemable, the Company may, except with respect to the
Redemption Price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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A copy of the Rights Agreement is attached hereto as an exhibit and is
incorporated herein by reference. The foregoing description of the Rights does
not purport to be complete and is qualified in its entirety by reference to such
exhibit.
Item 2. Exhibits.
Exhibit No. Description
1 Rights Agreement, dated as of August 12, 1998, between the
Company and State Street Bank and Trust Company, which
includes the form of the Certificate of Amendment of
Certificate of Incorporation with respect to Series A Junior
Participating Preference Stock as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Rights to Purchase
Shares of Preference Stock as Exhibit C. Pursuant to the
Rights Agreement, printed Right Certificates will not be
mailed until as soon as practicable after the earlier of the
tenth day after public announcement that a person or group has
acquired beneficial ownership of 15% or more of the shares of
Common Stock or the tenth business day after a person
commences, or announces its intention to commence, 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 the shares of Common Stock.
2 Amended and Restated Certificate of Incorporation of the
Company (Incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998).
3 Certificate of Amendment of Certificate of Incorporation With
Respect to Series A Junior Participating Preference Stock of
the Company.
4 Amended and Restated Bylaws of the Company (Incorporated by
reference to Exhibit 3.3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
CONNECTICUT WATER SERVICE, INC.
Date: September 25, 1998 By /s/ David C. Benoit
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Name: David C. Benoit
Title: Vice President - Finance
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EXHIBIT INDEX
Exhibit No. Description
1 Rights Agreement, dated as of August 12, 1998, between the
Company and State Street Bank and Trust Company, which
includes the form of the Certificate of Amendment of
Certificate of Incorporation with respect to Series A Junior
Participating Preference Stock as Exhibit A, the form of Right
Certificate as Exhibit B and the Summary of Rights to Purchase
Shares of Preference Stock as Exhibit C. Pursuant to the
Rights Agreement, printed Right Certificates will not be
mailed until as soon as practicable after the earlier of the
tenth day after public announcement that a person or group has
acquired beneficial ownership of 15% or more of the shares of
Common Stock or the tenth business day after a person
commences, or announces its intention to commence, 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 the shares of Common Stock.
2 Amended and Restated Certificate of Incorporation of the
Company (Incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998).
3 Certificate of Amendment of Certificate of Incorporation With
Respect to Series A Junior Participating Preference Stock of
the Company.
4 Amended and Restated Bylaws of the Company (Incorporated by
reference to Exhibit 3.3 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998).
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EXHIBIT 1
FORM 8-A
CONNECTICUT WATER SERVICE, INC.
and
STATE STREET BANK AND TRUST COMPANY
as Rights Agent
Rights Agreement
Dated as of August 12, 1998
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TABLE OF CONTENTS
Page
Section 1. Certain Definitions.................................................1
Section 2. Appointment of Rights Agent.........................................7
Section 3. Issue of Right Certificates.........................................7
Section 4. Form of Right Certificates.........................................10
Section 5. Countersignature and Registration..................................11
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates............12
Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights......13
Section 8. Cancellation and Destruction of Right Certificates.................15
Section 9. Availability of Shares of Preference Stock.........................16
Section 10. Preference Stock Record Date......................................18
Section 11. Adjustment of Purchase Price, Number of Shares and Number
of Rights.........................................................19
Section 12. Certificate of Adjusted Purchase Price or Number of Shares........34
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power....................................................34
Section 14. Fractional Rights and Fractional Shares...........................41
Section 15. Rights of Action..................................................43
Section 16. Agreement of Right Holders........................................44
Section 17. Right Certificate Holder Not Deemed a Shareholder.................45
Section 18. Concerning the Rights Agent.......................................45
Section 19. Merger or Consolidation or Change of Name of Rights Agent.........46
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Section 20. Duties of Rights Agent............................................47
Section 21. Change of Rights Agent............................................51
Section 22. Issuance of New Right Certificates................................52
Section 23. Redemption........................................................53
Section 24. Exchange..........................................................54
Section 25. Notice of Certain Events..........................................56
Section 26. Notices...........................................................57
Section 27. Supplements and Amendments........................................58
Section 28. Successors........................................................59
Section 29. Benefits of this Agreement........................................59
Section 30. Determinations and Actions by the Board of Directors..............60
Section 31. Severability......................................................60
Section 32. Governing Law.....................................................60
Section 33. Counterparts......................................................61
Section 34. Descriptive Headings..............................................61
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RIGHTS AGREEMENT
Agreement dated as of August 12, 1998 between Connecticut Water
Service, Inc., a Connecticut corporation (the "Company"), and State Street Bank
and Trust Company (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preference share purchase right (a "Right") for each share of
Common Stock (as hereinafter defined) of the Company outstanding as of the close
of business (as defined below) on October 11, 1998 (the "Record Date") each
Right representing the right to purchase one one-hundredth (subject to
adjustment) of a share of Preference Stock (as hereinafter defined), upon the
terms and subject to the conditions herein set forth, and the Board of Directors
has further authorized and directed the issuance of one Right (subject to
adjustment as provided herein) with respect to each share of Common Stock that
shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined); provided, however, that Rights may be issued
with respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the Redemption Date and the Final Expiration Date
in accordance with Section 22.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meaning indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more
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of the shares of Common Stock then outstanding, but shall not include an Exempt
Person (as such term is hereinafter defined); provided, however, that if the
Board of Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring Person" has become such inadvertently
(including, without limitation, because (i) such Person was unaware that it
beneficially owned a percentage of Common Stock that would otherwise cause such
Person to be a "Acquiring Person" or (ii) such Person was aware of the extent of
its Beneficial Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Rights Agreement) and
without any intention of changing or influencing control of the Company, and
such Person, as promptly as practicable after being advised of such
determination divested or divests himself or itself of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would no longer
be an Acquiring Person, then such Person shall not be deemed to be or to have
become an "Acquiring Person" for any purposes of this Agreement. No Person shall
become an "Acquiring Person" as the result of an acquisition of shares of Common
Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the shares of Common Stock then outstanding, provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding by reason of such share acquisitions
by the Company and thereafter become the Beneficial Owner of any additional
shares of Common Stock (other than pursuant to a dividend or distribution paid
or made by the Company on the outstanding Common Stock in shares of Common Stock
or pursuant to a split or subdivision of the outstanding Common Stock), then
such Person shall be deemed to be an "Acquiring Person" unless upon the
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consummation of the acquisition of such additional shares of Common Stock such
Person does not own 15% or more of the shares of Common Stock then outstanding.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
in effect on the date of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, shall be deemed
to have "Beneficial Ownership" of and shall be deemed to "beneficially own" any
securities:
(i) which such Person or any of such Person's Affiliates or
Associates is deemed to beneficially own, directly or indirectly within
the meaning of Rule 13d-3 of the General Rules and Regulations under
the Exchange Act as in effect on the date of this Agreement;
(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
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rights, exchange rights, rights, warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, (x) 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, (y) securities which such Person has a right
to acquire on the exercise of Rights at any time prior to the time a
Person becomes an Acquiring Person or (z) securities issuable upon
exercise of Rights from and after the time a Person becomes an
Acquiring Person if such Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof ("original Rights") or
pursuant to Section 11(i) or Section 11(n) with respect to an
adjustment to original Rights; 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 by reason of such agreement, arrangement or
understanding 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
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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 1(c)(ii)(B)) or disposing of any securities of the Company.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of Connecticut, or the State
in which the principal office of the Rights Agent is located, are authorized or
obligated by law or executive order to close.
(e) "close of business" on any given date shall mean 5:00 P.M.,
Hartford, Connecticut time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Hartford, Connecticut time, on
the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall mean
the common stock, without par value, of the Company. "Common Stock" when used
with reference to any Person other than the Company shall mean the capital stock
(or, in the case of an unincorporated entity, the equivalent 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.
(g) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(h) "Effective Date" shall mean the Expiration Date as defined in
Section 7(a) of the Prior Rights Agreement.
(i) "equivalent preferred shares" shall have the meaning set forth in
Section 11(b) hereof.
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(j) "Exempt Person" shall mean the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, in each case including, without
limitation, in its fiduciary capacity, or, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity or trustee holding
Common Stock for or pursuant to the terms of any such plan or for the purpose of
funding any such plan or funding other employee benefits for employees of the
Company or of any Subsidiary of the Company.
(k) "Final Expiration Date" shall have the meaning set forth in Section
7 hereof.
(l) "NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation system.
(m) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(n) "Preference Stock" shall mean the Series A Junior Participating
Preference Stock, $1 par value, of the Company having the rights and preferences
set forth in the Form of Certificate of Amendment of Certificate of
Incorporation attached to this Agreement as Exhibit A.
(o) "Prior Rights Agreement" shall mean the Rights Agreement dated as
of October 11, 1988 between the Company and State Street Bank and Trust Company,
Rights Agent.
(p) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(q) "Securities Act" shall mean the Securities Act of 1933, as amended.
(r) "Stock Acquisition Date" shall mean the first date of public
announcement (which for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person
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has become such or such earlier date as a majority of the Board of Directors
shall become aware of the existence of an Acquiring Person.
(s) "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.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable, upon ten (10) days' prior written notice to the Rights Agent. The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such co-Rights Agent.
Section 3. Issue of Right Certificates.
(a) Until the later of (A) the Effective Date or (B) the earlier of (i)
the tenth day after the Stock Acquisition Date or (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 Exempt Person) of, or of the first
public announcement of the intention of such Person (other than an Exempt
Person) to commence, a tender or exchange offer the consummation of which would
result in any Person
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(other than an Exempt Person) becoming the Beneficial Owner of shares of Common
Stock aggregating 15% or more of the Common Stock then outstanding (including
any such date which is after the date of this Agreement and prior to the
issuance of the Rights), the later of the dates specified in (A) or (B) above
being herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates
for Common Stock registered in the names of the holders thereof and not by
separate Right Certificates, and (y) the Rights will be transferable only in
connection with the transfer of Common Stock. 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 Stock as of the close of business on the Distribution
Date (other than any Acquiring Person or any Associate or Affiliate of an
Acquiring Person), at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right (subject to adjustment as provided
herein) for each share of Common Stock so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Shares of Preference
Stock, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Stock as
of the close of business on the Record Date (other than any Acquiring Person or
any Associate or Affiliate of any Acquiring Person), at the address of such
holder shown on the records of the Company. With respect to certificates for
Common Stock
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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 thereof
together with the Summary of Rights. 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 Stock outstanding on the Record Date, with or
without a copy of the Summary of Rights, shall also constitute the transfer of
the Rights associated with the Common Stock represented thereby.
Certificates issued for Common Stock (including, without limitation,
upon transfer of outstanding Common Stock or issuance or reissuance of Common
Stock out of authorized but unissued shares) 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 Connecticut
Water Service, Inc. (the "Company") and State Street Bank and Trust
Company dated as of August 12, 1998 as the same may be amended from
time to time (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt
of a written request therefor. UNDER CERTAIN CIRCUMSTANCES, AS SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY
PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID
AND WILL NO LONGER BE TRANSFERABLE.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise
<PAGE> 13
-10-
provided herein, shall also constitute the transfer of the Rights associated
with the Common Stock represented thereby. In the event that the Company
purchases or otherwise acquires any Common Stock after the Record Date but prior
to the Distribution Date, any Rights associated with such Common Stock shall be
deemed cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Stock which are no longer
outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in 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 NASDAQ or of
any stock exchange or other automated quotation system on which the Rights may
from time to time be listed, or to conform to usage. Subject to the provisions
of Sections 11, 13 and 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-hundredths of a share of
Preference Stock as shall be set forth therein at the price per one
one-hundredth of a share of Preference Stock set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a share of Preference
Stock and the Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
<PAGE> 14
-11-
(a) The Right Certificates shall be executed on behalf of the Company
by the Chairman of the Board of Directors, the President, any of the Vice
Presidents, the Treasurer or the Controller of the Company, 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 Right
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 Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this 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 an office or agency designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
<PAGE> 15
-12-
(a) Subject to the provisions of Sections 7(e), 11(a)(ii) and 14
hereof, at any time after the close of business on the Distribution Date, and
prior to the close of business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-hundredths of a share of Preference Stock as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the office or
agency of the Rights Agent designated for such purpose. Thereupon the Rights
Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates.
(b) Subject to the provisions of Section 11(a)(ii) hereof, at any time
after the Distribution Date and prior to the close of business on the earlier of
the Redemption Date or the Final Expiration Date, upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of loss/
theft or destruction, of indemnity or security reasonably satisfactory to them,
and, 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
<PAGE> 16
-13-
of the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights.
(a) Except as otherwise provided herein, the Rights shall become
exercisable on the Distribution Date, and thereafter the registered holder of
any Right Certificate may, subject to Section 11(a) (ii) hereof and except as
otherwise provided herein, exercise the Rights evidenced thereby in whole or in
part upon surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights Agent at the
office or agency of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-hundredth of a share of
Preference Stock as to which the Rights are exercised, at any time which is both
after the Distribution Date and prior to the earliest of (i) the tenth
anniversary of the Effective Date (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date") or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The Purchase Price shall be initially $90 for each one
one-hundredth of a share of Preference Stock purchasable upon the exercise of a
Right. The Purchase Price and the number of one one-hundredths of a share of
Preference Stock or other securities or property to be acquired upon exercise of
a Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) of this Section 7.
<PAGE> 17
-14-
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the shares of Preference Stock to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof; in cash or by 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 Preference Stock certificates for the number of shares of Preference Stock
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 interests in such number of one one-hundredths
of a share of Preference Stock as are to be purchased (in which case
certificates for the Preference Stock 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 hereof, (iii)
promptly 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 Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered holder
of any Right Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the exercisable
Rights remaining unexercised shall be issued by
<PAGE> 18
-15-
the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
transfer or exercise of Rights pursuant to Section 6 hereof or this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Rights Certificate surrendered for such
transfer or exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Shares of Preference Stock.
<PAGE> 19
-16-
(a) The Company covenants and agrees that it will, at all times after
the Effective Date, cause to be reserved and kept available out of its
authorized and unissued shares of Preference Stock or any shares of Preference
Stock held in its treasury, the number of shares of Preference Stock that will
be sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preference Stock (and, following the time
that a Person becomes an Acquiring Person, shares of Common Stock and other
securities) issuable upon the exercise of Rights may be listed or admitted to
trading on NASDAQ or listed on any national securities exchange or other
quotation system, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed or admitted to trading on NASDAQ or listed on any national
securities exchange or other quotation system upon official notice of issuance
upon such exercise.
(c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
shares of Preference Stock (and following the time that a Person first becomes
an Acquiring Person, shares of Common Stock and other securities) upon the
exercise of Rights, to register and qualify such shares of Preference Stock (and
following the time that a Person first becomes an Acquiring Person, shares of
Common Stock and other securities) under the Securities Act and any applicable
state securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Final Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights
<PAGE> 20
-17-
in order to prepare and file a registration statement under the Securities Act
and permit it to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and until a registration statement under the Securities Act (if
required) shall 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 shares of Preference Stock (and,
following the time that a Person becomes an Acquiring Person, shares of Common
Stock and other securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares of Preference Stock (or shares of Common Stock or other
securities) 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 Right Certificates to a Person other than, or the issuance or
delivery of certificates or depositary receipts for the Preference Stock (or
shares of Common Stock or other securities) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
<PAGE> 21
-18-
surrendered for exercise or to issue or deliver any certificates or depositary
receipts for Preference Stock (or shares of Common Stock or other securities)
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by that holder of such Right 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. Preference Stock Record Date. Each Person in whose name any
certificate for Preference Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preference Stock represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preference Stock 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 Preference Stock transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preference Stock for which
the Rights shall be exercisable, including, without limitation, the right to
vote or to receive dividends or other distributions, 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 and Number
of Rights. The Purchase Price, the number of shares of Preference Stock or other
securities or property
<PAGE> 22
-19-
purchasable upon exercise of 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
Preference Stock payable in shares of Preference Stock, (B)
subdivide the outstanding Preference Stock, (C) combine the
outstanding Preference Stock into a smaller number of shares
of Preference Stock or (D) issue any shares of its capital
stock in a reclassification of the Preference Stock (including
any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a), 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 shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to
such date and at a time when the Preference Stock transfer
books of the Company were open, the holder would have owned
upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the
aggregate par value, if any, of the shares of capital stock of
the Company issuable upon exercise of one Right.
<PAGE> 23
-20-
(ii) Subject to Section 24 of this Agreement, in the event
that any Person becomes an Acquiring Person, then (A) the
Purchase Price shall be adjusted to be the Purchase Price in
effect immediately prior to such Person becoming an Acquiring
Person multiplied by the number of one one-hundredths of a
share of Preference Stock for which a Right was exercisable
immediately prior to such Person becoming an Acquiring Person,
whether or not such Right was then exercisable, and (B) each
holder of a Right, except as otherwise provided in this
Section 11 (a)(ii) and Section 11 (a)(iii) hereof, shall
thereafter have the right to receive, upon exercise at a price
equal to the Purchase Price (as so adjusted), in accordance
with the terms of this Agreement and in lieu of shares of
Preference Stock, such number of shares of Common Stock (or at
the option of the Company, such number of one one-hundredths
of shares of Preference Stock) as shall equal the result
obtained by (x) multiplying the then current Purchase Price by
the number of one one-hundredths of a share of Preference
Stock for which a Right is then exercisable and dividing that
product by (y) 50% of the then current per share market price
of the Company's Common Stock (determined pursuant to Section
11 (d) hereof) on the date such Person became an Acquiring
Person; provided, however, that the Purchase Price and the
number of shares of Common Stock so receivable upon exercise
of a Right shall thereafter be subject to further adjustment
as appropriate in accordance with Section 11 (f) hereof.
Notwithstanding anything in this Agreement to the contrary,
however, from and after the time (the "invalidation time")
when any Person first becomes an
<PAGE> 24
-21-
Acquiring Person, any Rights that are beneficially owned by
(x) any Acquiring Person (or any Affiliate or Associate of any
Acquiring Person), (y) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who becomes a transferee
after the invalidation time or (z) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the
invalidation time pursuant to either (I) a transfer from the
Acquiring Person to holders of its equity securities or to any
Person with whom it has any continuing agreement, arrangement
or understanding regarding the transferred Rights or (II) a
transfer which the Board of Directors has determined is part
of a plan, arrangement or understanding which has the purpose
or effect of avoiding the provisions of this paragraph, and
subsequent transferees of such Persons, shall be void without
any further action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such
Rights under any provision of this Agreement. The Company
shall use all reasonable efforts to ensure that the provisions
of this Section 11(a)(ii) are complied with, but shall have
no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations
with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. From and after the
invalidation time, no Right Certificate shall be issued
pursuant to Section 3 or Section 6 hereof that represents
Rights that are or have become void pursuant to the provisions
of this Section 11(a)(ii), and any Right Certificate
delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of
<PAGE> 25
-22-
this Section 11(a)(ii) shall be cancelled. From and after
the occurrence of an event specified in Section 13(a) hereof,
any Rights that theretofore have not been exercised pursuant
to this Section 11(a)(ii) shall thereafter be exercisable
only in accordance with Section 13 and not pursuant to this
Section 11(a)(ii).
(iii) The Company may at its option substitute for a share of
Common Stock issuable upon the exercise of Rights in
accordance with the foregoing Section 11(a)(ii) such number
or fractions of shares of Preference Stock having an aggregate
current market value equal to the current per share market
price of a share of Common Stock. In the event that there
shall not be sufficient shares of Common Stock issued but not
outstanding or authorized but unissued to permit the exercise
in full of the Rights in accordance with the foregoing
Section 11(a)(ii), the Board of Directors shall, to the extent
permitted by applicable law and any material agreements then
in effect to which the Company is a party, (A) determine the
excess of (1) the value of the shares of Common Stock issuable
upon the exercise of a Right in accordance with
Section 11(a)(ii) (the "Current Value") over (2) the then
current Purchase Price multiplied by the number of one
one-hundredths of shares of Preference Stock for which a Right
was exercisable immediately prior to the time that the
Acquiring Person became such (such excess, the "Spread"), and
(B) with respect to each Right (other than Rights which have
become void pursuant to Section 11(a)(ii)), make adequate
provision to substitute for the shares of Common Stock
issuable in accordance with Section 11(a)(ii) upon exercise
of the Right and payment of the applicable Purchase Price, (1)
cash, (2) a
<PAGE> 26
-23-
reduction in the Purchase Price, (3) shares of Preference
Stock or other equity securities of the Company (including,
without limitation, shares or fractions of shares of
preference stock or preferred stock, which, by virtue of
having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed
in good faith by the Board of Directors to have substantially
the same value as the shares of Common Stock (such shares of
Preference Stock and shares or fractions of shares of
preference stock, preferred stock or other equity securities
of the Company are hereinafter referred to as "Common Stock
equivalents"), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having a
value which, when added to the value of the shares of Common
Stock actually issued upon exercise of such Right, shall have
an aggregate value equal to the Current Value (less the amount
of any reduction in the Purchase Price), where such aggregate
value has been determined by the Board of Directors upon the
advice of a nationally recognized investment banking firm
selected in good faith by the Board of Directors; provided,
however, if the Company shall not make adequate provision to
deliver value pursuant to clause (B) above within thirty (30)
days following the date that the Acquiring Person became such
(the "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, to the extent permitted by
applicable law and any material agreements then in effect to
which the Company is a party, upon the surrender for exercise
of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available), and
then, if
<PAGE> 27
-24-
necessary, such number or fractions of shares of Preference
Stock (to the extent available), and then, if necessary, cash,
which shares and/or cash have an aggregate value equal to the
Spread. If, upon the date any Person becomes an Acquiring
Person, the Board of Directors shall determine in good faith
that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full
of the Rights, then, if the Board of Directors so elects, the
thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order that the Company
may seek shareholder approval for the authorization of such
additional shares (such thirty (30) day period, as it may be
extended, is herein called the "Substitution Period"). To the
extent that the Company determines that some action need be
taken pursuant to the second and/or third sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject
to Section 11(a)(ii) hereof and the last sentence of this
Section 11(a)(iii), 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 second 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)(iii), the
<PAGE> 28
-25-
value of the shares of Common Stock shall be the current per
share market price (as determined pursuant to Section 11(d)(i))
on the Section 11(a)(ii) Trigger Date and the per share or
fractional value of any "Common Stock equivalent" shall be
deemed to equal the current per share market price or fraction
thereof of the Common Stock. The Board of Directors of the
Company may, but shall not be required to, establish
procedures to allocate the right to receive shares of Common
Stock upon the exercise of the Rights among holders of Rights
pursuant to this Section 11 (a)(iii).
(b) In case the Company shall at any time after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
all holders of Preference Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preference
Stock (or shares having the same rights, privileges and preferences as the
Preference Stock ("equivalent preference shares")) or securities convertible
into Preference Stock or equivalent preference shares at a price per share of
Preference Stock or equivalent preference shares (or having a conversion price
per share, if a security convertible into shares of Preference Stock or
equivalent preference shares) less than the then current per share market price
of the Preference Stock (determined pursuant to Section 11(d) hereof) 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 shares
of Preference Stock and equivalent preference shares outstanding on such record
date plus the number of shares of Preference Stock and equivalent preference
shares which the aggregate offering price of the total number of shares of
Preference Stock and/or
<PAGE> 29
-26-
equivalent preference 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 shares of Preference Stock and equivalent preference shares outstanding on
such record date plus the number of additional shares of Preference Stock and/or
equivalent preference shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value, if any, of the
shares of capital stock of the Company issuable upon exercise of one Right. 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.
Shares of Preference Stock and equivalent preference shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, 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 at any time after the date of this
Agreement fix a record date for the making of a distribution to all holders of
the Preference Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in Preference Stock) or
subscription rights or
<PAGE> 30
-27-
warrants (excluding those referred to in Section 11(b) hereof), 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 Preference Stock (determined pursuant to Section 11(d) hereof) on
such record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one share of Preference Stock, and the denominator of which shall
be such current per share market price (determined pursuant to Section 11(d)
hereof) of the Preference Stock; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value, if any, of the shares of capital stock of the Company to be
issued upon exercise of one Right. 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) Except as otherwise provided herein, 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 30 consecutive Trading Days (as such term is hereinafter defined)
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
<PAGE> 31
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such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security, and prior to the
expiration of 30 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 by 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
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date the 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 or over-the-counter market 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 or over-the-market, a Business Day.
<PAGE> 32
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(ii) For the purpose of any computation hereunder, if the
Preference Stock is publicly traded, the "current per share market
price" of the Preference Stock shall be determined in accordance with
the method set forth in Section 11(d)(i). If the Preference Stock is
not publicly traded but the Common Stock is publicly traded, the
"current per share market price" of the Preference Stock shall be
conclusively deemed to be the current per share market price of the
Common Stock as determined pursuant to Section 11(d)(i) multiplied by
one hundred (appropriately adjusted to reflect any stock Split) stock
dividend or similar transaction occurring after the date hereof). If
neither the Common Stock nor the Preference Stock is publicly traded,
"current per share market price" of the Preference Stock or the Common
Stock for purposes of the preceding two sentences of this Section
11(d)(ii), 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 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. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one ten-thousandth of a
share of Preference Stock or share of Common Stock or other share or security as
the case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
<PAGE> 33
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(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than the Preference
Stock, thereafter the Purchase Price and the number of such other shares so
receivable upon exercise of a 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 Preference Stock contained in Sections 11(a),
11(b), 11(c), 11(e), 11(h), 11(i) and 11(m) and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preference Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preference Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the 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
share of Preference Stock (calculated to the nearest one ten-thousandth of a
share of Preference Stock) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right immediately prior to such
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
<PAGE> 34
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(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 share of Preference Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-hundredths of a share of Preference Stock for which a Right was
exercisable immediately-prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one tenthousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company may, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall
<PAGE> 35
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be issued, executed and countersigned in the manner provided for herein and
shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preference Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-hundredths of a share of Preference Stock which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, of the Preference Stock or
other shares of capital stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of Preference Stock or other such shares at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preference Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preference Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall
<PAGE> 36
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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.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those 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 Preference Stock, issuance
wholly for cash of any shares of Preference Stock at less than the current
market price, issuance wholly for cash or Preference Stock or securities which
by their terms are convertible into or exchangeable for Preference Stock,
dividends on Preference Stock payable in shares of Preference Stock or issuance
of rights, options or warrants referred to hereinabove in Section 11(b),
hereafter made by the Company to holders of its Preference Stock shall not be
taxable to such shareholders.
(n) Anything in this Agreement to the contrary notwithstanding, 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 Stock payable in Common Stock or (ii) effect a subdivision, combination
or consolidation of the Common Stock (by reclassification or otherwise than by
payment of a dividend payable in Common Stock) into a greater or lesser number
of Common Stock, then in any such case, the number of Rights associated with
each share of Common Stock then outstanding, or issued or delivered thereafter,
shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction, the
<PAGE> 37
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numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of such event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.
(o) The Company agrees that, after the earlier of the Distribution Date
or the Stock Acquisition Date, it will not, except as permitted by Sections 23,
24 or 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, 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 Stock or the
Preference Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof (if
so required under Section 25 hereof). The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power.
(a) In the event, directly or indirectly, at any time after any Person
has become an Acquiring Person, (i) the Company shall merge with and into any
other Person, (ii) any Person shall consolidate with the Company, or any Person
shall merge with and into the Company and
<PAGE> 38
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the Company shall be the continuing or surviving corporation of such merger and,
in connection with such merger, all or part of the Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating 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 upon the first occurrence of such event,
proper provision shall be made so that: (A) each holder of record of a Right
(other than Rights which have become void pursuant to Section 11(a)(ii)) 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 share of Preference Stock for which a Right was exercisable
(whether or not such Right was then exercisable) immediately prior to the time
that any Person first became an Acquiring Person (each as subsequently adjusted
thereafter pursuant to Sections 11(a)(i), 11(b), 11(c), 11(h), 11(i) and 11(m)),
in accordance with the terms of this Agreement and in lieu of Preference Stock,
such number of validly issued, fully paid and non-assessable and freely
tradeable shares of Common Stock of the Principal Party (as defined herein) not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-hundredths of a share of
Preference Stock for which a Right was exercisable immediately prior to the time
that any Person first became an Acquiring Person (as subsequently adjusted
thereafter pursuant to Sections 11(a)(i), 11(b), 11(c), 11(h), 11(i) and
11(m)) and (2) dividing that product by 50% of the then current per share
<PAGE> 39
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market price of the Common Stock of such Principal Party (determined pursuant to
Section 11(d) (i) hereof) on the date of consummation of such consolidation,
merger, sale or transfer; provided that the Purchase Price and the number of
shares of Common Stock of such Principal Party issuable upon exercise of each
Right shall be further adjusted as provided in Section 11(f) of this Agreement
to reflect any events occurring in respect of such Principal Party after the
date of such consolidation, merger, sale or transfer; (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; and (D) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock in accordance with Section 9 hereof) in
connection with such consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; provided that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this (a), such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had such holder, at the time of such transaction, owned the Common
Stock of the Principal Party receivable upon the exercise of a Right pursuant to
this (a), and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to
<PAGE> 40
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permit the subsequent exercise- of the Rights in accordance with the terms
hereof for such cash, shares, rights, warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (i) or (ii) of
the first sentence of (a) hereof: (A) the Person that is the issuer of
the securities into which the shares of Common Stock are converted in
such merger or consolidation, or, if there is more than one such
issuer, the issuer the shares of Common Stock of which have the
greatest aggregate market value of shares outstanding, or (B) if no
securities are so issued, (x) the Person that is the other party to the
merger, if such Person survives said merger, or, if there is more than
one such Person, the Person the shares of Common Stock of which have
the greatest aggregate market value of shares outstanding or (y) if the
Person that is the other party to the merger does not survive the
merger, the Person that does survive the merger (including the Company
if it survives) or (z) the Person resulting from the consolidation; and
(iii) in the case of any transaction described in (iii) of the
first sentence in (a) hereof, the Person that is the party receiving
the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that
is a party to such transaction or transactions receives the same
portion of the assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons as is the issuer of Common Stock
having the greatest aggregate market value of shares outstanding;
provided, however, that in any such case described in the foregoing
clause (b)(i) or (b)(ii), if the
<PAGE> 41
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Common Stock of such Person is not at such time or has not been
continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, the term "Principal Party" shall refer to such
other Person, or (2) if such Person is a Subsidiary, directly or
indirectly, of more than one Person, and the Common Stocks of all of
such persons have been so registered, the term "Principal Party" shall
refer to whichever of such Persons is the issuer of Common Stock having
the greatest aggregate market value of shares outstanding, or (3) if
such Person is owned, directly or indirectly, by a joint venture formed
by two or more Persons that are not owned, directly or indirectly, by
the same Person, the rules set forth in clauses (1) and (2) above shall
apply to each of the owners having an interest in the venture as if the
Person owned by the joint venture was a Subsidiary of both or all of
such joint venturers, and the Principal Party in each such case shall
bear the obligations set forth in this Section 13 in the same ratio as
its interest in such Person bears to the total of such interests.
(c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof
and providing that, as soon as
<PAGE> 42
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practicable after executing such agreement pursuant to this Section 13(c), the
Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, if necessary, 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, and similarly comply
with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall be listed or admitted to trading on the New York
Stock Exchange or on another national securities exchange, to list or
admit to trading (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on the New York
Stock Exchange or such securities exchange, or, if the Common Stock of
the Principal Party shall not be listed or admitted to trading on the
New York Stock Exchange or a national securities exchange, to cause the
Rights and the securities receivable upon exercise of the Rights to be
reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form)
under the Exchange Act; and
<PAGE> 43
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(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has any provision in any of its
authorized securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share thereof (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of Section 13, then, in
such event, the Company hereby agrees with each holder of Rights that it shall
not consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
(e) The Company covenants and agrees that it shall not, at any time
after a Person first becomes an Acquiring Person enter into any transaction of
the type contemplated by (i), (ii) or (iii) of Section 13(a) hereof if (x) at
the time of or immediately after such consolidation, merger,
<PAGE> 44
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sale, transfer or other transaction there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (y) prior to, simultaneously with or immediately after
such consolidation, merger, sale, transfer of other transaction, the
shareholders of the Person who constitutes, or would constitute, the Principal
Party for purposes of Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates or Associates
or (z) the form or nature of organization of the Principal Party would preclude
or limit the exercisability of the Rights.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights (except prior to the Distribution
Date in accordance with Section 11(n) hereof). In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the
<PAGE> 45
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principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of Preference
Stock (other than fractions which are integral multiples of one one-hundredth of
a share of Preference Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preference Stock (other than
fractions which are integral multiples of one one-hundredth of a share of
Preference Stock). Interests in fractions of Preference Stock in integral
multiples of one one-hundredth of a share of Preference Stock 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 Preference Stock represented by such
depositary receipts. In lieu of fractional shares of Preference Stock that are
not integral multiples of one one-hundredth of a share of Preference Stock, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
<PAGE> 46
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fraction of the current market value of one share of Preference Stock. For the
purposes of this Section 14(b), the current market value of a share of
Preference Stock shall be the closing price of a share of Preference Stock (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one share of Common Stock. For the purposes of this
Section 14(c), the current market value of a share of Common Stock shall be the
closing price of a share of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise or exchange.
(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 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of any of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of any
<PAGE> 47
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other Common Stock), on his own behalf and for his own benefit, may enforce, and
may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate (or, prior to the Distribution Date, such
Common Stock) in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or agency of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the Common Stock certificate
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made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preference Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without 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
<PAGE> 49
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Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preference Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed 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 hereof.
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 powers 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
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so
<PAGE> 50
-47-
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other
<PAGE> 51
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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 President, any Vice President, the
Treasurer, the Controller 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 wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment
in the terms of the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 11, 13, 23 and 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 Right Certificates after receipt
of a
<PAGE> 52
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certificate furnished pursuant to Section 12, describing such change or
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Preference Stock or other securities to be issued pursuant to this Agreement
or any Right Certificate or as to whether any shares of Preference Stock or
other securities 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
person reasonably believed by the Rights Agent to be one of the Chairman of the
Board of Directors, the President, the Chief Financial Officer 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. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the Rights
Agent in accordance with a proposal included in any such application on or after
the date specified in such application (which date shall not be less than five
Business Days after the date any officer of the Company
<PAGE> 53
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actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed to certify the holder is not an
Acquiring Person (or an Affiliate or Associate thereof), the Rights Agent shall
not take any further action with respect to such requested exercise or transfer
without first consulting with, and receiving instructions from, the Company.
<PAGE> 54
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Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preference Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock or Preference Stock by registered or certified mail, and, following
the Distribution Date, to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be a corporation organized and doing
business under the laws of the United States or any State thereof, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $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
<PAGE> 55
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as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock or
Preference Stock, and, following the Distribution Date, mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such forms
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 Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Stock following the Distribution Date and
prior to the earlier of the Redemption Date and the Final Expiration Date, the
Company may with respect to shares of Common Stock so issued or sold pursuant to
(i) the exercise of stock options, (ii) under any employee plan or arrangement,
(iii) upon the exercise, conversion or exchange of securities, notes or
debentures issued by the Company or (iv) a contractual obligation of the Company
in
<PAGE> 56
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each case existing prior to the Distribution Date, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale.
Section 23. Redemption.
(a) The Board of Directors of the Company may, at any time prior to the
earlier of (i) the close of business on the tenth day following the Stock
Acquisition Date, subject to extension by the Board as provided in Section 23
(b) hereof, or (ii) the close of business on the Final Expiration Date, redeem
all but not less than all the then outstanding Rights at a redemption price of
$.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (the redemption
price being hereinafter referred to as the "Redemption Price"). The redemption
of the Rights 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, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the current market price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors.
(b) The Board may, at its option and as provided herein, at any time
prior to the close of business on the Final Expiration Date and prior to such
time as the Rights are no longer redeemable by the Board, from time to time
supplement or amend the Rights Agreement without the approval of the holders of
any Rights or the Rights Agent to extend or shorten the time during which the
Rights may be redeemed.
(c) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23 (or at
such later time as the Board of Directors may establish for the effectiveness of
such redemption), and without any further action
<PAGE> 57
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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. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any defect in, any
such notice shall not affect the validity of such redemption. Within 10 days
after such action of the Board of Directors ordering the redemption of the
Rights (or such later time as the Board of Directors may establish for the
effectiveness of such redemption), 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
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption shall 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 first becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have not become effective or that have become void pursuant to the provisions of
Section 11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such amount per Right 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 (1) after any Person (other than an Exempt
Person), together with all Affiliates and Associates of such Person,
<PAGE> 58
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becomes the Beneficial Owner of shares of Common Stock aggregating 50% or more
of the shares of Common Stock then outstanding. From and after the occurrence of
an event specified in Section 13(a) hereof, any Rights that theretofore have not
been exchanged pursuant to this Section 24(a) shall thereafter be exercisable
only in accordance with Section 13 and may not be exchanged pursuant to this
Section 24(a). The exchange 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.
(b) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. The Company
shall promptly mail a notice of any such exchange to all of the holders of the
Rights so exchanged 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
shares of Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other
<PAGE> 59
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than Rights which have become void pursuant to the provisions of Section 11(a)
(ii) hereof) held by each holder of Rights.
(c) The Company may at its option and, in the event that there shall
not be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company shall substitute to the extent of
such insufficiency, for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of Preference Stock or
fraction thereof (or equivalent preferred shares as such term is defined in
Section 11(b)) such that the current per share market price (determined pursuant
to Section 11(d) hereof) of one share of Preference Stock (or equivalent
preferred share) multiplied by such number or fraction is equal to the current
per share market price of one share of Common Stock (determined pursuant to
Section 11(d) hereof) as of the date of such exchange.
Section 25. Notice of Certain Events.
(a) In case the Company shall at any time after the earlier of the
Distribution Date or the Stock Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preference Stock or to make
any other distribution to the holders of its Preference Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its Preference
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preference Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preference Stock
(other than a reclassification involving only the subdivision or combination of
outstanding Preference Stock), (iv) to effect the liquidation, dissolution or
winding up of the Company, or (v) to declare or pay any dividend on the Common
<PAGE> 60
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Stock payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, 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 liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of the Common Stock
and/or Preference Stock, if any such date is to be fixed, and such notice shall
be so given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of the Preference
Stock for purposes of such action, and in the case of any such other action, at
least 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 Stock and/or
Preference Stock, whichever shall be the earlier.
(b) In case any event described in Section 11(a)(ii) or Section 13
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) in accordance with Section 26 hereof, 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)
and Section 13 hereof.
Section 26. Notices. Notice or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
<PAGE> 61
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Connecticut Water Service, Inc.
93 West Main Street
Clinton, Connecticut 06413-0562
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
State Street Bank and Trust Company
c/o Boston EquiServe Limited Partnership
150 Royall Street
Canton, MA 02021
Attention: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Except as otherwise provided in
this Section 27, for so long as the Rights are then redeemable, the Company may
in its sole and absolute discretion, and the Rights Agent shall if the Company
so directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of the Rights. At any time when the Rights
are no longer redeemable, except as otherwise provided in this Section 27, the
Company may, and the Rights Agent shall, if the Company so directs, supplement
or amend this Agreement without the approval of any holders of Rights
Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be
<PAGE> 62
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defective or inconsistent with any other provisions herein, (iii) shorten or
lengthen any time period hereunder, or (iv) change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable;
provided that no such supplement or amendment shall adversely affect the
interests of the holders of Rights as such (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person), and no such amendment may cause
the Rights again to become redeemable or cause the Agreement again to become
amendable other than in accordance with this sentence. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made which decreases the Redemption Price. Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
Section 30. 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
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Agreement and to exercise the rights and powers specifically granted to the
Board of Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors of the Company in good faith shall
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights, as such, and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Rights.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement or applicable to 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.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Connecticut and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
<PAGE> 64
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Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: CONNECTICUT WATER SERVICE, INC.
By /s/ Michele G. DiAcri By /s/ Marshall T. Chiaraluce
Name: Michele G. DiAcri Name: Marshall T. Chiaraluce
Title: Secretary Title: President/CEO
STATE STREET BANK
AND TRUST COMPANY
Attest:
By /s/ Tyler Haynes By /s/ Charles Rossi
Name: Tyler Haynes Name: Charles Rossi
Title: Administration Manager Title: President
<PAGE> 65
EXHIBIT A
FORM
OF
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
WITH RESPECT TO
SERIES A JUNIOR PARTICIPATING PREFERENCE STOCK
OF
CONNECTICUT WATER SERVICE, INC.
(Pursuant to Section 33-666 of the
Connecticut Business Corporation Act)
-----------------------------------------------------------------------
Connecticut Water Service, Inc., a corporation organized and existing
under the law of the State of Connecticut (hereinafter called the "Company"),
hereby certifies that the following resolution was duly adopted by the Board of
Directors of the Company as authorized and required by Section 33-666 of the
Connecticut Business Corporation Act at a meeting duly called and held on August
12, 1998:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Company (hereinafter called the "Board of Directors"
or the "Board") in accordance with the provisions of the Company's Certificate
of Incorporation, as amended to date (hereinafter called the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of Preference
Stock, $1 par value, of the Company and hereby states the designation and number
of shares, and fixes the terms, preferences, limitations and relative rights
thereof, and amends Article SEVENTH of the Certificate of Incorporation by
adding the following Sections after Paragraph G thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preference Stock" (the "Series A
Preference Stock") and the number of shares constituting the Series A Preference
Stock shall be 150,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no
A-1
<PAGE> 66
decrease shall reduce the number of shares of Series A Preference Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Company convertible into Series A Preference Stock. Shares of Series A
Preference Stock shall have a stated capital of $10.00 per share.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preference Stock of the Company (the "Preference Stock") (or any similar stock)
ranking prior and superior to the Series A Preference Stock with respect to
dividends, the holders of shares of Series A Preference Stock, in preference to
the holders of Common Stock, without par value of the Company (the "Common
Stock") and of any other stock of the Company ranking junior to the Series A
Preference Stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July, and October
in each year (each such date 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 A Preference Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, 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 A Preference Stock. In the event the
Company shall at any time after August 19, 1998 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 A Preference Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event,
provided, however, that no such adjustment shall be made with respect to any
such dividend or subdivision approved by the Board of Directors on August 12,
1998.
(B) The Company shall declare a dividend or distribution on the Series
A Preference Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Dividend Payment Date and the next subsequent Dividend
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Payment Date, a dividend of $1 per share on the Series A Preference Stock shall
nevertheless be payable, when, as and if declared, on such subsequent Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series A Preference Stock from the
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Preference Stock entitled to receive a
quarterly dividend and before such Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preference Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preference Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preference
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Certificate of Incorporation or required by
law, each share of Series A Preference Stock shall entitle the holder thereof to
100 votes on all matters upon which the holders of the Common Stock of the
Company are entitled to vote. In the event the Company shall at any time after
August 13, 1998 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 A Preference Stock were entitled
immediately prior to such 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, provided, however, that no such adjustment shall be made with respect to
any such dividend or subdivision approved by the Board of Directors on August
12, 1998.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Amendment to the Certificate of
Incorporation creating a series of Preference Stock or any similar stock, and
except as otherwise required by law, the holders of shares of Series A
Preference Stock and the holders of shares of Common Stock and any other capital
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stock of the Company having general voting rights shall vote together as one
class on all matters submitted to a vote of shareholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preference 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.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preference Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not earned or declared, on shares of Series A
Preference Stock outstanding shall have been paid in full, the Company shall
not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (as to dividends) to the Series A
Preference Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to
dividends) with the Series A Preference Stock, except dividends paid
ratably on the Series A Preference 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
A Preference Stock, provided that the Company may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Company ranking junior (as to
dividends and upon dissolution, liquidation or winding up) to the
Series A Preference Stock or rights, warrants or options to acquire
such junior stock;
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preference Stock, or any shares of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preference Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
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(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preference Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their retirement become authorized but unissued shares of Preference
Stock and may be reissued as part of a new series of Preference Stock to be
created by resolution or resolutions of the Board of Directors, subject to any
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series A Preference Stock unless, prior thereto, the holders of shares of Series
A Preference Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series A Preference 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 (B) to the holders of shares of stock ranking on a parity
upon liquidation, dissolution or winding up with the Series A Preference Stock,
except distributions made ratably on the Series A Preference Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Series A Preference Stock liquidation preference and the
liquidation preferences of all other classes and series of stock of the Company,
if any, that rank on a parity with the Series A Preference Stock in respect
thereof, then the assets available for such distribution shall be distributed
ratably to the holders of the Series A Preference Stock and the holders of such
parity shares in the proportion to their respective liquidation preferences. In
the event the Company shall at any time after August 12, 1998 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 A
Preference Stock were entitled immediately prior to such event under the proviso
in clause (A) 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, provided, however, that no such adjustment shall be made with
respect to any such dividend or subdivision approved by the Board of Directors
on August 12, 1998.
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Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are converted into, exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case each
share of Series A Preference Stock shall at the same time be similarly converted
into, exchanged for 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
converted, exchanged or converted. In the event the Company shall at any time
after August 12, 1998 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 conversion, exchange or change of
shares of Series A Preference Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event, provided, however, that no such adjustment shall be made with respect to
any such dividend or subdivision approved by the Board of Directors on August
12, 1998.
Section 8. No Redemption. The shares of Series A Preference Stock shall
not be redeemable from any holder.
Section 9. Rank. The Series A Preference Stock shall rank, with respect
to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Company, junior to all series of Preferred
Stock and to all other series of Preference Stock and senior to the Common
Stock.
Section 10. Amendment. If any proposed amendment to the Certificate of
Incorporation would alter, change or repeal any of the preferences, powers or
special rights given to the Series A Preference Stock so as to affect the Series
A Preference Stock adversely, then the holders of the Series A Preference Stock
shall be entitled to vote separately as a class upon such amendment, and the
affirmative vote of two-thirds of the outstanding shares of the Series A
Preference Stock, voting separately as a class, shall be necessary for the
adoption thereof, in addition to such other vote as may be required by the
Business Corporation Law of the State of Connecticut.
Section 11. Fractional Shares. Series A Preference Stock may be issued
in fractions of a share that 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 Series A Preference Stock.
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<PAGE> 71
The foregoing Amendment to the Company's Certificate of Incorporation
was adopted by the Board of Directors without shareholder action. No shareholder
vote was required for adoption.
IN WITNESS WHEREOF, this Certificate of Amendment of Certificate of
Incorporation is executed on behalf of the Company by its _________________ this
____ day of _____________, 1998.
___________________________
Name:
Title:
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<PAGE> 72
EXHIBIT B
Form of Right Certificate
Certificate No. R-________ ______ Rights
NOT EXERCISABLE AFTER OCTOBER 11, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON
(AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
CONNECTICUT WATER SERVICE, INC.
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 August
12, 1998 as the same may be amended from time to time (the "Rights
Agreement"), between Connecticut Water Service, Inc., a Connecticut
corporation (the "Company"), and State Street Bank and Trust Company
(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., Hartford, Connecticut time, on October 11, 2008
at the office or agency of the Rights Agent designated for such
purpose, or of its successor as Rights Agent, one one-hundredth of a
fully paid non-assessable share of Series A Junior Participating
Preference Stock, without par value (the "Preference Stock"), of the
Company, at a purchase price of $90 per one one-hundredth of a share of
Preference Stock (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to
Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-hundredths of a shares of
Preference Stock 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 _______________ based on the Preference Stock as
constituted at such date. As provided in the Rights Agreement, the
Purchase Price, the number of one one-hundredths of a share of
Preference Stock (or other securities or property) which may be
purchased upon the exercise of the Rights and the number of Rights
evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.
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<PAGE> 73
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned office or agency of the Rights Agent. The
Company will mail to the holder of this Right Certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or agency of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preference Stock as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of
Preference Stock or shares of the Company's Common Stock, without par value.
No fractional shares of Preference Stock or Common Stock will be issued
upon the exercise or exchange of any Right or Rights evidenced hereby (other
than fractions of Preference Stock which are integral multiples of one
one-hundredth of a share of Preference Stock, 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 Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preference
Stock or of any other securities of the Company which may at any time be
issuable on the exercise or exchange hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement) or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
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<PAGE> 74
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ____________________.
ATTEST: CONNECTICUT WATER SERVICE, INC.
By ________________________ By___________________________
Name:
Countersigned: Title:
___________________________
as Rights Agent
By_________________________
Authorized Signature
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<PAGE> 75
Form of Reverse Side of Right Certificate
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED __________________________ hereby sells, assigns and
transfer unto
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
Rights represented by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
____________ Attorney, to transfer said Rights on the books of the within-named
Company, with full power of substitution.
Dated: ________________
________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, trust company, broker, dealer
or other eligible institution participating in a recognized signature guarantee
medallion program
________________________________________________________________________________
(To be completed)
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, were not acquired by the
undersigned from, and are not being assigned to, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________
Signature
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<PAGE> 76
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
To Connecticut Water Service, Inc.:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the shares of Preference Stock
(or other securities or property) issuable upon the exercise of such Rights and
requests that certificates for such shares of Preference Stock (or such other
securities) be issued in the name of:
________________________________________________________________________________
(please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivery to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated:_____________________
_____________________________
Signature
(Signature must conform to holder specified on Right Certificate)
Signature Guaranteed:
Signature must be guaranteed by bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program.
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<PAGE> 77
Form of Reverse Side of Right Certificate - continued
________________________________________________________________________________
(To be completed)
The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement)
________________________
Signature
________________________________________________________________________________
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right 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, such Assignment or Election to Purchase will not be honored.
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<PAGE> 78
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING
PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF PREFERENCE STOCK
On August 12, 1998 the Board of Directors of Connecticut Water Service,
Inc. (the "Company") declared a dividend of one preference share purchase right
(a "Right") for each outstanding share of common stock, without par value, of
the Company (the "Common Stock"). The dividend is payable on October 11, 1998
(the "Record Date") to the shareholders of record on that date. Subject to
certain terms and conditions, each Right shall entitle the registered holder to
purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preference Stock, $1 par value (the "Preference Stock") of the
Company at a price of $90 per one one-hundredth of a share of Preference Stock
(the "Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement dated as of August 12, 1998 as the
same may be amended from time to time (the "Rights Agreement"), between the
Company and State Street Bank and Trust Company, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (with
certain exceptions an "Acquiring Person") have acquired beneficial ownership of
15% or more of the outstanding shares of Common Stock 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 or group of affiliated persons 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 the
outstanding shares of Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate together with a copy of this Summary of Rights.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common
Stock certificates issued after the Record Date upon transfer or new issuances
of Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution
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<PAGE> 79
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for shares of Common Stock outstanding as of the
Record Date, even without such notation or a copy of this Summary of Rights,
will also constitute the transfer of the Rights associated with the shares of
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on October 11, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is advanced or extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Preference
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preference Stock, (ii) upon the grant to holders of the Preference Stock of
certain rights or warrants to subscribe for or purchase Preference Stock at a
price, or securities convertible into Preference Stock with a conversion price,
less than the then-current market price of the Preference Stock or (iii) upon
the distribution to holders of the Preference Stock of evidences of indebtedness
or assets (excluding regular periodic cash dividends or dividends payable in
Preference Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights is also subject to adjustment in the
event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring, in any such case, after August 12,
1998 and prior to the Distribution Date; provided, however, that no such
adjustment shall be made with respect to any such dividend or subdivision
approved by the Board of Directors of the Company on August 12, 1998.
Shares of Preference Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preference Stock will be entitled, when, as and
if declared, to a minimum preferential quarterly dividend payment of $1 per
share but will be entitled to an aggregate dividend of 100 times the dividend
declared per share of Common Stock. In the event of liquidation, dissolution or
winding up of the Company, the holders of the Preference Stock will be entitled
to a minimum preferential liquidation payment of $100 per share (plus any
accrued but unpaid dividends) but will be entitled to an aggregate payment of
100 times the payment made per share of Common Stock. Each share of Preference
Stock will have 100 votes, voting together with the Common Stock. Finally, in
the event of any merger, consolidation or other transaction in which shares of
Common Stock are converted or exchanged, each share of
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<PAGE> 80
Preference Stock will be entitled to receive 100 times the amount received per
share of Common Stock. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preference Stock's dividend, liquidation
and voting rights, the value of the one one-hundredth interest in a share of
Preference Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereupon become void),
will thereafter have the right to receive upon exercise of a Right at the then
current exercise price of the Right, that number of shares of Common Stock
having a market value of two times the exercise 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,
proper provision will be made so that each holder of a Right (other than Rights
beneficially owned by an Acquiring Person which will have become void) will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the person with whom the Company has engaged in the foregoing transaction (or
its parent), which number of shares at the time of such transaction will have a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding shares of Common Stock or the occurrence of an event described in
the prior paragraph, the Board of Directors of the Company may exchange the
Rights (other than Rights owned by such person or group which will have become
void), in whole or in part, at an exchange ratio of one share of Common Stock,
or one one-hundredth of a share of Preference Stock (or of a share of a class or
series of the Company's preference stock or preferred stock having equivalent
rights, preferences and privileges), per Right (subject to adjustment)
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preference Stock will be issued
(other than fractions which are integral multiples of one one-hundredth of a
share of Preference Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Preference Stock on the last
trading day prior to the date of exercise.
At any time prior to the earlier of (i) the close of business on the
tenth day following the Stock Acquisition Date, subject to extension by the
Board, or (ii) the close of business on the
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<PAGE> 81
Final Expiration Date, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.0l per Right (the "Redemption
Price"). The redemption of the Rights 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. Immediately upon any 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.
For so long as the Rights are then redeemable, the Company may, except
with respect to the redemption price, amend the Rights in any manner. After the
Rights are no longer redeemable, the Company may, except with respect to the
redemption price, amend the Rights in any manner that does not adversely affect
the interests of holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
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, as the same may
be amended from time to time, which is hereby incorporated herein by reference.
C-4
<PAGE> 1
EXHIBIT 3
FORM 8-A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
WITH RESPECT TO
SERIES A JUNIOR PARTICIPATING PREFERENCE STOCK
OF
CONNECTICUT WATER SERVICE, INC.
(Pursuant to Section 33-666 of the
Connecticut Business Corporation Act)
Connecticut Water Service, Inc., a corporation organized and existing
under the law of the State of Connecticut (hereinafter called the "Company"),
hereby certifies that the following resolution was duly adopted by the Board of
Directors of the Company as authorized and required by Section 33-666 of the
Connecticut Business Corporation Act at a meeting duly called and held on August
12, 1998:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Company (hereinafter called the "Board of Directors"
or the "Board") in accordance with the provisions of the Company's Certificate
of Incorporation, as amended to date (hereinafter called the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of Preference
Stock, $1 par value, of the Company and hereby states the designation and number
of shares, and fixes the terms, preferences, limitations and relative rights
thereof, and amends Article SEVENTH of the Certificate of Incorporation by
adding the following Sections after Paragraph G thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preference Stock" (the "Series A
Preference Stock") and the number of shares constituting the Series A Preference
Stock shall be 150,000. 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 A Preference Stock to a number less than the
number of shares
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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 Company convertible into Series A
Preference Stock. Shares of Series A Preference Stock shall have a stated
capital of $10.00 per share.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preference Stock of the Company (the "Preference Stock") (or any similar stock)
ranking prior and superior to the Series A Preference Stock with respect to
dividends, the holders of shares of Series A Preference Stock, in preference to
the holders of Common Stock, without par value of the Company (the "Common
Stock") and of any other stock of the Company ranking junior to the Series A
Preference Stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July, and October
in each year (each such date 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 A Preference Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, 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 A Preference Stock. In the event the
Company shall at any time after August 19, 1998 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 A Preference Stock
were entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event,
provided, however, that no such adjustment shall be made with respect to any
such dividend or subdivision approved by the Board of Directors on August 12,
1998.
(B) The Company shall declare a dividend or distribution on the Series
A Preference Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Dividend Payment Date and the next subsequent Dividend
Payment Date, a dividend of $1 per share on the Series A Preference Stock shall
nevertheless be payable, when, as and if declared, on such subsequent Dividend
Payment Date.
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(C) Dividends shall begin to accrue and be cumulative, whether or not
earned or declared, on outstanding shares of Series A Preference Stock from the
Dividend Payment Date next preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the record date for the first
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is a
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series A Preference Stock entitled to receive a
quarterly dividend and before such Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preference Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preference Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preference
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth and
except as otherwise provided in the Certificate of Incorporation or required by
law, each share of Series A Preference Stock shall entitle the holder thereof to
100 votes on all matters upon which the holders of the Common Stock of the
Company are entitled to vote. In the event the Company shall at any time after
August 13, 1998 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 A Preference Stock were entitled
immediately prior to such 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, provided, however, that no such adjustment shall be made with respect to
any such dividend or subdivision approved by the Board of Directors on August
12, 1998.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Amendment to the Certificate of
Incorporation creating a series of Preference Stock or any similar stock, and
except as otherwise required by law, the holders of shares of Series A
Preference Stock and the holders of shares of Common Stock and any other capital
stock of the Company having general voting rights shall vote together as one
class on all matters submitted to a vote of shareholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preference Stock shall have no special voting rights and
their consent shall not be required (except
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to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preference Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not earned or declared, on shares of Series A
Preference Stock outstanding shall have been paid in full, the Company shall
not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (as to dividends) to the Series A
Preference Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to
dividends) with the Series A Preference Stock, except dividends paid
ratably on the Series A Preference 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
A Preference Stock, provided that the Company may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Company ranking junior (as to
dividends and upon dissolution, liquidation or winding up) to the
Series A Preference Stock or rights, warrants or options to acquire
such junior stock;
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preference Stock, or any shares of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preference Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preference Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their retirement become authorized
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but unissued shares of Preference Stock and may be reissued as part of a new
series of Preference Stock to be created by resolution or resolutions of the
Board of Directors, subject to any conditions and restrictions on issuance set
forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series A Preference Stock unless, prior thereto, the holders of shares of Series
A Preference Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned or
declared, to the date of such payment, provided that the holders of shares of
Series A Preference 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 (B) to the holders of shares of stock ranking on a parity
upon liquidation, dissolution or winding up with the Series A Preference Stock,
except distributions made ratably on the Series A Preference Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event, however, that there are not sufficient assets available to permit payment
in full of the Series A Preference Stock liquidation preference and the
liquidation preferences of all other classes and series of stock of the Company,
if any, that rank on a parity with the Series A Preference Stock in respect
thereof, then the assets available for such distribution shall be distributed
ratably to the holders of the Series A Preference Stock and the holders of such
parity shares in the proportion to their respective liquidation preferences. In
the event the Company shall at any time after August 12, 1998 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 A
Preference Stock were entitled immediately prior to such event under the proviso
in clause (A) 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, provided, however, that no such adjustment shall be made with
respect to any such dividend or subdivision approved by the Board of Directors
on August 12, 1998.
Section 7. Consolidation, Merger, etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are converted into, exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such case each
share of Series A Preference Stock shall at the same time be similarly converted
into, exchanged for 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
converted, exchanged or converted. In the event the Company shall at
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any time after August 12, 1998 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 conversion,
exchange or change of shares of Series A Preference Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event, provided, however, that no such
adjustment shall be made with respect to any such dividend or subdivision
approved by the Board of Directors on August 12, 1998.
Section 8. No Redemption. The shares of Series A Preference Stock shall
not be redeemable from any holder.
Section 9. Rank. The Series A Preference Stock shall rank, with respect
to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up of the Company, junior to all series of Preferred
Stock and to all other series of Preference Stock and senior to the Common
Stock.
Section 10. Amendment. If any proposed amendment to the Certificate of
Incorporation would alter, change or repeal any of the preferences, powers or
special rights given to the Series A Preference Stock so as to affect the Series
A Preference Stock adversely, then the holders of the Series A Preference Stock
shall be entitled to vote separately as a class upon such amendment, and the
affirmative vote of two-thirds of the outstanding shares of the Series A
Preference Stock, voting separately as a class, shall be necessary for the
adoption thereof, in addition to such other vote as may be required by the
Business Corporation Law of the State of Connecticut.
Section 11. Fractional Shares. Series A Preference Stock may be issued
in fractions of a share that 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 Series A Preference Stock.
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The foregoing Amendment to the Company's Certificate of Incorporation
was adopted by the Board of Directors without shareholder action. No shareholder
vote was required for adoption.
IN WITNESS WHEREOF, this Certificate of Amendment of Certificate of
Incorporation is executed on behalf of the Company by its President/CEO this
27th day of August, 1998.
/s/ Marshall T. Chiaraluce
--------------------------
Name: Marshall T. Chiaraluce
Title: President/CEO
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