SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 26, 1996
AQUARION COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1-8060 06-0852232
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(State of (Commission File Number) IRS Employer
Incorporation) Identification No.
835 Main Street
Bridgeport, Connecticut 06601
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(Address of principal executive offices) (Zip Code)
(203) 335-2333
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(Registrant's telephone number)
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Item 5. Other Events
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On June 25, 1996 the Board of Directors of Aquarion Company
(the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, no par
value ($1 per share stated value), of the Company (the "Common Stock").
The dividend is payable on July 12, 1996 (the "Record Date") to the
stockholders of record on that date. Upon the earlier of (i) the
expiration of rights (the "Existing Rights") issued pursuant to the
Rights Agreement dated as of November 18, 1986 between the Company and
The Chase Manhattan Bank N.A., Rights Agent (the "Prior Rights
Agreement") or (ii) the redemption of the Existing Rights as provided in
the Prior Rights Agreement (the earlier of such dates referred to as the
"Effective Date"), each Right shall entitle the registered holder to
purchase from the Company one one-hundredth of a share of Series B
Junior Participating Preferred Stock, without par value (the "Preferred
Stock") of the Company at a price of $120 per one one-hundredth of a
share of Preferred Stock (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights
Agreement dated as of June 25, 1996 as the same may be amended from time
to time (the "Rights Agreement"), between the Company and ChaseMellon
Shareholder Services, L.L.C., 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 out-
standing 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 Date (or
earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for shares of Common Stock
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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 the tenth anniversary of the Effective Date
(the "Final Expiration Date"), unless the Final Expiration Date is
advanced or extended or unless the Rights are earlier redeemed or ex-
changed by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Pre-
ferred 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 Preferred Stock, (ii) upon the
grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities
convertible into Preferred Stock with a conversion price, less than the
then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends or
dividends payable in Preferred Stock) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights are 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 subdi-
visions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each share of Preferred 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 Preferred 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
Preferred 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
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converted or exchanged, each share of Preferred 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 Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-hundredth
interest in a share of Preferred 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 Preferred Stock (or of a share of a class or series of the
Company's 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 Preferred
Stock will be issued (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred 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
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Preferred Stock on the last trading day prior to the date of exercise.
At any time prior to the time an Acquiring Person becomes
such, 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 stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
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Item 7. Exhibits
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1. Rights Agreement, dated as of June 25, 1996, between the
Company and ChaseMellon Shareholder Services, L.L.C. which
includes the Certificate of Designations for the Series B
Junior Participating Preferred Stock as Exhibit A, the form of
Right Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Shares 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. Press Release dated June 25, 1996.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
AQUARION COMPANY
Dated: June 26, 1996 By: /s/ Janet M. Hansen
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Name: Janet M. Hansen
Title: Executive Vice President,
Chief Financial Officer
and Treasurer
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EXHIBIT INDEX
Exhibit No. Description
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1. Rights Agreement, dated as of June 25, 1996, between the Company
and ChaseMellon Shareholder Services, L.L.C. which includes the
Certificate of Designations for the Series B Junior Participating
Preferred Stock as Exhibit A, the form of Right Certificate as
Exhibit B and the Summary of Rights to Purchase Preferred Shares 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. Press Release dated June 25, 1996.
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EXHIBIT 1
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AQUARION COMPANY
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
Rights Agreement
Dated as of June 25, 1996
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . 9
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . 9
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . 12
Section 5. Countersignature and Registration . . . . . . . . . . . 13
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates . . . . . . . . . . . . . . . . . . . . . . 14
Section 7. Exercise of Rights, Purchase Price; Expiration Date of
Rights . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8. Cancellation and Destruction of Right Certificates . . . 19
Section 9. Availability of Shares of Preferred Stock . . . . . . . 19
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . 22
Section 11. Adjustment of Purchase Price, Number of Shares and
Number of Rights . . . . . . . . . . . . . . . . . . . . 23
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earnings Power . . . . . . . . . . . . . . . . . . . . . 43
Section 14. Fractional Rights and Fractional Shares . . . . . . . . 50
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . 53
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . 54
Section 17. Right Certificate Holder Not Deemed a Stockholder . . . 55
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . 56
Section 19. Merger or Consolidation or Change of Name of Rights
Agent . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . 58
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . 62
Section 22. Issuance of New Right Certificates . . . . . . . . . . . 64
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Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . 65
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . 69
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . 71
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . 72
Section 29. Benefits of this Agreement . . . . . . . . . . . . . . . 72
Section 30. Determinations and Actions by the Board of Directors . . 72
Section 31. Severability . . . . . . . . . . . . . . . . . . . . . . 73
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . 73
Section 33. Counterparts . . . . . . . . . . . . . . . . . . . . . . 74
Section 34. Descriptive Headings . . . . . . . . . . . . . . . . . . 74
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RIGHTS AGREEMENT
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Agreement, dated as of June 25, 1996 between Aquarion Company, a
Delaware corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C. (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred 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 July 12,
1996 (the "Record Date") each Right representing the right to purchase
one-hundredth (subject to adjustment) of a share of Preferred 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
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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:
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(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 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
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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.
Notwithstanding the foregoing, (i) if a Person would be deemed an
Acquiring Person upon the adoption of this Agreement because of
ownership of 15% or more but less than 20% of the shares of stock on
such date, such Person will not be deemed an Acquiring Person for any
purposes
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3
of this Agreement unless and until such Person acquires
Beneficial Ownership 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), after the
adoption of this Agreement unless upon the 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 and
(ii) 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
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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 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
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4
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 hereof.
(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
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5
members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided,
--------
however, that a Person shall not be deemed the Beneficial Owner of,
-------
or to beneficially own, (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
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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
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6
and regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to
a bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by
the proviso to Section 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 New York,
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.,
New York City time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., New York City time, on
the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company shall
mean the common stock, no par value ($1 per share stated value) of the
Company. "Common Stock" when used with reference to any Person other
than the Company shall mean
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7
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.
(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) "New York Stock Exchange" shall mean the New York Stock
Exchange, Inc.
(m) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
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8
(n) "Preferred Stock" shall mean the Series B Junior Participating
Preferred Stock, without par value, of the Company having the rights and
preferences set forth in the Form of Certificate of Designation attached
to this Agreement as Exhibit A.
(o) "Prior Rights Agreement" shall mean the Rights Agreement dated
as of November 18, 1986 between the Hydraulic Company and the Chase
Manhattan Bank, N.A., 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 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.
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9
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.
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 (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)
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10
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
Preferred 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
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.
<PAGE>
<PAGE>
11
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, disposition of
Common Stock out of treasury 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 Aquarion Company and
ChaseMellon Shareholder Services, L.L.C. dated as of
June 25, 1996 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 Aquarion 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. Aquarion 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
<PAGE>
<PAGE>
12
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 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 the New York Stock Exchange or of any
other stock exchange or automated quotation system on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of
<PAGE>
<PAGE>
13
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 Preferred Stock as shall be set forth therein
at the price per one one-hundredth of a share of Preferred Stock set
forth therein (the "Purchase Price"), but the number of such one one-
hundredths of a share of Preferred Stock and the Purchase Price shall be
subject to adjustment as provided herein.
Section 5. Countersignature and Registration. (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
<PAGE>
<PAGE>
14
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 evi-
denced 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. (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 Preferred Stock as the Right Certificate or Right Certifi-
cates 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
<PAGE>
<PAGE>
15
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 indem-
nity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the 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
- ---------
<PAGE>
<PAGE>
16
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 Preferred
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) Purchase Price shall be initially $120 for each one
one-hundredth of a share of Preferred Stock purchasable upon the
exercise of a Right. The Purchase Price and the number of one one-
hundredths of a share of Preferred 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.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the
<PAGE>
<PAGE>
17
form of election to purchase duly executed, accompanied by payment of
the aggregate Purchase Price for the shares of Preferred 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
Preferred Stock certificates for the number of shares of Preferred 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 Preferred Stock as are to be purchased (in
which case certificates for the Preferred 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.
<PAGE>
<PAGE>
18
(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 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
<PAGE>
<PAGE>
19
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 Preferred Stock.
------------------------------------------
(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 Preferred Stock or any shares of
Preferred Stock held in its treasury, the number of shares of Preferred
Stock that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred 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 the New York Stock Exchange or listed on any
other national securities exchange or 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 the New York Stock Exchange or listed
on any other exchange or quotation system upon official notice of
issuance upon such exercise.
<PAGE>
<PAGE>
20
(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 Preferred 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 Preferred 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
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
<PAGE>
<PAGE>
21
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 Preferred 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 Preferred 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 Preferred 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 surrendered for exercise or
to issue or deliver any certificates or depositary receipts for
Preferred 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)
<PAGE>
<PAGE>
22
or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose
---------------------------
name any certificate for Preferred 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 Preferred 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
Preferred 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 Preferred 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 Preferred
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 Preferred
- ----------------
Stock or other securities or property purchasable upon exercise of each
Right and the number of Rights outstanding
<PAGE>
<PAGE>
23
are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of Preferred Stock or (D) issue any shares of its
capital stock in a reclassification of the Preferred 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
Preferred 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
<PAGE>
<PAGE>
24
be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right.
(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
Preferred 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 Subsection
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 Preferred Stock, such number of shares of Common
Stock (or at the option of the Company, such number of one one-
hundredths of shares of Preferred 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 Preferred 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
<PAGE>
<PAGE>
25
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
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
<PAGE>
<PAGE>
26
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
paragraph, and any Right Certificate delivered to the Rights Agent
that represents Rights that are or have become void pursuant to the
provisions of this paragraph 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 subparagraph (ii) such number or fractions of
shares of Preferred 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 subparagraph (ii), the Board of Directors shall, to the
extent permitted by applicable law
<PAGE>
<PAGE>
27
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 the
foregoing subparagraph (ii) (the "Current Value") over (2) the then
current Purchase Price multiplied by the number of one one-hundredths
of shares of Preferred 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 subparagraph (ii) upon exercise of the
Right and payment of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) shares of Preferred Stock or
other equity securities of the Company (including, without
limitation, shares or fractions of shares of 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 preferred stock and shares or fractions of shares of
preferred stock are hereinafter referred to as "Common Stock
equivalents"), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having a value
which, when
<PAGE>
<PAGE>
28
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 necessary, such number or fractions of shares of Preferred 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
<PAGE>
<PAGE>
29
than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek stockholder 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) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to
seek any authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to such 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 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 of the Common
Stock. The Board of Directors of the Company
<PAGE>
<PAGE>
30
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 Preferred Stock entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe
for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("equivalent preferred
shares")) or securities convertible into Preferred Stock or equivalent
preferred shares at a price per share of Preferred Stock or equivalent
preferred shares (or having a conversion price per share, if a security
convertible into shares of Preferred Stock or equivalent preferred
shares) less than the then current per share market price of the
Preferred 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 Preferred Stock and equivalent
preferred shares outstanding on such record date plus the number of
shares of Preferred Stock and equivalent preferred shares which the
aggregate offering price of the total number of shares of Preferred
Stock and/or equivalent preferred shares so to be offered (and/or the
<PAGE>
<PAGE>
31
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 Preferred Stock
and equivalent preferred shares outstanding on such record date plus the
number of additional shares of Preferred Stock and/or equivalent
preferred shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible); 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 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 Preferred Stock and equivalent preferred shares owned
by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such 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.
<PAGE>
<PAGE>
32
(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 Preferred 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 Preferred Stock) or subscription rights or 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 Preferred 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 Preferred Stock, and the denominator
of which shall be such current per share market price (determined
pursuant to Section 11(d) hereof) of the Preferred 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 of the shares
of capital stock of the Company to be issued upon exercise of one Right.
Such adjustments shall be made
<PAGE>
<PAGE>
33
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 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,
<PAGE>
<PAGE>
34
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 on which the Security is listed or
admitted to trading is open for the transaction of business or, if
the Security is not listed or admitted to trading on any national
securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, if the
Preferred Stock is publicly traded, the "current per share market
price" of the Preferred Stock shall be determined in accordance
with the method set forth in Section 11(d)(i). If the Preferred
Stock is not publicly traded but the Common
<PAGE>
<PAGE>
35
Stock is publicly traded, the "current per share market price" of the
Preferred 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 Preferred Stock is publicly traded, "current per share market
price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least 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 Preferred 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>
<PAGE>
36
(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 Preferred 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
Preferred 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 Preferred 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 Preferred 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 Preferred
<PAGE>
<PAGE>
37
Stock (calculated to the nearest one ten- thousandth of a share of Preferred
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 Pur-
chase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one-hundredths of a share of
Preferred 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
Preferred 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 ten-thousandth) 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
<PAGE>
<PAGE>
38
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 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 Preferred 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 Preferred Stock
which were expressed in the initial Right Certificates issued hereunder.
<PAGE>
<PAGE>
39
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the
Preferred 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
Preferred 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 Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
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
<PAGE>
<PAGE>
40
the extent that it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision
of the Preferred Stock, issuance wholly for cash of any shares of
Preferred Stock at less than the current market price, issuance wholly
for cash or Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, dividends on
Preferred Stock payable in shares of Preferred Stock or issuance of
rights, options or warrants referred to hereinabove in Section 11(b),
hereafter made by the Company to holders of its Preferred Stock shall
not be taxable to such stockholders.
(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<PAGE>
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 numerator of which shall be the total
<PAGE>
<PAGE>
41
number of shares of Common Stock outstanding immediately prior to the
occurrence of the 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 Preferred 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
- -----------------
<PAGE>
<PAGE>
42
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 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 Preferred 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
Preferred Stock, such number of validly issued, fully
<PAGE>
<PAGE>
43
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 Preferred 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 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 the 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
<PAGE>
<PAGE>
44
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 Section 13(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 Section
13(a), and such Principal Party shall take such steps (including,
but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in
accordance with the terms hereof for such cash, shares, rights,
warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (i) or (ii)
of the first sentence of Section 13(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
<PAGE>
<PAGE>
45
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
(ii) in the case of any transaction described in (iii) of the
first sentence in Section 13(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 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
<PAGE>
<PAGE>
46
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 practicable after executing such agreement
pursuant to this Section 13, the Principal Party will:
<PAGE>
<PAGE>
47
(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 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
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the
<PAGE>
<PAGE>
48
Principal Party subject to purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has 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.
<PAGE>
<PAGE>
49
(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) - (iii) of Section 13(a)
hereof if (x) at the time of or immediately after such consolidation,
merger, 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 stockholders 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
<PAGE>
<PAGE>
50
the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such
other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the
Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Stock (other than fractions which are integral
<PAGE>
<PAGE>
51
multiples of one one-hundredth of a share of Preferred Stock) upon exercise
of the Rights or to distribute certificates which evidence fractional shares
of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock). Interests in
fractions of Preferred Stock in integral multiples of one one-hundredth
of a share of Preferred 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 Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one one-hundredth of a share of
Preferred 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 fraction of the current
market value of one share of Preferred Stock. For the purposes of this
Section 14(b), the current market value of a share of Preferred Stock
shall be the closing price of a share of Preferred 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
<PAGE>
<PAGE>
52
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 a whole share of Common Stock (as determined in accordance with
Section 14(a) 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 the
Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of
the Common Stock), 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
<PAGE>
<PAGE>
53
and in this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
--------------------------
Right, by accepting the same, consents and agrees with the Company and
the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of 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 nota-
tions of ownership or writing on the Right Certificates or the Common
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the
<PAGE>
<PAGE>
54
Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
-------------------------------------------------
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
Preferred 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 stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (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,
<PAGE>
<PAGE>
55
liability or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly. Anything in this Agreement to the
contrary notwithstanding, in no event shall the Rights Agent be liable
for special, indirect or consequential loss or damage of any kind
whatsoever, even if ChaseMellon has been advised of the likelihood of such
loss or damages and regardless of the form of action.
(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 Preferred Stock or
Common Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, let-
ter, 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
<PAGE>
<PAGE>
56
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 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
<PAGE>
<PAGE>
57
its prior name or in its changed name and
in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
----------------------
the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the Company and the
holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed
by 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
<PAGE>
<PAGE>
58
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 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 certificate furnished pursuant
<PAGE>
<PAGE>
59
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 Preferred Stock or other
securities to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of Preferred 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
<PAGE>
<PAGE>
60
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 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 stockholder, 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
<PAGE>
<PAGE>
61
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 the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
----------------------
successor Rights Agent may resign and be discharged from its duties
under this Agreement upon 30 days' notice in writing mailed to the
Company and to each transfer agent of the Common Stock or Preferred
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 Preferred 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
<PAGE>
<PAGE>
62
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, or an affiliate of such
a corporation. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it
had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment the
Company shall
<PAGE>
<PAGE>
63
file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Stock or Preferred 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 each case existing prior
to the Distribution Date, issue Rights Certificates representing the
appropriate number of Rights in connection with such issuance or sale.
<PAGE>
<PAGE>
64
Section 23. Redemption. (a) The Board of Directors of the
----------
Company may, at any time prior to such time as any Person first becomes
an Acquiring Person, redeem all but not less than all the then out-
standing 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) 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
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
<PAGE>
<PAGE>
65
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 Dis-
tribution 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 Af-
filiates and Associates of such Person, 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
<PAGE>
<PAGE>
66
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
<PAGE>
<PAGE>
67
effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(ii) 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 Preferred 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 Preferred 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 Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred
Stock rights or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, (iii) to effect any
<PAGE>
<PAGE>
68
reclassification of
its Preferred Stock (other than a reclassification involving only the
subdivision or combination of outstanding Preferred Stock), (iv) to
effect the liquidation, dissolution or winding up of the Company, or (v) to
declare or pay any dividend on the Common 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 Preferred 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 Preferred 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
Preferred 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
<PAGE>
<PAGE>
69
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. Notices or demands authorized by this
-------
Agreement to be given or made by the Rights Agent or by the holder of
any Right Certificate to or on the Company shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Rights Agent) as follows:
Aquarion Company
835 Main Street
Bridgeport, Connecticut 06601
Attention: Corporate 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:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Overpeck Centre
Ridgefield Park, NJ 07660
Attention: Reorganization Department
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.
<PAGE>
<PAGE>
70
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 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
<PAGE>
<PAGE>
71
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 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
<PAGE>
<PAGE>
72
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 Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the
--------------------
several Sections of this Agreement are inserted for
<PAGE>
<PAGE>
73
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: AQUARION COMPANY
By S/S Larry L. Bingaman By S/S Janet M. Hansen
-------------------------- -------------------------
Name: Larry L. Bingaman Name: Janet M. Hansen
Title:Vice President Corporate Title:Executive Vice President,
Relations and Secretary Chief Financial Officer
and Treasurer
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
Attest:
By S/S Joan B. Hayes By S/S Lee Tinto
------------------------- -------------------------
Name: Joan B. Hayes Name: Lee Tinto
Title:Assistant Vice President Title:Trust Officer
<PAGE>
<PAGE>
Exhibit A
---------
FORM
OF
CERTIFICATE OF DESIGNATION
OF
Series B JUNIOR PARTICIPATING PREFERRED STOCK
OF
AQUARION COMPANY
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
___________________
Aquarion Company, a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called
the "Company"), hereby certifies that the following resolution was duly
adopted by the Board of Directors of the Company as required by Section
151 of the General Corporation Law of the State of Delaware at a meeting
duly called and held on June 25, 1996:
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 here-
by creates a series of Preferred Stock, without par value, of the
Company and hereby states the designation and number of shares, and
fixes the relative rights, powers and preferences thereof, and the
limitations thereof, as follows:
Section 1. Designation and Amount. The shares of such
----------------------
series shall be designated as "Series B Junior Participating Preferred
Stock" (the "Series B Preferred Stock") and the number of shares
constituting the Series B Preferred Stock shall be 100,000. 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 B Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the Company
convertible into Series B Preferred Stock. Shares of Series B Preferred
Stock shall have a stated capital of $10.00 per share, which for
purposes of Article 4 of the Certificate of Incorporation shall also
constitute the "stated value" of such shares.
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Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company (the "Preferred Stock") (or any
similar stock) ranking prior and superior to the Series B Preferred
Stock with respect to dividends, the holders of shares of Series B
Preferred Stock, in preference to the holders of Common Stock, no par
value ($1 per share stated value) of the Company (the "Common Stock")
and of any other stock of the Company ranking junior to the Series B
Preferred 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 B Preferred 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 B
Preferred Stock. In the event the Company shall at any time after June
25, 1996 declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or con-
solidation 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 B
Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series B Preferred 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 B Preferred 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 B
Preferred 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 B Preferred 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 B Preferred 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 B Preferred 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
-------------
B Preferred 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 B
Preferred 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 June 25, 1996 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 B Preferred 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.
(B) Except as otherwise provided herein, in the
Certificate of Incorporation or in any other Certificate of
Designations creating a series of Preferred Stock or any
similar stock, and except as otherwise required by law, the
holders of shares of Series B Preferred Stock and the
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<PAGE>
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 stockholders
of the Company.
(C) Except as set forth herein, or as otherwise provided
by law, holders of Series B Preferred Stock shall have no
special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred 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 B Preferred 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 B Preferred 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 B Preferred Stock, except
dividends paid ratably on the Series B Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series B Preferred 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 B Preferred Stock or
rights, warrants or options to acquire such junior stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series B
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
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<PAGE>
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 B
-----------------
Preferred 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 Preferred Stock and may be reissued as
part of a new series of Preferred 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 B Preferred Stock
unless, prior thereto, the holders of shares of Series B Preferred 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 B Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (B) to
the holders of shares of stock ranking on a parity upon liquidation,
dissolution or winding up with the Series B Preferred Stock, except
distributions made ratably on the Series B Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation, dissolution or
winding up. In the event, however, that there are not sufficient assets
available to permit payment in full of the Series B 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 B Preferred Stock in respect thereof, then the assets available
for such distribution shall be distributed ratably to the holders of the
Series B Preferred 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 June 25, 1996 declare or pay any dividend
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<PAGE>
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 B Preferred 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.
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 B Preferred
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 June 25, 1996 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 B Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B Preferred
-------------
Stock shall not be redeemable from any holder.
Section 9. Rank. The Series B Preferred 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 other series of Preferred Stock and senior to the Common Stock.
Section 10. Amendment. If any proposed amendment to the
---------
Certificate of Incorporation (including this Certificate of
Designations) would alter, change or repeal any of the preferences,
powers or special rights given to the Series B
A-6
<PAGE>
<PAGE>
Preferred Stock so as to affect the Series B Preferred Stock adversely, then
the holders of the Series B Preferred 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 B Preferred 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 General Corporation
Law of the State of Delaware.
Section 11. Fractional Shares. Series B Preferred 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 B Preferred Stock.
A-7
<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Company by its Executive Vice President,
Chief Financial Officer and Treasurer and attested by its Secretary
this 26 day of June 1996.
________________________________________
Executive Vice President,
Chief Financial Officer
and Treasurer
Attest:
______________________
Secretary
A-8
<PAGE>
<PAGE>
Exhibit B
---------
Form of Right Certificate
Certificate No. R- ____ ___ Rights
NOT EXERCISABLE AFTER _____________, 2006 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
AQUARION COMPANY
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 June 25, 1996 as the
same may be amended from time to time (the "Rights Agreement"), between
Aquarion Company, a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (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.,
New York City time, on ________________, 2006 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 B Junior Participating Preferred Stock, without par value (the
"Preferred Stock"), of the Company, at a purchase price of $120 per one
one-hundredth of a share of Preferred 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 share
of Preferred 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 June 25, 1996 based on the Preferred 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 Preferred
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.
B-1
<PAGE>
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 Preferred 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 Preferred Stock or shares of the Company's Common
Stock, no par value ($1 per share stated value).
No fractional shares of Preferred Stock or Common Stock will
be issued upon the exercise or exchange of any Right or Rights evidenced
hereby (other than fractions of Preferred Stock which are integral
multiples of one one-hundredth of a share of Preferred 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 Preferred 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 stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
B-2
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<PAGE>
stockholders (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>
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of _____________.
ATTEST: AQUARION COMPANY
By __________________ By __________________
Countersigned:
_______________________,
as Rights Agent
By________________________
Authorized Signature
B-4
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<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED _________________________ hereby sells,
assigns and 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>
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 Aquarion Company:
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to
purchase the shares of Preferred Stock (or other securities or property)
issuable upon the exercise of such Rights and requests that certificates
for such shares of Preferred 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.
B-6
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<PAGE>
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.
B-7
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<PAGE>
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 Preferred Stock
On June 25, 1996 the Board of Directors of Aquarion Company
(the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, no par
value ($1 per share stated value), of the Company (the "Common Stock").
The dividend is payable on July 12, 1996 (the "Record Date") to the
stockholders of record on that date. Upon the earlier of (i) the
expiration of rights (the "Existing Rights") issued pursuant to the
Rights Agreement dated as of November 18, 1986 between the Company and
The Chase Manhattan Bank N.A., Rights Agent (the "Prior Rights
Agreement") or (ii) the redemption of the Existing Rights as provided in
the Prior Rights Agreement (the earlier of such dates referred to as the
"Effective Date"), each Right shall entitle the registered holder to
purchase from the Company one one-hundredth of a share of Series B
Junior Participating Preferred Stock, without par value (the "Preferred
Stock") of the Company at a price of $120 per one one-hundredth of a
share of Preferred Stock (the "Purchase Price"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights
Agreement dated as of June 25, 1996 as the same may be amended from time
to time (the "Rights Agreement"), between the Company and ChaseMellon
Shareholder Services, L.L.C., 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 out-
standing 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
<PAGE>
<PAGE>
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
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 the tenth anniversary of the Effective Date
(the "Final Expiration Date"), unless the Final Expiration Date is
advanced or extended or unless the Rights are earlier redeemed or ex-
changed by the Company, in each case as described below.
The Purchase Price payable, and the number of shares of Pre-
ferred 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 Preferred Stock, (ii) upon the
grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities
convertible into Preferred Stock with a conversion price, less than the
then-current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends or
dividends payable in Preferred Stock) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights are 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 subdi-
visions, consolidations or combinations of the Common Stock occurring,
in any such case, prior to the Distribution Date.
Shares of Preferred Stock purchasable upon exercise of the
Rights will not be redeemable. Each share of Preferred 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
2
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<PAGE>
Preferred 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
Preferred 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 Preferred 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 Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-hundredth
interest in a share of Preferred 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 Preferred Stock (or of a share of a class or series of the
Company's 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
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adjustment of at least 1% in such Purchase Price. No fractional shares of
Preferred Stock will be issued (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred 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 Preferred Stock on the last trading day prior to the date
of exercise.
At any time prior to the time an Acquiring Person becomes
such, 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 stockholder 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 dated June 26, 1996. 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.
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EXHIBIT 2
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For Immediate Release CONTACT:
Larry L. Bingaman
(203) 336-7626
AQUARION ADOPTS REPLACEMENT
SHAREHOLDER RIGHTS PLAN
BRIDGEPORT, Conn., June 25, 1996 -- Aquarion Company (NYSE:WTR) today
announced that its board of directors has adopted a replacement
shareholder rights plan. The new rights will become effective upon
the earlier of December 3, 1996, when the existing rights expire, or the
earlier redemption of the existing rights.
"The revised rights plan continues to provide protection against
abusive takeover tactics such as a partial or two-tier tender offer,"
said Richard K. Schmidt, president and chief executive officer. "It
should also encourage anyone seeking to acquire the company to negotiate
with the board first, thereby providing a reasonable means of
safeguarding the interests of all shareholders if an effort is made to
acquire the company at a price not reflective of its fair market value,"
he said. The replacement rights plan was not adopted in response to
any known effort to acquire the company, Schmidt commented.
The distribution of the replacement rights will be made on July
12, 1996, payable to shareholders of record at the close of business on
that date. The replacement rights will expire on the tenth anniversary
of their effective date.
Aquarion Company is engaged primarily in the supply and protection
of public water. Its principal subsidiary, Bridgeport Hydraulic Company,
is one of the 10 largest investor-owned water utilities in the U.S. and
serves a population of 500,000 in 25 Connecticut and Long Island
communities. Other businesses include environmental testing
laboratories, real estate through the sale of surplus water company
land, timber processing and contract management of municipal water
systems.
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