FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Pennsylvania Enterprises, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1920170
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(State of incorporation or organization) (IRS Employer Identification No.)
Wilkes-Barre Center, 39 Public Square, Wilkes-Barre, PA 18711-0601
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Common Stock Purchase Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
<PAGE>
Item 1. Description of Registrant's Securities
to be Registered
On April 26, 1995, the Board of Directors of Pennsylvania
Enterprises, Inc. (the "Company") declared a dividend distribution of one Right
for each outstanding share of Common Stock, no par value (stated value $10 per
share), of the Company (the "Common Shares") to stockholders of record on May
16, 1995 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one-half of a Common Share. No less than two Rights,
and only integral multiples of two Rights, may be exercised at any time by
holders of Rights at a price of $100 per Common Share (the "Purchase Price")
(equivalent to $50 for each one-half of a Common Share), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between the Company and Chemical Bank, as Rights
Agent.
Initially, the Rights will be attached to all Common Share
certificates representing Common Shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Shares (an "Acquiring
Person"), or (ii) 10 business days (or such later day as may be determined by
action of the Board of Directors prior to such time as any person or group
becomes an Acquiring Person) following the commencement of a tender offer or
exchange offer if, upon consummation thereof, any person or group would be an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such certificate together
with a copy of this Summary of Rights. The date of announcement of the
existence of an Acquiring Person referred to in clause (i) above is hereinafter
referred to as the "Share Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Share certificates.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights), the surrender
for transfer of any certificates for Common Shares outstanding as of the Record
Date, with or without a copy of this Summary of Rights attached thereto, will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares on the
Distribution Date and, thereafter, such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on May 16, 2005, unless earlier redeemed or
exchanged by the Company as described below.
<PAGE>
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, the Rights Agreement provides that proper
provision shall be made so that each holder of two Rights, except as provided
below, shall thereafter have the right to receive, upon exercise, Common Shares
(or, in certain circumstances, Common Stock Equivalents (as such term is
defined in the Rights Agreement)) having a value equal to two (2) times the
exercise price of two Rights. Upon the occurrence of the event described in
the preceding sentence, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate (as such terms are defined in the Rights
Agreement) of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of the Rights Agreement, shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of the Rights
Agreement or otherwise.
At any time after the occurrence of the event described in the first
sentence of the preceding paragraph and prior to the acquisition by any Person
of 50% or more of the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (except Rights which previously have been
voided as described above), in whole, but not in part, at an exchange ratio of
one Common Share (or, in certain circumstances, one Common Stock Equivalent)
per Right.
In the event that, following the earlier of the Distribution Date and
the Share Acquisition Date, (i) the Company engages in a merger or other
business combination transaction in which the Company is not the surviving
corporation, (ii) the Company engages in a merger or other business combination
transaction with another person in which the Company is the surviving
corporation, but in which its Common Shares are changed or exchanged, or (iii)
more than 50% of the Company's assets or earning power is sold or transferred
(other than a sale of the water business of Pennsylvania Gas and Water Company
("PG&W") pursuant to an Asset Purchase Agreement dated as of April 26, 1995
among the Company, PG&W, Pennsylvania-American Water Company and American Water
Works Company, Inc.), the Rights Agreement provides that proper provision shall
be made so that each holder of two Rights (except Rights which previously have
been voided as described above) shall thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of two Rights,
common stock of the acquiring company having a value equal to two (2) times the
exercise price of two Rights.
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to holders of the Common Shares of certain rights, options or
<PAGE>
warrants to subscribe for Common Shares or convertible securities at less than
the current market price of the Common Shares (except for rights under the
Company's Dividend Reinvestment and Stock Purchase Plan or Customer Stock
Purchase Plan), or (iii) upon the distribution to holders of the Common Shares
of evidences of indebtedness, stock (other than a dividend payable in Common
Shares), assets or cash (excluding regular quarterly cash dividends) or of
subscription rights, options or warrants (other than those referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued upon the
exercise of any Right or Rights. In lieu of fractions of a share equal to one-
half of a share or less, a cash payment will be made, as provided in the Rights
Agreement. No Rights may be exercised that would entitle the holders to any
fraction of a Common Share greater than one-half of a share unless concurrently
therewith such holder purchases an additional fraction of a Common Share which,
when added to the number of Common Shares to be received upon such exercise,
equals an integral number of Common Shares, as provided in the Rights
Agreement.
At any time prior to such time as any Person becomes an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.005 per Right, subject to adjustment (the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The terms of the Rights may be amended by the Company and the Rights
Agent, provided that following the Distribution Date the amendment does not
materially adversely affect the interests of holders of Rights (other than an
Acquiring Person) and provided that no amendment shall be made which decreases
the Redemption Price.
As of April 28, 1995 there were 5,735,530 Common Shares issued and
outstanding and 757, 285 Common Shares reserved for issuance. Shareholders of
record on May 16, 1995 will receive one Right for each Common Share held. As
long as the Rights are attached to the Common Shares, the Company will issue
one Right with each new Common Share. The Company's Board of Directors has
reserved for issuance upon exercise of the Rights, 3,276,438 Common Shares.
The Rights have certain antitakeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by its Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors at a time when the Rights are redeemable.
The Rights Agreement, specifying the terms of the Rights (which
includes as Exhibit A the form of Rights Certificate), is attached hereto as an
exhibit and is incorporated herein by reference. The foregoing description of
the Rights is qualified in its entirety by reference to such Exhibit.
<PAGE>
<TABLE>
<CAPTION>
Item 2. Exhibits
<S> <C>
1. Rights Agreement, dated as of April 26, 1995 between Pennsylvania
Enterprises, Inc. and Chemical Bank, as Rights Agent, which includes
the form of Rights Certificate as Exhibit A. Pursuant to the Rights
Agreement, printed Rights Certificates will not be mailed until as
soon as practicable after the Distribution Date.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: May 10, 1995
PENNSYLVANIA ENTERPRISES, INC.
By /s/ John F. Kell, Jr.
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John F. Kell, Jr.
Vice President, Finance
<PAGE>
Index to Exhibits
Exhibit
1. Rights Agreement, dated as of April 26, 1995, between Pennsylvania
Enterprises, Inc. and Chemical Bank, as Rights Agent, which includes the
form of Rights Certificate as Exhibit A.
EXHIBIT 1
PENNSYLVANIA ENTERPRISES, INC.
and
CHEMICAL BANK
Rights Agent
Rights Agreement
Dated as of April 26, 1995
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Section Page
<S> <C> <C>
1 Certain Definitions................................ 1
2 Appointment of Rights Agent........................ 5
3 Issue of Right Certificates........................ 5
4 Form of Right Certificates......................... 6
5 Countersignature and Registration.................. 7
6 Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates.......................... 7
7 Exercise of Rights; Purchase Price; Expiration
Date of Right...................................... 8
8 Cancellation and Destruction of Right
Certificates....................................... 10
9 Reservation and Availability of Common Shares...... 10
10 Common Shares Record Date.......................... 11
11 Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights......................... 12
12 Certificate of Adjusted Purchase Price or
Number of Shares................................... 17
13 Consolidation, Merger or Sale or Transfer of
Assets or Earning Power............................ 17
14 Additional Covenants............................... 20
15 Fractional Rights and Fractional Shares............ 21
16 Rights of Action................................... 21
17 Agreement of Rights Holders........................ 22
18 Right Certificate Holder Not Deemed a Stockholder.. 22
19 Concerning the Rights Agent........................ 23
<PAGE>
Section Page
<S> <C> <C>
20 Merger or Consolidation or Change of Name of
Rights Agent....................................... 23
21 Duties of Rights Agent............................. 24
22 Change of Rights Agent............................. 25
23 Issuance of New Right Certificates................. 26
24 Redemption......................................... 27
25 Exchange........................................... 27
26 Notice of Certain Events........................... 28
27 Notices............................................ 29
28 Supplements and Amendments......................... 30
2 Successors......................................... 30
30 Determinations and Actions by the Board of
Directors, etc. ................................... 30
31 Benefits of this Agreement......................... 31
32 Severability....................................... 31
33 Governing Law...................................... 31
34 Counterparts....................................... 31
35 Descriptive Headings............................... 31
Exhibit A -- Form of Right Certificate...................... A-1
Exhibit B -- Form of Summary of Rights...................... B-1
</TABLE>
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of April 26, 1995 (the "Agreement"),
between Pennsylvania Enterprises, Inc., a Pennsylvania corporation (the
"Company"), and Chemical Bank, a New York banking corporation (the "Rights
Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as such term is hereinafter defined) for each share of
common stock, no par value (stated value $10 per share), of the Company (the
"Common Shares") outstanding as of the close of business on May 16, 1995 (the
"Record Date"), and has authorized the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Final Expiration Date (as such terms are hereinafter defined), each Right
representing the right to purchase one-half of a Common Share, upon the terms
and subject to the conditions hereinafter set forth (the "Rights").
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 meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Shares
then outstanding, but shall not include (i) the Company, (ii) any Subsidiary
(as such term is hereinafter defined) of the Company, or (iii) any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan. Notwithstanding the foregoing, no Person shall become an
"Acquiring Person" solely as the result of an acquisition of Common Shares by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Shares then outstanding; provided, however, that if a Person
becomes the Beneficial Owner of 15% or more of the Common Shares then
outstanding by reason of share acquisitions by the Company and shall, after
such share acquisitions, become the Beneficial Owner of any additional Common
Shares, then such Person shall be deemed to be an "Acquiring Person".
(b) "Affiliate", "Associate" and "control" 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.
<PAGE>
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns,
directly or indirectly, within the meaning of Rule 13d-
3 or Rule 13d-5 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, directly or
indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling
group members with respect to a bona fide public
offering of securities), or upon the exercise of
conversion rights, exchange rights, rights, warrants
or options, or otherwise; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own", (A) securities tendered
pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's
Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any
time prior to the occurrence of any event described in
Section 11(a)(ii) hereof or clause (x), (y) or (z) of
Section 13(a) hereof or (C) securities issuable upon
exercise of Rights from and after the occurrence of
any event described in clause (B) of this proviso
which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the
Distribution Date (as such term is hereinafter
defined) or pursuant to Section 3(a) or Section 23
hereof (the "Original Rights") or pursuant to Section
11(i) hereof in connection with an adjustment made
with respect to any Original Rights;
(iii) which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of
pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to
"beneficially own", any security under this
subparagraph (iii) as a result of an agreement,
arrangement or understanding to vote such security if
such agreement, arrangement or understanding (1)
arises solely from a revocable proxy given to such
Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or
successor report); or
(iv) which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate
or Associate thereof) 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
<PAGE>
public offering of securities) for the purpose of
acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to
subparagraph (iii) of this paragraph (c)) or disposing
of any securities of the Company.
If a Person shall be deemed to be the Beneficial Owner of any securities which
are not outstanding, such securities shall be deemed to be outstanding for
purposes of determining the percentage of Common Shares beneficially owned by
such Person.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York or
Commonwealth of Pennsylvania 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) "Company Restructuring" shall mean a sale of the water
business of Pennsylvania Gas and Water Company, a wholly-owned Subsidiary (as
hereinafter defined) of the Company ("PG&W") pursuant to an Asset Purchase
Agreement dated as of April 26, 1995 among the Company, PG&W, American Water
Works Company, Inc. and Pennsylvania-American Water Company, as amended from
time to time.
(g) "Common Shares" when used with reference to the Company (or
without express reference to another Person) shall mean the shares of common
stock, no par value (stated value $10 per share), of the Company or any other
shares of capital stock of the Company into which the Common Shares are
reclassified or changed. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock or other equity
securities or equity or other beneficial interests of such Person with the
greatest aggregate voting power.
(h) "Common Stock Equivalent" shall mean a share, or fraction
of a share, of any authorized class of preferred stock of the Company having
dividend, voting, liquidation and other rights which result, in the judgment of
the Board of Directors, in such share, or fraction of a share, being
approximately equivalent in value to one Common Share as of the Event Date (as
such term is hereinafter defined); provided, however, that, if in the judgment
of the Board of Directors there are not sufficient authorized but unissued
shares of preferred stock available for the creation of Common Stock
Equivalents, "Common Stock Equivalent" shall mean such cash, reduction in
Purchase Price (as such term is hereinafter defined), other equity securities,
debt securities, other assets or any combination of the foregoing, that the
Board of Directors shall determine to be approximately equivalent in value to
one Common Share as of the Event Date. As used herein, "Event Date" shall mean
(i) for purposes of any determination made pursuant to Section 11(a)(iii)
hereof, the date of occurrence of the event described in Section 11(a)(ii)
hereof and (ii) for purposes of any determination made pursuant to Section
25(c) hereof, the Exchange Date (as such term is hereinafter defined).
(i) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
<PAGE>
(j) "Exchange" shall have the meaning set forth in Section 25
hereof.
(k) "Exchange Date" shall have the meaning set forth in Section
7(a) hereof.
(l) "Exchange Ratio" shall have the meaning set forth in
Section 25 hereof.
(m) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(n) "Person" shall mean any individual, firm, corporation,
partnership or other entity and shall include any successor by merger or
otherwise of such Person.
(o) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(p) "Purchase Price" shall have the meaning set forth in
Section 4 hereof.
(q) "Record Date" shall have the meaning set forth in the
recital of this Agreement.
(r) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(s) "Redemption Price" shall have the meaning set forth in
Section 24(a) hereof.
(t) "Registered Common Shares" shall have the meaning set forth
in Section 13(b) hereof.
(u) "Right Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(v) "Rights" shall have the meaning set forth in the recital of
this Agreement.
(w) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(x) "Share Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(y) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which a majority of the voting power of the
<PAGE>
voting equity securities or equity or other beneficial interests is owned,
directly or indirectly, by such Person, or which is otherwise controlled by
such Person.
(z) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(aa) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions 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 earlier of (i) the close of business on the tenth
day after the Share Acquisition Date or (ii) the close of business on the tenth
business day (or such later day 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 that a tender or exchange offer by any Person is first published, sent
or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act if, upon consummation thereof, such Person
would be an Acquiring Person (the earlier of such dates, including any such
date which is after the date of this Agreement and prior to the issuance of the
Rights, being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of paragraph (b) of this Section
3) by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be certificates for Rights)
and not by separate certificates, and (y) the Rights will be transferable only
in connection with the transfer of the underlying Common Shares. As soon as
practicable after the Distribution Date, the Rights Agent will send, by first-
class, insured, postage prepaid mail, to each record holder of Common Shares as
of the close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more Right certificates, in
substantially the form of Exhibit A hereto (the "Right Certificates"),
evidencing one Right for each Common Share so held, subject to adjustment as
provided herein. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) As promptly as practicable after the Record Date, the
Company will send a copy of a Summary of Rights in substantially the form
attached hereto as Exhibit B (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Shares as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for Common Shares outstanding as
<PAGE>
of the Record Date, until the Distribution Date, the Rights will be evidenced
by such certificates for Common Shares together with a copy of the Summary of
Rights, and the registered holders of Common Shares shall also be the
registered holders of the associated Rights. Until the Distribution Date (or
the earliest of the Redemption Date, Exchange Date or Final Expiration Date),
the surrender for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate.
(c) Rights shall be issued in respect of all Common Shares
which become outstanding (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c)) after the Record
Date but prior to the earliest of the Distribution Date, the Redemption Date,
the Exchange Date or the Final Expiration Date. Certificates representing such
Common Shares shall also be deemed to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between
Pennsylvania Enterprises, Inc. (the "Company") and Chemical Bank,
dated as of April 26, 1995 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer
be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement without
charge promptly after receipt of a written request therefor. As
described in the Rights Agreement, Rights beneficially owned by (i)
an Acquiring Person or any Associate or Affiliate thereof (as such
terms are defined in the Rights Agreement), (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes
a transferee after the Acquiring Person becomes such or (iii) under
certain circumstances, a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee before or
concurrently with the Acquiring Person becoming such, shall become
null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date, the Exchange Date or
the Final Expiration Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone
and the registered holders of Common Shares shall also be the holders of the
associated Rights, and the surrender for transfer of any such certificates
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the Distribution
Date, any Rights associated with such Common Shares shall be deemed canceled
and retired so that the Company shall not be entitled to exercise any Rights
associated with the Common Shares which are no longer outstanding.
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 A
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
<PAGE>
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 23 hereof, the
Right Certificates shall entitle the holders thereof to purchase such number of
Common Shares as shall be set forth therein at the price per Common Share set
forth therein (the "Purchase Price"), but the number of such shares 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 its Chairman or Vice Chairman of the Board, its President or any
Vice President, either manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and
delivered by the Company with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Agreement any such person was not
such an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at one of its offices in New York, New York, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates, the Certificate Number of each such Right Certificate 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 Section 7(e) and Section 15
hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the earliest of the Redemption Date,
the Exchange Date or the Final Expiration Date, any Right Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of Common Shares as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
<PAGE>
transferred, split up, combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to
the transfer of any such surrendered Right Certificate or Certificates until
the registered holder shall have completed and signed the certificate contained
in the form of assignment set forth on the reverse side of each such Right
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 7(e) and Section 15 hereof, countersign and deliver
to the person entitled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require payment 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) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will execute
and deliver a new Right Certificate of like tenor to the Rights Agent for
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The Rights shall not be exercisable prior to the
Distribution Date. The registered holder of any Right Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office or offices of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each Common Share as to which the Rights are exercised, at or prior
to the earliest of (i) the close of business on May 16, 2005 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided
in Section 24 hereof (the "Redemption Date") or (iii) the time at which the
Rights are exchanged as provided in Section 25 hereof (the "Exchange Date");
provided, however, that no less than two Rights, and only integral multiples of
two Rights, may be exercised at any time by such registered holders; and
provided further, that if the number of Rights exercised would entitle the
holder thereof to receive any fraction of a Common Share greater than one-half
of a share, the holder thereof shall not be entitled to exercise such rights
unless such holder concurrently purchases from the Company (and in such event
the Company shall sell to such holder), at a price in proportion to the
Purchase Price, an additional fraction of a Common Share which, when added to
the number of Common Shares to be received upon such exercise, will equal an
integral number of Common Shares.
(b) The Purchase Price for each Common Share pursuant to the
exercise of the Rights shall initially be $100 (equivalent to $50 for each one-
<PAGE>
half of a Common Share). The Purchase Price 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) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased as
set forth below 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(e)
hereof, the Rights Agent shall, subject to Section 21(j) hereof, thereupon
promptly (i) requisition from any transfer agent of the Common Shares (or make
available, if the Rights Agent is the transfer agent for such shares)
certificates for the number of Common Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of issuance of fractional shares in accordance with Section 15
hereof, (iii) after receipt of such certificates, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Right Certificate. The payment of
the Purchase Price shall be made in cash or by certified or bank official check
or money order payable to the order of the Company. In the event that the
Company is obligated to issue other securities of the Company pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities are available for distribution by the Rights Agent, if
and when appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 15 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the occurrence of the event described in Section 11(a)(ii)
hereof, any Rights beneficially owned by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. No Right Certificate shall be issued pursuant to Section 3 hereof
that represents Rights beneficially owned by an Acquiring Person whose Rights
<PAGE>
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof and no Right Certificate shall be issued at any time upon the transfer
of any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate. Any Right Certificate delivered
to the Rights Agent for transfer to any of the foregoing Persons, or which
represents void Rights, shall be canceled. The Company shall use reasonable
efforts to effect compliance with the provisions of this Section 7(e), but
shall have no liability to any holder of Right Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
transfer as set forth in Section 6 hereof or exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or election to purchase set
forth on the reverse side of the Right Certificate surrendered for such
assignment or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
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 canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Common Shares
and/or any authorized and issued Common Shares held in its treasury, the number
of Common Shares that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the Common Shares issuable upon the exercise of
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the occurrence of the event
described in Section 11(a)(ii) hereof on which the consideration to be
<PAGE>
delivered by the Company has been determined in accordance with Section
11(a)(ii) or 11(a)(iii) hereof, as the case may be, a registration statement
under the Securities Act with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) subject to Section 25 hereof, cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the Final Expiration Date. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall 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. In addition, if the
Company shall determine that a registration statement is required following the
Distribution Date but prior to the occurrence of the event described in Section
11(a)(ii) hereof, the Company may temporarily suspend the exercisability of the
Rights until such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law or a registration statement shall not have
been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Common Shares delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (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 and of any certificates for Common Shares upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of
certificates for Common Shares in a name other than that of, the registered
holder of the Right Certificates evidencing Rights surrendered for exercise or
to issue or deliver any certificates for Common Shares in a name other than
that of the registered holder upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
Section 10. Common Shares Record Date. Each person in whose name
any certificate for Common Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Common
Shares 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 all applicable transfer taxes) was
<PAGE>
made; provided, however, that if the date of such surrender and payment is a
date upon which the transfer books of the Company with respect to the Common
Shares 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 transfer books of the Company for the Common Shares
are open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall, at any
time after the date of this Agreement, (A) declare a
dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares
into a greater number of shares, (C) combine the
outstanding Common Shares into a smaller number of
shares or (D) issue any shares of its capital stock in
a reclassification of the Common Shares (including any
such reclassification in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and in
Section 7(e) hereof, 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 Common
Shares or shares of capital stock, as the case may be,
issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the
aggregate number and kind of Common Shares or shares
of capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such
date and at a time when the transfer books of the
Company for the Common Shares were open, he would have
owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination
or reclassification.
(ii) Subject to Sections 11(a)(iii) and 25
hereof, in the event that any Person shall become an
Acquiring Person, then proper provision shall be made
so that each holder of two Rights, except as provided
in Section 7(e) hereof, shall thereafter have a right
to receive, upon exercise thereof at a price equal to
the then-current Purchase Price multiplied by the
number of Common Shares for which two Rights are then
exercisable, in accordance with the terms of this
Agreement such number of Common Shares as shall equal
the result obtained by (x) multiplying the then-
current Purchase Price by the number of Common Shares
for which two Rights are then exercisable and (y)
dividing that product by 50% of the current market
price (determined pursuant to Section 11(d)(i) hereof)
per Common Share on the date such Person became an
Acquiring Person.
(iii) Subject to Section 25 hereof, in
the event that the number of Common Shares which are
authorized by the Company's Certificate of
<PAGE>
Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing
subparagraph (ii), the Rights shall not be exercisable
for Common Shares, but proper provision shall be made
so that each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have a right to
receive, upon exercise thereof in accordance with the
terms of this Agreement at the price determined
pursuant to subparagraph (ii), such number of Common
Stock Equivalents (or, in the judgment of the Board of
Directors, such combination of Common Stock
Equivalents and Common Shares) as shall equal the
number of Common Shares determined pursuant to
subparagraph (ii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Common Shares or securities convertible
into Common Shares at a price per Common Share (or having a conversion price
per share, if a security convertible into Common Shares) less than the current
market price (as determined pursuant to Section 11(d) hereof) per Common Share
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 Common Shares outstanding on such record date, plus the number of
Common Shares which the aggregate offering price of the total number of Common
Shares so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of Common Shares
outstanding on such record date, plus the number of additional Common Shares to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. Common 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 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. The provisions
of this Section 11(b) shall not apply to issuances of Common Shares pursuant to
the Company's Dividend Reinvestment and Stock Purchase Plan or Customer Stock
Purchase Plan or any successor to either such Plan.
(c) In case the Company shall fix a record date for a
distribution to all holders of Common Shares (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness, cash (other
than a regular quarterly cash dividend), assets, stock (other than a dividend
payable in Common Shares) or subscription rights, options or warrants
(excluding those referred to in or excluded pursuant to Section 11(b) hereof),
the Purchase Price to be in effect after such record date shall be determined
<PAGE>
by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the current market price
(as determined pursuant to Section 11(d) hereof) per one Common Share 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 and shall be conclusive for all purposes)
of the portion of the cash, assets, stock or evidences of indebtedness so to be
distributed or of such subscription rights, options or warrants applicable to
one Common Share and the denominator of which shall be such current market
price (as determined pursuant to Section 11(d) hereof) per one Common Share.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) For the purposes of any computation hereunder, the "current
market price" per Common Share on any date shall be deemed to be the average of
the daily closing prices per Common Share 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 market price per Common Share is
determined during a period following the announcement by the issuer of such
Common Shares of (i) a dividend or distribution on such Common Shares payable
in such Common Shares or securities convertible into such Common Shares (other
than the Rights) or (ii) any subdivision, combination or reclassification of
such Common Shares 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 market price" shall be appropriately adjusted to take into account ex-
dividend trading. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if
the Common Shares 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 Common Shares are listed or admitted to trading or, if
the Common Shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") or such other system then in use, or, if on any such date the
Common Shares 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 Common Shares selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the Common
Shares, the fair value of such shares on such date as determined in good faith
by the Board of Directors of the Company shall be used and shall be conclusive
for all purposes. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business or, if the Common
Shares are not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Shares are not publicly held or not so
listed or traded, "current market price" per share shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
<PAGE>
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a Common Share or other
share. 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.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than Common
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Common Shares contained in this Section 11 and the provisions of Sections
6, 7, 9, 10, 13 and 15 with respect to the Common Shares shall apply on like
terms to any such other shares.
(g) All Rights 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 Common Shares
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 two Rights
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
Common Shares (calculated to the nearest ten-thousandth) obtained by (i)
multiplying (x) the number of Common Shares covered by two Rights immediately
prior to this adjustment, by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of Common Shares purchasable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment
in the number of Rights shall be exercisable for the number of Common Shares
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
<PAGE>
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement.
If Right Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as promptly
as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 15 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 holder shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Right Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Common Shares 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 shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Common
Shares 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 Common 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 Common Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Common Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any consolidation or subdivision of the Common
<PAGE>
Shares, issuance wholly for cash of any of the Common Shares at less than the
current market price, issuance wholly for cash of securities which by their
terms are convertible into or exchangeable for Common Shares, stock dividends
or issuance of rights, options or warrants referred to hereinabove in this
Section 11, hereafter made by the Company to holders of its Common Shares shall
not be taxable to such stockholders.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate (or, if prior to the Distribution Date,
to each holder of a certificate representing Common Shares) in accordance with
Section 27 hereof. The Rights Agent shall be fully protected in relying on any
such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the earlier of the
Distribution Date and the Share Acquisition Date, (x) the Company, directly or
indirectly, shall consolidate with, or merge with and into, any other Person,
and the Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person, directly or indirectly, shall
consolidate with, or merge with and into, the Company, and the Company shall be
the continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the outstanding
Common Shares 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 (z)
the Company, directly or indirectly, shall sell or otherwise transfer (or one
or more of its Subsidiaries, directly or indirectly, shall sell or otherwise
transfer), in one or more transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the
Company or one or more wholly owned Subsidiaries of the Company and other than
the Company Restructuring), then, and in each such case, proper provision shall
be made so that (i) each holder of two Rights (except as otherwise provided
herein) 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
Common Shares for which two Rights are then exercisable (without taking into
account any adjustment previously made pursuant to Section 11(a)(ii) or
11(a)(iii) hereof), in accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, nonassessable and freely tradable
Common Shares of the Principal Party (as hereinafter defined), free and clear
of any liens, encumbrances and other adverse claims and not subject to any
rights of call or first refusal, as shall be equal to the result obtained by
(1) multiplying the then-current Purchase Price by the number of Common Shares
for which two Rights are then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii) or 11(a)(iii) hereof)
and (2) dividing that product by 50% of the current market price (determined
pursuant to Section 11(d)(i) hereof) per Common Share of the Principal Party on
the date of consummation of such consolidation, merger, sale or transfer; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all the obligations and
<PAGE>
duties of the Company pursuant to this Agreement; (iii) except for purposes of
Section 1(g) hereof, the term "Company" shall thereafter be deemed to refer to
such Principal Party; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares) in connection with the consummation of any such transaction as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; provided, however,
that, upon the subsequent occurrence of any merger, consolidation, sale of all
or substantially all of the assets, recapitalization, reclassification of
shares, reorganization or other extraordinary transaction in respect of such
Principal Party, each holder of two Rights (except as otherwise provided
herein) shall thereupon be entitled to receive, upon exercise of such Rights
and payment of the Purchase Price, such cash, shares, rights, warrants and
other property which such holder would have been entitled to receive had he, at
the time of such transaction, owned the Common Shares of the Principal Party
purchasable upon the exercise of such Rights (after giving effect to the
foregoing provisions of 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 and (v) the provisions of Sections 11(a)(ii) and 11(a)(iii)
hereof shall be of no effect following the occurrence of any event described in
clauses (x), (y) and (z) of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any merger described in
clause (x) or (y) of Section 13(a), any Person that is
the issuer of any securities into which Common Shares
of the Company are converted in such merger, and if no
securities are so issued, any Person that is a party
to such merger that survives the merger;
(ii) in the case of any consolidation
described in clause (x) or (y) of Section 13(a), any
Person that directly controls, alone or with other
Persons, a corporation that is consolidating with the
Company; and
(iii) in the case of any transaction or
transactions described in clause (z) of Section 13(a),
any Person that receives any assets or earning power
transferred pursuant to such transaction or
transactions;
provided, however, that with respect to such Person (or, if there is more than
one such Person, with respect to each such Person), (1) if the Common Shares of
such Person are not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act ("Registered Common Shares"), or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person which has
Registered Common Shares outstanding, "Principal Party" shall refer to such
other Person; (2) if the Common Shares of such Person are not Registered Common
Shares or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary of another Person but is not a direct or indirect
Subsidiary of another Person which has Registered Common Shares outstanding,
<PAGE>
"Principal Party" shall refer to the ultimate parent entity of such first-
mentioned Person; (3) if the Common Shares of such Person are not Registered
Common Shares or such Person is not a corporation, and such Person is directly
or indirectly controlled by more than one Person, and one or more of such
latter Persons have Registered Common Shares outstanding, "Principal Party"
shall refer to whichever of such latter Persons is the issuer of outstanding
Registered Common Shares having the greatest aggregate current market value
(determined pursuant to Section 11(d)(i) hereof); or (4) if the Common Shares
of such Person are not Registered Common Shares or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and none of such latter Persons have Registered Common Shares
outstanding, "Principal Party" shall refer to whichever ultimate parent entity
is the entity having the greatest net assets;
provided, further, however, that if under the foregoing provisions of this
Section 13(b) there shall for any reason be more than one Principal Party,
"Principal Party" shall refer to whichever of such Persons is the issuer of
outstanding Registered Common Shares having the greatest aggregate current
market value (determined pursuant to Section 11(d) hereof) or, if none of such
Persons has Registered Common Shares outstanding, whichever of such Persons is
the entity having the greatest net assets.
(c) Notwithstanding anything herein to the contrary, if the
Principal Party as determined pursuant to paragraph (b) above is not a
corporation, proper provision shall be made so that such Principal Party shall
create or otherwise make available for purposes of the exercise of the Rights
in accordance with the terms of this Agreement, a type or types of securities
having a fair market value (as determined by a nationally recognized investment
banking firm selected by the Board of Directors of the Company) equal to at
least the value of the Common Shares which each holder of a Right would have
been entitled to receive if such Principal Party had been a corporation.
(d) The Company shall not consummate any such consolidation,
merger, sale or transfer unless (1) at the time of and after such consummation
the Principal Party shall have a sufficient number of authorized Common Shares
which have not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and (2) prior to such
consummation the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger or sale or transfer of assets
mentioned in paragraph (a) of this Section 13, the Principal Party will
(i) prepare and file a registration
statement under the Securities Act with respect to the
Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to
(A) become effective as soon as practicable after such
filing and (B) 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 or "blue sky"
laws; and
<PAGE>
(ii) deliver to holders of the Rights
historical financial statements for the Principal
Party and each of its Affiliates which comply in all
respects with the requirements for registration on
Form 10 under the Exchange Act.
Section 14. Additional Covenants.
(a) Except as expressly provided herein, no adjustment to the
Purchase Price, the number of Common Shares or other securities for which a
Right is exercisable or the number of Rights outstanding (except as permitted
by Section 24 or Section 25 hereof) or any similar adjustment shall be made or
be effective if such adjustment would have the effect of reducing or limiting
the benefits the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Section 11(a)(ii) and Section
13 hereof, unless the terms of this Agreement are amended so as to preserve
such benefits.
(b) The Company covenants and agrees that, following the
earlier of the Share Acquisition Date and the Distribution Date, except as
permitted by Sections 24, 25 and 28 hereof, it shall not, directly or
indirectly, take any action the purpose or effect of which is to eliminate or
otherwise diminish in any material respect the benefits intended to be afforded
by the Rights.
(c) The Company covenants and agrees that it shall not
consummate any of the transactions described in clauses (x), (y) and (z) of
Section 13(a) hereof if (i) at the time of or after such consummation there are
or would be any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect (whether of the
Company or any other Person) or any other action taken (whether by the Company
or any other Person) the purpose or effect of which is to eliminate or
otherwise diminish in any material respect the benefits intended to be afforded
by the Rights or (ii) the stockholders of the Principal Party shall have
received, either prior to, simultaneously with, or after the consummation of
such transaction, a distribution of Rights previously owned by the Principal
Party or any of its Affiliates and Associates.
(d) The Company further covenants and agrees that it shall not
consummate any of the transactions described in clauses (x), (y) and (z) of
Section 13(a) hereof unless prior thereto the Company and the Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with paragraph (c) above and further providing that the
Principal Party covenants and agrees that it shall not, directly or indirectly,
take any action the purpose or effect of which is to eliminate or otherwise
diminish in any material respect the benefits intended to be afforded by the
Rights. The provisions of this paragraph (d) and paragraph (c) above shall
similarly apply to successive mergers, consolidations, sales or other
transfers.
Section 15. 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.
<PAGE>
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
15(a), the current market value of a whole Right shall be the closing price of
the Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the
Rights 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 and shall be
conclusive for all purposes.
(b) The Company shall not be required to issue fractions of
Common Shares upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares. In lieu of fractional Common Shares equal
to one-half of a share or less, the Company may 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
Common Share. Any exercise of Rights that would entitle the holder thereof to
receive any fraction of a share greater than one-half of a share shall be
governed by Section 7(a) hereof. For purposes of this Section 15(b), the
current market value of one Common Share shall be the closing price of a Common
Share (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 15.
Section 16. Rights of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), 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 Shares), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Agreement. Without limiting the
<PAGE>
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 17. Agreement of Rights 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 Shares;
(b) after the Distribution Date, the Right Certificates will be
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and
the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 18. 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 Common Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any 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 Section 26 hereof), or to receive dividends
<PAGE>
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 19. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises. Anything in this Agreement to
the contrary notwithstanding, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
the 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 Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, instruction, 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.
Section 20. 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 with or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 22
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 such 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.
<PAGE>
(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 such time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 21. 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 or
Vice Chairman of the Board, the President, a Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates or be required to verify the same (except as to its
countersignature thereof), 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 adjustment required under the provisions of
Sections 11 or 13 hereof or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
<PAGE>
Common Shares will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing
by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from any one of the Chairman or Vice Chairman of the Board, the President, a
Vice President, the Secretary or the Treasurer of the Company, and to apply to
such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer.
(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 accountable for any act, default, neglect or misconduct of any
such attorneys or agents 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 Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to any item therein,
the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
Section 22. 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, if
instructed by the Company, to each transfer agent of the Common Shares by
registered or certified mail, and, at the expense of the Company, 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 Shares by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
<PAGE>
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 of the State of New
York (or of any other State of the United States so long as such corporation is
authorized to do business as a banking institution in the State of New York),
in good standing, having a principal office in the State of New York, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $100 million. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 22, 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 23. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the 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 Shares following the
Distribution Date and prior to the earliest of the Redemption Date, the
Exchange Date and the Final Expiration Date, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of employee
stock options or under any employee plan or arrangement outstanding, granted or
awarded as of the Distribution Date, or upon the exercise, conversion or
exchange of securities issued by the Company prior to such date, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
such Right Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the Person to whom such
Right Certificates would be issued and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
<PAGE>
Section 24. Redemption.
(a) The Board of Directors of the Company may, at its option,
at any time prior to such time as any Person becomes an Acquiring Person,
redeem all but not less than all the then outstanding Rights at a redemption
price of $.005 per Right, appropriately adjusted to reflect any stock split,
stock dividend, reclassification or similar transaction occurring after the
date hereof (such 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. Without limiting the generality of the
foregoing, the Company may, at its option, pay the Redemption Price in cash,
Common Shares (based on the "current market price," as defined in Section 11(d)
hereof, of the Common Shares 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 of
the Company ordering the redemption of the Rights (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 such notice shall not affect the validity of such
redemption. Within 10 days after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to the Rights Agent and to all such holders at their last address
as it appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made.
(c) Neither the Company nor any of its Subsidiaries may redeem,
acquire or purchase for value any Rights at any time in any manner except (i)
pursuant to a redemption in accordance with this Section 24 or an exchange
pursuant to Section 25 hereof or (ii) in connection with the purchase or other
acquisition of Common Shares prior to the Distribution Date.
Section 25. Exchange.
(a) Subject to paragraph (c) of this Section 25, the Board of
Directors of the Company may, at its option, at any time after the occurrence
of the event described in Section 11(a)(ii) hereof, exchange all but not less
than all of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any stock split, stock dividend,
reclassification or similar transaction occurring after the date hereof (such
exchange being hereinafter referred to as the "Exchange" and such exchange
<PAGE>
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of Common Shares
aggregating 50% or more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company authorizing the Exchange and without any further action and without
any notice, the right to exercise the Rights shall terminate and the only right
thereafter of a holder of Rights included in the Exchange shall be to receive
that number of Common Shares equal to the number of Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public
notice of the Exchange; provided, however, that the failure to give or any
defect in such notice shall not affect the validity of the Exchange. Within 10
days after such action of the Board of Directors ordering the Exchange, the
Company shall mail a notice of Exchange to the Rights Agent and the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given whether or not the holder receives the notice. Each such
notice of Exchange will state the method by which the Exchange will be
effected.
(c) In the event that the number of Common Shares which are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the Exchange in full, the Exchange Ratio shall equal
one Common Stock Equivalent (in lieu of one Common Share) per Right.
Alternatively, the Board of Directors of the Company may, at its option,
determine that the Company shall (i) issue Common Shares in the Exchange to the
extent Common Shares are available and (ii) utilize Common Stock Equivalents in
the Exchange as provided above to the extent Common Shares are not available,
in which case such Common Shares shall be allocated on such basis as the Board
of Directors determines pursuant to Section 30 hereof.
(d) After aggregating all the Common Shares to which a holder
of Rights is entitled upon the Exchange, the Company shall not be required to
issue a fraction of a Common Share or to distribute a certificate which
evidences a fraction of a Common Share to such holder. In lieu of issuing
fractional shares, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional shares would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of one Common Share. For the purposes of this paragraph (d), the current
market value of one Common Share shall be the closing price of a Common Share
(as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the Exchange Date.
Section 26. Notice of Certain Events. (a) In case the Company
shall propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Common Shares or to make any
other distribution to the holders of Common Shares (other than a regular
<PAGE>
quarterly cash dividend), (ii) to offer to the holders of Common Shares rights,
options or warrants to subscribe for or to purchase any additional Common
Shares at less than the current market price of the Common Shares, or shares of
stock of any class or any other securities, rights or options other than
pursuant to the Company's Dividend Reinvestment and Stock Purchase Plan and
Customer Stock Purchase Plan (or any successor to either such Plan), (iii) to
effect any reclassification of its Common Shares (other than a reclassification
involving only the subdivision of outstanding Common Shares), (iv) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons (other than a Company Restructuring), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 27 hereof, a notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend, or
distribution of rights, options or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares, 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 20 days prior to the record date for determining
holders of the Common Shares for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) of this
Agreement shall occur, then (i) the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance with
Section 27 hereof, a notice of the occurrence of such event, which shall
specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof and (ii) all references in the preceding paragraph to
Common Shares shall thereafter be deemed to refer to, if appropriate, Common
Stock Equivalents.
Section 27. 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:
Pennsylvania Enterprises, Inc.
Wilkes-Barre Center
39 Public Square
Wilkes-Barre, PA 18711
Attention: Secretary
Subject to the provisions of Section 22 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:
<PAGE>
Chemical Bank
450 West 33rd Street
New York, New York 10001-2697
Attention: Shareholder Services
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 28. Supplements and Amendments. Prior to the earlier of the
Share Acquisition Date and the Distribution Date, and subject to the last
sentence of this Section 28, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this Agreement,
whether or not adverse to the holders of Rights, without any approval of the
holders of Rights. From and after the earlier of the Share Acquisition Date
and the Distribution Date, and subject to the last sentence of this Section 28,
the Company and the Rights Agent may from time to time supplement or amend this
Agreement without any approval of the holders of Rights in order (i) to cure
any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to extend the period during which the Rights may be redeemed; provided,
however, that such period may not be extended if at the time of such supplement
or amendment the Rights are not then redeemable, or (iv) to change or
supplement the provisions herein to effectuate the purposes of this Agreement,
or to make any other provisions with respect to the Rights, which, in either
such case, shall not materially adversely affect the interests of the holders
of Rights (other than Acquiring Persons and Affiliates or Associates thereof).
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with
the terms of this Section 28, the Rights Agent shall execute such supplement or
amendment; provided, however, that the Rights Agent may, but shall not be
obligated to, enter into any such supplement or amendment which affects the
Rights Agent's own rights, duties or immunities under this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which decreases the Redemption Price.
Section 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 30. Determinations and Actions by the Board of Directors,
etc. The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or
not to redeem the Rights pursuant to Section 24 hereof, to exchange or not to
<PAGE>
exchange the Rights pursuant to Section 25 hereof or to supplement or amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purpose of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties, and (y) not subject the Board
of Directors to any liability to the holders of the Rights.
Section 31. 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 Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, the Common
Shares).
Section 32. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 24
hereof shall be reinstated and shall not expire until the close of business on
the tenth day following the date of such determination by the Board of
Directors.
Section 33. Governing Law. This Agreement (other than with respect
to the rights and obligations of the Rights Agent which shall be governed by
the laws of the State of New York) and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the Commonwealth of
Pennsylvania and for all purposes shall be governed by and construed in
accordance with the laws of such Commonwealth applicable to contracts to be
made and performed entirely within such Commonwealth.
Section 34. 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 35. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the date and year first above written.
Attest: PENNSYLVANIA ENTERPRISES, INC.
/s/ Thomas J. Ward By: /s/ Dean T. Casaday
- -------------------------------- --------------------------------
Name: Thomas J. Ward Name: Dean T. Casaday
Title: Secretary Title: President
Attest: CHEMICAL BANK
By: /s/ Joseph Lifrieri
- -------------------------------- --------------------------------
Name: Name: Joseph Lifrieri
Title: Title: Vice President
<PAGE>
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- ---------- Rights
NOT EXERCISABLE AFTER MAY 16, 2005 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY AT $.005 PER
RIGHT, AND TO EXCHANGE AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN
THE RIGHTS AGREEMENT. AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY (1) AN ACQUIRING PERSON OR ANY ASSOCIATE OR AFFILIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), (2) A TRANSFEREE
OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR AFFILIATE) WHO BECOMES A
TRANSFEREE AFTER THE ACQUIRING PERSON BECOMES SUCH OR (3) UNDER CERTAIN
CIRCUMSTANCES, A TRANSFEREE OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR
AFFILIATE) WHO BECOMES A TRANSFEREE BEFORE OR CONCURRENTLY WITH THE ACQUIRING
PERSON BECOMING SUCH, SHALL BECOME NULL AND VOID.
<PAGE>
Right Certificate
PENNSYLVANIA ENTERPRISES, INC.
This certifies that , or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of April 26, 1995 (the "Rights
Agreement"), between Pennsylvania Enterprises, Inc., a Pennsylvania corporation
(the "Company"), and Chemical Bank (the "Rights Agent"). Each Right entitles
the registered holder 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 May 16, 2005 at the office or offices of
the Rights Agent designated for such purpose, or its successors as Rights
Agent, one-half of a fully paid, non-assessable share of Common Stock (the
"Common Shares") of the Company. No less than two Rights and only integral
multiples of two Rights may be exercised at any time by holders of Rights at a
purchase price of $100 per Common Share (the "Purchase Price") (equivalent to
$50 for each one-half of a Common Share), subject to adjustment, upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above, are
the number and Purchase Price as of May 16, 1995, based on the Common Shares as
constituted at such date.
From and after the occurrence of the event described in Section
11(a)(ii) of the Rights Agreement, if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate thereof (as such terms are defined in the Rights Agreement), (ii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such or (iii) under
certain circumstances, a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee before or concurrently with
the Acquiring Person becoming such, such Rights shall become null and void and
no holder hereof shall have any rights with respect to such Rights.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of Common Shares or other securities which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.
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 office of the
Company and are also available upon written request to the Company.
<PAGE>
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office or offices 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 Common Shares 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 its option
at a redemption price of $.005 per Right or (ii) may be exchanged by the
Company at its option for shares of the Company's Common Stock, no par value
(stated value $10 per share) (or, in certain circumstances, Common Stock
Equivalents (as such term is defined in the Rights Agreement)).
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby. In lieu of fractions of a share equal to
one-half of a share or less, a cash payment will be made, as provided in the
Rights Agreement. No Rights may be exercised that would entitle the holder to
any fraction of a Common Share greater than one-half of a share unless
concurrently therewith such holder purchases an additional fraction of a Common
Share which, when added to the number of Common Shares to be received upon such
exercise, equals an integral number of Common Shares, as provided in the Rights
Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
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 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.
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated: ------------, ----
ATTEST: PENNSYLVANIA ENTERPRISES, INC.
By:
- -------------------------------- --------------------------------
Secretary Title:
Countersigned:
CHEMICAL BANK
By:
--------------------------------
Authorized Signature
<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 transfers unto --------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address of transferee)
- -------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ---------------- Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ------------, ----
--------------------------------
Signature
Signature Guaranteed:
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the Rights evidenced by this Right Certificate [ ] are [ ] are not being
sold, assigned and transferred to a Person who is an Acquiring Person, an
Affiliate or Associate of an Acquiring Person or a nominee of any such
Acquiring Person, Associate or Affiliate;
(3) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ------------, ----
--------------------------------
Signature
<PAGE>
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To PENNSYLVANIA ENTERPRISES, INC.:
The undersigned hereby irrevocably elects to exercise -------- Rights
represented by this Right Certificate to purchase the Common Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance of such Rights
shall be registered in the name and delivered to:
Please insert social security
or other identifying number
- -------------------------------------------------------------------------------
(Please print name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dated: ------------, ----
--------------------------------
Signature
Signature Guaranteed:
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ------------, ----
--------------------------------
Signature
<PAGE>
NOTICE
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On April 26, 1995, the Board of Directors of Pennsylvania
Enterprises, Inc. (the "Company") declared a dividend distribution of one Right
for each outstanding share of Common Stock, no par value (stated value $10 per
share), of the Company (the "Common Shares") to stockholders of record on May
16, 1995 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one-half of a Common Share. No less than two Rights,
and only integral multiples of two Rights may be exercised at any time by
holders of Rights at a price of $100 per Common Share (the "Purchase Price")
(equivalent to $50 for each one-half of a Common Share), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between the Company and Chemical Bank, as Rights
Agent.
Initially, the Rights will be attached to all Common Share
certificates representing Common Shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Shares (an "Acquiring
Person"), or (ii) 10 business days (or such later day as may be determined by
action of the Board of Directors prior to such time as any person or group
becomes an Acquiring Person) following the commencement of a tender offer or
exchange offer if, upon consummation thereof, any person or group would be an
Acquiring Person (the earlier of such dates being called the "Distribution
Date"), the Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such certificate together
with a copy of this Summary of Rights. The date of announcement of the
existence of an Acquiring Person referred to in clause (i) above is hereinafter
referred to as the "Share Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Share certificates.
Until the Distribution Date (or earlier redemption, exchange or expiration of
the Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption, exchange or expiration of the Rights), the surrender
for transfer of any certificates for Common Shares outstanding as of the Record
Date, with or without a copy of this Summary of Rights attached thereto, will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares on the
Distribution Date and, thereafter, such separate Right Certificates alone will
evidence the Rights.
<PAGE>
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on May 16, 2005, unless earlier redeemed or
exchanged by the Company as described below.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, the Rights Agreement provides that proper
provision shall be made so that each holder of a Right, except as provided
below, shall thereafter have the right to receive, upon exercise, Common Shares
(or, in certain circumstances, Common Stock Equivalents (as such term is
defined in the Rights Agreement)) having a value equal to two (2) times the
exercise price of the Right. Upon the occurrence of the event described in the
preceding sentence, any Rights beneficially owned by (i) an Acquiring Person or
an Associate or Affiliate (as such terms are defined in the Rights Agreement)
of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of the
Rights Agreement, shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of the Rights Agreement or otherwise.
At any time after the occurrence of the event described in the first
sentence of the preceding paragraph and prior to the acquisition by any Person
of 50% or more of the outstanding Common Shares, the Board of Directors of the
Company may exchange the Rights (except Rights which previously have been
voided as described above), in whole, but not in part, at an exchange ratio of
one Common Share (or, in certain circumstances, one Common Stock Equivalent)
per Right.
In the event that, following the earlier of the Distribution Date and
the Share Acquisition Date, (i) the Company engages in a merger or other
business combination transaction in which the Company is not the surviving
corporation, (ii) the Company engages in a merger or other business combination
transaction with another person in which the Company is the surviving
corporation, but in which its Common Shares are changed or exchanged, or (iii)
more than 50% of the Company's assets or earning power is sold or transferred
(other than a sale of the water business of Pennsylvania Gas and Water Company
("PG&W") pursuant to an Asset Purchase Agreement dated as of April 26, 1995
among the Company, PG&W, Pennsylvania-American Water Company and American Water
Works Company, Inc.,) the Rights Agreement provides that proper provision shall
be made so that each holder of a Right (except Rights which previously have
been voided as described above) shall thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the Right,
common stock of the acquiring company having a value equal to two (2) times the
exercise price of the Right.
The Purchase Price payable, and the number of Common Shares or other
securities 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
<PAGE>
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to holders of the Common Shares of certain rights, options or
warrants to subscribe for Common Shares or convertible securities at less than
the current market price of the Common Shares (except for rights under the
Company's Dividend Reinvestment and Stock Purchase Plan or Customer Stock
Purchase Plan), or (iii) upon the distribution to holders of the Common Shares
of evidences of indebtedness, stock (other than a dividend payable in Common
Shares), assets or cash (excluding regular quarterly cash dividends) or of
subscription rights, options or warrants (other than those referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the Common Shares or a stock dividend on the Common
Shares payable in Common Shares or subdivisions, consolidations or combinations
of the Common Shares occurring, in any such case, prior to the Distribution
Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued upon the
exercise of any Right or Rights. In lieu of fractions of a share equal to one-
half of a share or less, a cash payment will be made, as provided in the Rights
Agreement. No Rights may be exercised that would entitle the holders to any
fraction of a Common Share greater than one-half of a share unless concurrently
therewith such holder purchases an additional fraction of a Common Share which,
when added to the number of Common Shares to be received upon such exercise,
equals an integral number of Common Shares, as provided in the Rights
Agreement.
At any time prior to such time as any Person becomes an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.005 per Right, subject to adjustment (the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The terms of the Rights may be amended by the Company and the Rights
Agent, provided that following the Distribution Date the amendment does not
materially adversely affect the interests of holders of Rights (other than an
Acquiring Person) and provided that no amendment shall be made which decreases
the Redemption Price.
A copy of the Rights Agreement is being filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement will be available free of charge from the Company.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
