<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
PIEDMONT NATURAL GAS COMPANY, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0556998
(State of incorporation or organization) (IRS Employer Identification No.)
1915 REXFORD ROAD, CHARLOTTE, NORTH CAROLINA 28211
(Address of principal executive offices) (Zip Code)
If this form relates to the registration of a class of securities
pursuant to Section 12(b) of the Exchange Act and is effective pursuant to
General Instruction A.(c), check the following box. [X]
If this form relates to the registration of a class of securities
pursuant to Section 12(g) of the Exchange Act and is effective pursuant to
General Instruction A.(d), check the following box. [ ]
Securities Act registration statement file number to which this form relates:
_________________________ (if applicable).
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
PREFERRED STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
Securities to be registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
<PAGE> 2
ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED
On February 27, 1998, the Board of Directors of Piedmont Natural Gas
Company, Inc., a North Carolina corporation, (the "Company"), declared a
dividend distribution of one preferred share purchase right (each a "Right") for
each outstanding share of common stock, no par value (the "Common Stock") of the
Company, to shareholders of record at the close of business on March 12, 1998
(the "Record Date"). Each Right entitles the record holder to purchase from the
Company one one-thousandth of a share ("Preferred Stock Fraction") of the
Company's Series A Junior Participating Preferred Stock, no par value (the
"Preferred Stock") at a purchase price of $100 (the "Purchase Price"), subject
to adjustment in certain circumstances. Except as otherwise provided in the
Rights Agreement, the Purchase Price may be paid, at the election of the
registered holder, in cash or by certified bank check or money order payable to
the order of the Company. The description and terms of the Rights are set forth
in a Rights Agreement, dated as of February 27, 1998 (as it may be amended,
modified or supplemented from time to time, the "Rights Agreement"), between the
Company and Wachovia Bank, N.A., as Rights Agent.
Initially, the Rights will be attached to the certificates representing
outstanding shares of Common Stock, and no Rights Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) the close of business on the tenth day
after the date of a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), or (ii) the close of business on
the tenth Business Day (or such later date as may be determined by the Company's
Board of Directors prior to such time as any person becomes an Acquiring Person)
after the commencement of a tender offer or exchange offer if, upon consummation
thereof, the person or group making such offer would be the beneficial owner of
15% or more of the outstanding shares of Common Stock. Until the Distribution
Date, (i) the Rights will be evidenced by the Common Stock certificates and will
be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after March 12, 1998 will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, such separate Rights
Certificates alone will evidence the Rights. Except in certain limited
circumstances, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on February 26, 2008 (the "Final Expiration
Date") unless earlier redeemed by the Company as described below.
Except in the circumstances described below, after the Distribution
Date each Right will be exercisable into a Preferred Stock Fraction. Each
Preferred Stock Fraction carries voting and
2
<PAGE> 3
dividend rights that are intended to produce the equivalent of one share of
Common Stock. The voting and dividend rights of the Preferred Stock are subject
to adjustment in the event of dividends, subdivisions and combinations with
respect to the Common Stock of the Company. In lieu of issuing certificates for
fractions of shares of Preferred Stock (other than fractions which are integral
multiples of Preferred Stock Fractions), the Company may pay cash in accordance
with the Rights Agreement.
In the event that, at any time following the Distribution Date, a
Person becomes an Acquiring Person (other than pursuant to an offer for all
outstanding shares of Common Stock at a price and on terms which the majority of
the independent Directors determine to be fair to, and otherwise in the best
interests of, shareholders), the Rights Agreement provides that proper provision
shall be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof, Preferred Stock Fractions, or, in the
discretion of the Board in certain circumstances, Common Stock, cash, property
or other securities of the Company having a value equal to two (2) times the
exercise price of the Right. In lieu of requiring payment of the Purchase Price
upon exercise of the Rights following any such event, the Company may provide
that each Right be exchanged for one share of Common Stock, or in the discretion
of the Board in certain circumstances, Preferred Stock Fractions, cash, property
or other securities, as the case may be. The only right of a holder of Rights
following the Company's election to provide for such exchange shall be to
receive the above described securities. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, any
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person shall immediately
become null and void.
For example, at an exercise price of $100 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an event
set forth in the preceding paragraph would entitle its holder to purchase $200
worth of Common Stock (or other consideration, as noted above) for $100.
Assuming that the Common Stock had a per share value of $50 at such time, the
holder of each valid Right would be entitled to purchase four shares of Common
Stock for $100. Alternatively, the Company could permit the holder to surrender
each Right in exchange for one share of Common Stock (with a value of $50)
without the payment of any consideration other than the surrender of the Right.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company engages in a merger or consolidation in which the Company is not
the surviving corporation, (ii) the Company engages in a merger or consolidation
with another person in which the Company is the surviving corporation, but in
which all or part of its Common Stock is changed or exchanged, or (iii) 50% or
more of the Company's assets or earning power is sold or transferred (except
with respect to clauses (i) and (ii), a merger or consolidation (a) which
follows an offer described in the second preceding paragraph and (b) in which
the amount and form of consideration is the same as was paid in such offer), 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 set forth
above) shall thereafter have the right to receive, upon the exercise thereof,
common stock of the acquiring company having a
3
<PAGE> 4
value equal to two (2) times the exercise price of the Right. The events set
forth in this paragraph and in the second preceding paragraph are referred to as
the "Triggering Events."
The Purchase Price payable, and the number of Preferred Stock Fractions
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a share dividend on the Preferred Stock or other capital stock, or a
subdivision, combination or reclassification of the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for Preferred Stock or securities convertible into Preferred Stock at
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock (other than
fractions which are integral multiples of Preferred Stock Fractions) will be
issued upon exercise of the Rights and, in lieu thereof, a cash payment will be
made based on the market price of the Preferred Stock on the last trading date
prior to the date of exercise.
At any time prior to the earlier of (i) the date on which a Section
11(a)(ii) Event (as such term is defined in the Rights Agreement) occurs and
(ii) the Final Expiration Date, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.001 per Right, payable in
cash or securities or both (the "Redemption Price"). Immediately upon the action
of the Board of Directors of the Company ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the $.001 redemption price.
Issuance of shares of Common Stock upon exercise of Rights is subject
to regulatory approval. 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. While the distribution of
the Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company as set forth above.
Any of the provisions of the Rights Agreement, other than certain
provisions relating to the principal economic terms of the Rights, may be
amended by the Board of Directors of the Company prior to the Distribution Date.
Thereafter, the provisions, other than certain provisions relating to the
principal economic terms of the Rights, of the Rights Agreement may be amended
by the Board in order: to cure any ambiguity, defect or inconsistency; to
shorten or lengthen any time period under the Rights Agreement; or in any other
respect that will not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person); provided that no amendment
4
<PAGE> 5
to adjust the time period governing redemption shall be made at such time as the
Rights are not redeemable.
As of January 31, 1998 there were 30,374,924 shares of Common Stock
outstanding and 2,189,892 shares reserved for issuance under stock plans of the
Company. Each outstanding share of Common Stock on March 12, 1998 will receive
one Right. As long as the Rights are attached to the shares of Common Stock and
in certain other limited circumstances, the Company will issue one Right with
each new share of Common Stock so that all such shares will have attached
Rights. Initially, 100,000 shares of Preferred Stock will be reserved for
issuance upon exercise of the Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or 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 of the Company.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibits the form of
Articles of Amendment of the Articles of Incorporation of the Company (setting
forth the terms of the Preferred Stock), the form of Rights Certificate and the
form of Summary of Rights to Purchase Preferred Stock, is attached hereto as an
Exhibit and incorporated herein by reference. The foregoing description of the
Rights is qualified by reference to such Exhibit.
ITEM 2. EXHIBITS.
(1) Form of Rights Agreement, dated as of February 27, 1998, between
Piedmont Natural Gas Company, Inc. and Wachovia Bank of North Carolina,
N.A., which includes as Exhibit A the Form of Articles of Amendment of
Piedmont Natural Gas Company, Inc. setting forth the terms of the
Preferred Stock, as Exhibit B the Form of Rights Certificate and as
Exhibit C the Summary of Rights to Purchase Preferred Stock.
5
<PAGE> 6
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
PIEDMONT NATURAL GAS COMPANY, INC.
Date: February 27, 1998 By: /s/ Martin C. Ruegsegger
-----------------------------------
Name: Martin C. Ruegsegger
-----------------------------------
Title: Vice President, Corporate
Counsel & Secretary
-----------------------------------
6
<PAGE> 1
PIEDMONT NATURAL GAS COMPANY, INC.
and
WACHOVIA BANK, N.A.
as Rights Agent
Rights Agreement
Dated as of February 27, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
Section 1. Certain Definitions..............................................1
Section 2. Appointment of Rights Agent......................................4
Section 3. Issue of Rights Certificates.....................................4
Section 4. Form of Rights Certificates......................................6
Section 5. Countersignature and Registration................................7
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.........................7
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights..................................8
Section 8. Cancellation and Destruction of Rights
Certificates..............................................10
Section 9. Reservation and Availability of
Capital Stock; Registration of Securities.................10
Section 10. Capital Stock Record Date......................................11
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights........................12
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares.......................................21
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.......................21
Section 14. Fractional Rights and Fractional Shares........................24
Section 15. Rights of Action...............................................25
Section 16. Agreement of Rights Holders....................................25
<PAGE> 3
Section 17. Rights Certificate Holder Not Deemed
a Shareholder.............................................26
Section 18. Concerning the Rights Agent....................................26
Section 19. Merger or Consolidation or Change of
Name of Rights Agent......................................26
Section 20. Duties of Rights Agent.........................................27
Section 21. Change of Rights Agent.........................................29
Section 22. Issuance of New Rights Certificates............................30
Section 23. Redemption and Termination.....................................30
Section 24. Exchange.......................................................31
Section 25. Notice of Certain Events.......................................32
Section 26. Notices........................................................33
Section 27. Supplements and Amendments ....................................33
Section 28. Successors.....................................................34
Section 29. Determinations and Actions by the
Board of Directors, etc...................................34
Section 30. Benefits of this Agreement.....................................34
Section 31. Severability...................................................35
Section 32. Governing Law..................................................35
Section 33. Counterparts...................................................35
Section 34. Descriptive Headings...........................................35
Exhibit A - Form of Articles of Amendment
Exhibit B - Form of Rights Certificate
Exhibit C - Form of Summary of Rights
<PAGE> 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 27, 1998 (the "Agreement"),
between Piedmont Natural Gas Company, a North Carolina corporation (the
"Company"), and Wachovia Bank of North Carolina, a national bank association,
(the "Rights Agent").
W I T N E S S E T H :
WHEREAS, on February 27, 1998 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Right for each share of common stock, no par value of the
Company (the "Common Stock") outstanding at the Close of Business on March 12,
1998 (the "Record Date"), and has authorized the issuance of one Right (as such
number may be hereinafter adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Common Stock of the Company issued or delivered
between the Record Date and the Distribution Date (as such term is hereinafter
defined) and as otherwise provided herein, each Right initially representing the
right to purchase one one-thousandth of a share of Preferred Stock (as
hereinafter defined) upon the terms and subject to the conditions hereinafter
set forth (individually a "Right" and collectively the "Rights");
NOW, THEREFORE, 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 (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 15% or more of the shares of Common Stock then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee
benefit plan or employee stock plan of the Company or of any Subsidiary of the
Company, (iv) any dividend reinvestment plan of the Company or (v) any Person or
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" as the result of an acquisition of Common Stock by the
Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Stock of the Company then outstanding; provided, however, that if
a Person shall become the Beneficial Owner of 15% or more of the Common Stock of
the Company then outstanding by reason of such an acquisition and shall, after
such acquisition, become the Beneficial Owner of any additional shares of Common
Sock, then such Person shall be deemed to be an "Acquiring Person".
(b) "ADJUSTMENT SHARES" shall have the meaning set forth in Section
11(a)(ii) hereof.
-1-
<PAGE> 5
(c) "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(d) 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, directly or indirectly, has the right or obligation to
acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange 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 such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) at any time prior to the
occurrence of a Triggering Event, securities issuable upon exercise of
the Rights or (C) from and after the occurrence of a Triggering Event,
securities issuable upon exercise of Rights which were acquired by such
person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act and any
successor provision thereof), including pursuant to any agreement,
arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this subparagraph (ii) as
a result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (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 (whether or not in writing),
but excluding customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities until the expiration of forty days after the date of such
acquisition, for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company.
-2-
<PAGE> 6
(e) "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of North Carolina are
authorized or obligated by law or executive order to close.
(f) "CLOSE OF BUSINESS" on any given date shall mean 5:00 P.M.,
Charlotte, North Carolina time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M., Charlotte, North Carolina
time, on the next succeeding Business Day.
(g) "COMMON STOCK" shall mean the common stock, no par value, of the
Company, except that "Common Stock" when used with reference to any Person other
than the Company shall mean the capital shares of such Person with the greatest
voting power, or the equity securities or other equity interest having power to
control or direct the management, of such Person.
(h) "DISTRIBUTION DATE" shall have the meaning set forth in Section
3(a) hereof.
(i) "EXPIRATION DATE" shall have the meaning set forth in Section 7(a)
hereof.
(j) "FINAL EXPIRATION DATE" shall have the meaning set forth in Section
7(a) hereof.
(k) "PERSON" shall mean any individual, firm, corporation, partnership
or other entity.
(l) "PREFERRED STOCK" shall mean shares of Series A Junior
Participating Preferred Stock, no par value, of the Company having the rights
and preferences set forth in the form of Articles of Amendment attached to this
Agreement as Exhibit A.
(m) "PREFERRED STOCK FRACTION" shall mean one one-thousandth of a share
of Preferred Stock.
(n) "PURCHASE PRICE" shall have the meaning set forth in Section 4(a)
hereof.
(o) "RECORD DATE" shall have the meaning set forth in the first Whereas
clause.
(p) "SECTION 11(A)(II) EVENT" shall mean the event described in
Section 11(a)(ii) hereof.
(q) "SECTION 13 EVENT" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(r) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by
the Company or an Acquiring Person, that an Acquiring Person has become such.
-3-
<PAGE> 7
(s) "SUBSIDIARY" shall mean, with reference to any other Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power, in the absence of contingencies, to elect at least
a majority of the directors or other persons performing similar functions is
beneficially owned, directly or indirectly, by such Person, or which is
otherwise controlled by such Person.
(t) "TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Unless otherwise specified, where reference is made in this Agreement
to sections of, and the General Rules and Regulations under, the Exchange Act,
such reference shall mean such sections and rules as amended from time to time
and any successor provisions thereto.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES. (a) Until Close of Business on
the earlier of (i) the Close of Business on the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date occurs
before the Record Date, the Close of Business on the Record Date) or (ii) the
Close of Business on the tenth Business Day (or such later date as may be
determined by the Company's 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 (other than the Company, any Subsidiary of the Company, any employee
benefit plan or employee stock plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan) is first published or
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 the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding (the earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Stock registered in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as practicable after
the Distribution Date, the Rights Agent will send by first-class, postage
prepaid mail, to each record holder of the Common Stock as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, one or more Rights Certificates, in substantially the
form of Exhibit B hereto (individually a "Rights Certificate" and collectively
the "Rights Certificates"), evidencing one Right for each share of Common Stock
so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section 11(p) hereof, at the time of
-4-
<PAGE> 8
distribution of the Rights Certificates, the Company shall make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by Rights
Certificates.
(b) Prior to the Record Date or as promptly as practicable following
the Record Date, the Company will send a copy of a Summary of Rights to Purchase
Preferred Stock, in substantially the form attached hereto as Exhibit C (the
"Summary of Rights"), by postage prepaid mail, to each record holder of Common
Stock as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to certificates for the
Common Stock outstanding on or after the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for the Common Stock
with or without a copy of the Summary of Rights attached thereto and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of Common
Stock with or without a copy of the Summary of Rights attached thereto in
respect of which Rights have been issued shall also constitute the transfer of
the Rights associated with such Common Stock.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates issued after the Record
Date, but prior to the earlier of the Distribution Date or the Expiration Date,
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
Piedmont Natural Gas Company, Inc. and Wachovia Bank, N.A., dated as of
February 27, 1998 (as it may be amended, modified or supplemented from
time to time, the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal offices of Piedmont Natural Gas Company, Inc. 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 Rights will expire on the Close of Business on
February 26, 2008 unless redeemed prior thereto. Piedmont Natural Gas
Company, Inc. will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such person or by
any subsequent holder, may become null and void."
-5-
<PAGE> 9
With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such Certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such Certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES. (a) The Rights Certificates
(and the forms of election to purchase and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of 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 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date (or, in
the case of Rights issued with respect to Common Stock issued by the Company
after the Record Date, as of the date of issuance of such Common Stock), shall
note the date of issuance and on their face shall entitle the holders thereof to
purchase such number of Preferred Stock Fractions as shall be set forth therein
at the price set forth therein (such exercise price per Preferred Stock
Fraction, the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing plan, 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, agreement, arrangement or understanding which
has as a primary purpose or effect the avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby
-6-
<PAGE> 10
may become null and void in the circumstances specified in Section 7(e)
of the Rights Agreement."
The provisions of Section 7(e) of this Agreement shall be operative whether or
not the foregoing legend is contained on any such Rights Certificates.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or its Secretary, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof. The Rights Certificates shall be countersigned manually 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 Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such officer of the Company; and
any Rights Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for such purpose, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the certificate
number of each of the Rights Certificates, the number of Rights evidenced on its
face by each of the Rights Certificates and the date of each of the Rights
Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a)
Subject to the provisions of Section 4(b), Section 7(e), and Section 14 hereof,
at any time after the Close of Business on the Distribution Date, and at or
prior to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or certificates, entitling the registered holder to purchase
(or receive) a like number of Preferred Stock Fractions (or, following a
Triggering Event, Preferred Stock Fractions, Common Stock, other securities,
cash or other assets, as the case may be) as the Rights Certificate or
Certificates surrendered then entitled such holder or holders in the case of a
transfer to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be 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 Rights
Certificate 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 Rights Certificate and
-7-
<PAGE> 11
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 4(b), Section 7(e), and Section 14 hereof, countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment from the holder of
the Right of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase set
forth on the reverse side thereof and the certificate contained therein 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 aggregate
Purchase Price (except as provided in Section 24) with respect to the
surrendered Rights for the total number of the Preferred Stock Fractions (or
Common Stock, other securities or property, as the case may be) as to which such
surrendered Rights are exercisable, at or prior to the earlier of (i) the Close
of Business on February 26, 2008 (the "Final Expiration Date") or (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the earlier
of (i) or (ii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each Preferred Stock Fraction pursuant to
the exercise of a Right shall initially be $100, and shall be subject to
adjustment from time to time as provided in Section 11 and Section 13(a) hereof
and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase set forth on the reverse side
thereof and the certificate contained therein duly executed, accompanied by
payment (except as provided in Section 24), with respect to each Right so
exercised, of the Purchase Price per Preferred Stock Fraction (or Common Stock,
other securities or property, as the case may be) to be purchased as set forth
below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(k) and Section 14(b) hereof, thereupon promptly (i)
(A) requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent for the shares of
Preferred Stock) certificates
-8-
<PAGE> 12
for the total number of Preferred Stock Fractions to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests subject to applicable law, or (B) if the Company shall have elected to
deposit the total number of shares of Preferred Stock issuable upon exercise of
the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of Preferred Stock Fractions
as are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company will direct the depositary agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made (x) in cash or by certified bank check or money order
payable to the order of the Company, or (y) by delivery of a certificate or
certificates (with appropriate stock powers executed in blank attached thereto)
evidencing a number of shares of Common Stock equal to the then Purchase Price
divided by the current market price (as determined pursuant to Section 11(d)
hereof) per share of Common Stock on the date of such exercise. In the event
that the Company is obligated to issue other securities (including Common Stock)
of the Company, pay cash and/or distribute other property pursuant to Section
11(a) hereof, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or 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 plan, 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 an plan, agreement,
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
-9-
<PAGE> 13
provision of this Agreement or otherwise. The Company shall use all reasonable
efforts to insure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of Rights
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 exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such 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 RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
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 Rights Certificate purchased or acquired by the Company,
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK; REGISTRATION
OF SECURITIES. (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, if necessary, following the occurrence of a Triggering
Event, out of its authorized and unissued shares of Common Stock and/or other
securities) the number of shares of Preferred Stock (and following the
occurrence of a Triggering Event, Common Stock and/or other securities) that,
except as provided in this Agreement including Section 11(a)(iii) hereof, will
be sufficient to permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts o cause, from and
after such time as the Rights become exercisable (and the Company reasonably
anticipates that a Right may be exercised), all shares (or other securities)
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be
-10-
<PAGE> 14
delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section 11(a)(iii)
hereof), or as soon as is required by law or regulation following the
Distribution Date, as the case may be, a registration statement or statements
under the Securities Act of 1933 (the "Securities Act"), with respect to the
shares of Common Stock or other securities purchasable upon exercise of the
Rights on an appropriate form or forms, (ii) cause such registration statement
or statements to become effective as soon as practicable after such filing and
(iii) cause such registration statement or statements 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 date of the expiration of the Rights. 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. 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 or the
exercise thereof would be in violation of applicable law.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Stock Fractions (and following
the occurrence of a Triggering Event, Common Stock and/or other securities)
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.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of Preferred Stock Fractions (or Common Stock
and/or other securities, as the case may be) upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates to a
person other than, or the issuance or delivery of a number of Preferred Stock
Fractions (or Common Stock and/or other securities, as the case may be) in
respect of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or deliver
any certificates for a number of Preferred Stock Fractions (or Common Stock
and/or other securities, as the case may be) in a name oter than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificates at
the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
SECTION 10. CAPITAL STOCK RECORD DATE. Each person in whose name any
certificate for a number of Preferred Stock Fractions (or Common Stock and/or
other securities, as the case may be)
-11-
<PAGE> 15
is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such Preferred Stock Fractions (or Common Stock
and/or other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock
Fraction (or Common Stock and/or other securities, as the case may be) transfer
books of the Company are closed, such Person shall be deemed to have become the
record holder of such shares (fractional or otherwise) on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
Fraction (or Common Stock and/or other securities, as the case may be) transfer
books of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any rights
of a stockholder of the Company with respect to shares (fractional or otherwise)
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
SECTION 11. ADJUSTMENT OF 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 Preferred Stock payable in
shares of Preferred Stock or other capital stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any share of its
capital stock in a reclassification of the Preferred Stock (including
any such reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving corporation),
except as otherwise provided in Section 11(a)(ii) and 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 shares of Preferred
Stock or capital stock, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of
the Purchase Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may be, which,
if such Right had been exercised immediately prior to such date and at
a time when the Preferred Stock (or other capital stock, as the case
may be) transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event
occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Section 24 of this Agreement, in the event any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan or employee stock
-12-
<PAGE> 16
plan of the Company or of any Subsidiary of the Company, any dividend
reinvestment plan of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of
any such plan) alone or together with its Affiliates and Associates,
shall, at any time after the date hereof, become an Acquiring Person,
unless the event causing such threshold to be crossed is a transaction
set forth in Section 13(a) hereof, or is an acquisition of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares
of Common Stock at a price and on terms determined by at least a
majority of the members of the Board of Directors who are not officers
of the Company and who are not representatives, nominees, Affiliates or
Associates of an Acquiring Person, after receiving advice from one or
more investment banking firms, to be (a) at a price which is fair to
shareholders (taking into account all factors which such members of the
Board deem relevant including, without limitation, the long-term
prospects and value of the Company and the prices which could
reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise in
the best interests of the Company and its shareholders, then, promptly
following the first occurrence of the event described in Section
11(a)(ii) hereof, proper provision shall be made so that each holder of
a Right (except as provided in Section 11(a)(iii), and in Section 7(e)
hereof) shall thereafter have the right to receive, upon exercise
thereof at a price equal to the then current Purchase Price multiplied
by the number of Preferred Stock Fractions for which a Right is then
exercisable in accordance with the terms of this Agreement, and in lieu
of a number of Preferred Stock Fractions, such number of Preferred
Stock Fractions of the Company (or, at the option of the Company, such
number of shares of Common Stock) as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then number of
Preferred Stock Fractions for which a Right was exercisable by such
holder immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (such product, following such
first occurrence, shall thereafter be referred to as the Purchase Price
for each Right and for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d) hereof) per
share of Common Stock on the date of such first occurrence (such number
of Preferred Stock Fractions or shares of Common Stock, as the case may
be, is herein called the "Adjustment Shares").
(iii) In the event that the number of Preferred Stock
Fractions or shares of Common Stock, as the case may be, which are
authorized but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights is not sufficient, or there
shall not have been received regulatory approvals necessary, in each
case to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section 11(a), the Company
shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over
(2) the Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) Common Stock or other
equity securities of the Company (including, without limitation,
preferred shares, or Preferred Stock Fractions), which the Board of
Directors of the Company has deemed to have the same value as the
-13-
<PAGE> 17
Preferred Stock Fractions or shares of Common Stock, as the case may
be, (such shares, "common stock equivalents")), (4) debt securities of
the Company, (5) other assets or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the Company;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) days following the first occurrence of (x) a Section 11(a)(ii)
Event or (y) the date on which the Company's right of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to herein as the "Section 11(a)(ii) Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price,
Preferred Stock Fractions or Common Stock, as the case may be, (to the
extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is
likely that sufficient additional Preferred Stock Fractions or shares
of Common Stock, as the case may be, could be authorized for issuance
upon exercise in full of the Rights, the thirty (30) day period set
forth above may be extended by resolution of the Board of Directors of
the Company to the extent necessary, but not more than ninety (90) days
following the first occurrence of a Section 11(a)(ii) Trigger Date, in
order that the Company may seek shareholder approval for the
authorization of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that the Company
determines that some action need be taken pursuant to the first and/or
second sentences of this Section 11(a)(iii), the Company (x) shall
provide subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek any authorization of additional shares, to take
any action to obtain any required regulatory approval and/or to decide
the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of
the Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any common stock
equivalents shall be deemed to have the same value as the Common Stock
on such date.
(iv) If the rules of the national securities exchange,
registered as such pursuant to Section 6 of the Exchange Act, or of the
national securities association, registered as such pursuant to Section
15A of the Exchange Act, on which the shares of Common Stock are
principally traded would prohibit such exchange or association from
listing or continuing to list, or from authorizing for or continuing
quotation and/or transaction reporting through an inter-dealer
quotation system, the shares of Common Stock or other equity securities
of the Company if the Rights were to be exercised for shares of Common
Stock in accordance with
-14-
<PAGE> 18
subparagraph (ii) of this Section 11(a) because such issuance would
nullify, restrict or disparately reduce the per share voting rights of
holders of shares of Common Stock or for any other reason, the Company
shall: (A) determine the Spread and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) equity
securities of the Company, including, without limitation, "common stock
equivalents," other than securities which would have the effect of
nullifying, restricting or disparately reducing the per share voting
rights of holders of shares of Common Stock or otherwise cause the
prohibition described above, (3) debt securities of the Company, (4)
other assets, or (5) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon
the advice of a nationally recognized investment banking firm selected
by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
Section 11(a)(ii) Trigger Date, then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, cash having an aggregate value
equal to the Spread. To the extent that the Company determines that an
action needs to be taken pursuant to the first sentence of this Section
11(a)(iv), the Company (x) shall provide, subject to Section 7(e), that
such action shall apply uniformly to all outstanding Rights and (y) may
suspend the exercisability of the Rights, but not longer than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order to decide
the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iv), the value of
the Common Stock shall be the current market price (as determined
pursuant to Section 11(d) hereof) per share of Common Stock on the
Section 11(a)(ii) Trigger Date and the value of any "common stock
equivalent" shall be deemed to have the same value as the Common Stock
on such date.
(b) In case the Company shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock, (or
shares having the same rights, privileges and preferences as the Preferred Stock
("equivalent Preferred Stock")) or securities convertible into Preferred Stock
or equivalent Preferred Stock at a price per share of Preferred Stock or
equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or equivalent Preferred Stock) less
than the current market price (as determined pursuant to Section 11(d) hereof)
per share of Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent Preferred Stock so to be offered
-15-
<PAGE> 19
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of shares of Preferred Stock outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent Preferred Stock to be offered for subscription or purchase (or onto
which the convertible securities to be offered are initially convertible). In
case such subscription price may be paid by delivery of consideration part or
all of which may 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 binding on the Rights Agent and the holders of the Rights.
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash (other than a regular quarterly
cash dividend paid out of the earnings or retained earnings of the Company),
assets (other than a dividend payable in Preferred Stock, but including any
dividend payable in capital stock other than Preferred Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock on
such record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator of which
shall be such current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such
distribution is not made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a)(iii) hereof, the "current
market price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing price per share of Common Stock for
the thirty (30) consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the current
market price per share of Common Stock on any date shall be deemed to
be the average of the daily closing price per share of Common Stock for
the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the then current market price
per share of Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (i) any dividend or
distribution on such Common Stock payable in such shares of Common
Stock or securities convertible into shares of Common Stock (other than
the Rights), (ii) any
-16-
<PAGE> 20
subdivision, combination or reclassification of such shares of Common
Stock, and prior to the expiration of the requisite thirty (30) Trading
Day or ten (10) Trading Day period, as set forth above, after the
ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, in each
such case, the current market price shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the
last quoted sale price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or, if on
any such date the shares of Common Stock are not quoted by 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
Stock selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the fair
value of such shares on such date 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 shares of Common
Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, current
market price per share shall mean the fair value per share as
determined in good faith by the 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.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for the Common Sock in Section
11(d)(i) (other than the last sentence thereof). If the current market
price per share of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held or listed
or traded in a manner described in Section 11(d)(i), the "current
market price" per share of Preferred Stock shall be conclusively deemed
to be an amount equal to 1,000 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring after the
date of this Agreement) multiplied by the current market price per
share of Common Stock. If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, "current market price"
per share of Preferred Stock shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
-17-
<PAGE> 21
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all purposes
of this Agreement, the "current market price" of a Preferred Stock
Fraction shall be equal to the "current market price" of one share of
Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) to the Purchase Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one ten-thousandth of a share of Common
Stock or other share or one one-millionth of a share of Preferred Stock, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three (3) years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any capital shares other than Preferred Stock, thereafter
the number of such other shares receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c), (e), (g),
(h), (i), (j), (k) and (m) hereof, and the provisions of Sections 7, 9, 10, 13,
14 and 24 hereof with respect to the Preferred Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Preferred Stock
Fractions (or other consideration, as the case may be) purchasable from time to
time hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Preferred Stock
Fractions (calculated to the nearest one one-millionth) obtained by (i)
multiplying (x) the number of Preferred Stock Fractions covered by a Right
immediately prior to this adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of Preferred Stock Fractions purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of Preferred Stock
Fractions
-18-
<PAGE> 22
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 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
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and 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 Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Stock Fractions issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to express the Purchase Price per Preferred Stock Fraction and the number of
Preferred Stock Fractions which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then stated value, if any, of the number of
Preferred Stock Fractions 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 Preferred Stock Fractions 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 issuance to the holder of any Right exercised after such record date
the number of Preferred Stock Fractions and other capital shares or securities
of the Company, if any, issuable upon such exercise over and above the number of
Preferred Stock Fractions and other capital shares and 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 (fractional or otherwise)
of Common Stock and other capital shares or securities upon the occurrence of
the event requiring such adjustment.
-19-
<PAGE> 23
(m) Anything in this Section 11 to the contrary notwithstanding, the
Board of Directors 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 in their good faith judgment the Board of Directors of
the Company shall determine to be advisable in order that any (i) consolidation
or subdivision of the Preferred Stock, (ii) issuance wholly for cash of shares
of Preferred Stock at less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holder of its Preferred Stock shall
not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof) or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number of Rights associated
with each share of Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each share of Common
Stock following any such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Common Stock immediately
prior to such event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the occurrence
of the event and the denominator of which shall be the total
-20-
<PAGE> 24
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 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
Preferred Stock and the Common Stock, a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 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 Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), and the Company shall not
be the continuing or surviving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related 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 any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case and except as
set forth in Section 13(d) hereof, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully
paid, nonassessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not subject to
any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of Preferred Stock Fractions
for which a Right is exercisable by such holder immediately prior to
the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the Section 13 Event, multiplying the
Purchase Price in effect immediately prior to the first occurrence of
such Section 11(a)(ii) Event by the number of Preferred Stock Fractions
for which a Right was exercisable immediately prior to such first
occurrence) and dividing that product (such product, following the
first occurrence of a Section 13 Event, shall be referred to as the
"Purchase
-21-
<PAGE> 25
Price" for each Right and for all purposes of this Agreement) by (2)
50% of the current market price (determined pursuant to Section
11(d)(i) hereof with respect to the Common Stock) per share of Common
Stock of such Principal Party on the date of consummation of such
Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations
and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of
its Common Stock) in connection with the consummation of any such
transaction as may be necessary to insure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in
relation to its Common Stock thereafter deliverable upon the exercise
of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
(2) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value; and (3)
in case such Person is owned, directly or indirectly, by a joint venture formed
by two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such
-22-
<PAGE> 26
joint venture as if such party were a "Subsidiary" of both or all of such joint
ventures and the Principal Parties in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of Common Stock 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 unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense 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 Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under the
Blue Sky laws of such jurisdictions as may be necessary or appropriate;
and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock that complies with the
provisions of Section 11(a)(ii) hereof (or a wholly-owned Subsidiary of any such
Person or Persons), (ii) the price per Common Share offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
Common Stock whose shares were purchased pursuant to such tender offer or
exchange and (iii) the form of consideration being offered to the remaining
holders of Common Stock pursuant to such transaction is the same as the form of
consideration paid pursuant to such tender offer or exchange offer. Upon
consummation of any such transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
-23-
<PAGE> 27
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price 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 n 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 shares of
Preferred Stock (other than integral multiples of Preferred Stock Fractions)
upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Preferred Stock (other than integral multiples of Preferred
Stock Fractions). In lieu of fractional shares of Preferred Stock that are not
Preferred Stock Fractions or integral multiples thereof, the Company may pay to
the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a share of Preferred Stock. For purposes of this Section
14(b), the current market value of one share of Preferred Stock shall be the
closing price of a share of Preferred Stock (as determined pursuant to Section
11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one share of Common Stock. For purposes of this Section
14(c), the current market value of one share of Common Stock shall be the
closing price of a share of Common Stock (as determined
-24-
<PAGE> 28
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, except those rights of action vested in the Rights Agent pursuant to
Sections 18 through 20 inclusive, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement. Holders of Rights shall be
entitled to recover the reasonable costs and expenses, including attorneys'
fees, incurred by them in any action to enforce the provisions of this
Agreement.
SECTION 16. 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 Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall, subject to the last sentence of
Section 7(e) hereof, be required to be affected by any notice to the contrary;
and
-25-
<PAGE> 29
(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 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of Preferred
Stock Fractions or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, 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 shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and disbursements and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability in
the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to
-26-
<PAGE> 30
which the Rights Agent or any successor Rights Agent shall be a party or any
corporation succeeding to the corporate trust or stock transfer 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, however, that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Rights Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all
such cases such Rights Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, all of which the Company and the holders of Rights Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company or for the Rights Agent), 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
(including, without limitation, the identity of any Acquiring Person and the
determination of current market prices) 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 the
Chairman of the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
-27-
<PAGE> 31
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), 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 and delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 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 Rights 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 Stock or Preferred
Stock to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any Common Stock or Preferred Stock 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 of
the Chairman of the Board, the President, any Vice President, the Treasurer and
the Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered 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 he Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
-28-
<PAGE> 32
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise of transfer without first
consulting with the Company.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock
and Preferred Stock, by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by any registered
holder of a Rights Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized, doing
business and in good standing under the laws of the United States or of the
States of New York or North Carolina (or of any other state of the United States
so long as such corporation is authorized to do business in the State of New
York or North Carolina), having a principal office in the State of New York or
North Carolina, which is authorized under such laws to exercise corporate trust
or stock transfer powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $100,000,000 or (b) an affiliate of
any such corporation described in clause (a) above. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates
or, prior to the Distribution Date, the registered holders of shares of Common
Stock. Failure to give any notice provided for in this Section 21, however, or
-29-
<PAGE> 33
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of Common Stock following the Distribution Date and
prior to the Expiration Date, the Company (a) shall, with respect to Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the Company, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
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
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 23. REDEMPTION AND TERMINATION. (a) The Board of Directors of
the Company may, at its option, at any time prior to the earlier of (i) the
close of business on the tenth day following the Stock Acquisition Date or (ii)
the Final Expiration Date, redeem all but not less than all the then outstanding
Rights at a redemption price of $.001 per Right, as such amount shall be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); and the Company may, at its
option, pay the Redemption Price either in cash or securities or both having a
current market price, as of a date determined by the Board of Directors, of
$.001.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly 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 all such holders at each holder's 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 Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
-30-
<PAGE> 34
SECTION 24. EXCHANGE. (a) The Board of Directors may, at its option, by
resolution adopted at any time after any Person becomes an Acquiring Person,
cause the Company to exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than the Company, any subsidiary of the Company, any employee benefit plan or
employee stock plan of the Company or of any Subsidiary of the Company, any
dividend reinvestment plan of the Company or any Person or 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 shares of Common Stock aggregating 50% or more of the shares
of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common Stock equal to the number of
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company shall promptly mail a notice of any such exchange to
all of the holders of the Rights so exchanged at their last addresses as they
appear on the registry books of the Rights Agent. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of the shares of Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights that will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights that have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(c) The Company may at its option substitute, and, in the event that
there shall not be sufficient shares of Common Stock issued but not outstanding
or authorized but unissued to permit any exchange or Rights as contemplated in
accordance with this Section 24, the Company shall substitute to the extent of
such insufficiency, for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of Preferred Stock or
fractions thereof (or equivalent preferred stock, as such term is defined in
Section 11(b) hereof) having an aggregate current per share market price
(determined pursuant to Section 11(d) hereof) equal to the current per share
market price of one share of Common Stock (determined pursuant to Section 11(d)
hereof) as of the effective date of such exchange.
(d) The Company shall not, in connection with any exchange pursuant to
this Section 24, be required to issue fractions of shares of Common Stock or to
distribute certificates that evidence
-31-
<PAGE> 35
fractional shares of Common Stock. In lieu of such fractional shares of Common
Stock, the Company shall pay to the registered holders of the Right Certificates
with regard to which such fractional shares of Common Stock would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole share of Common Stock. For the purposes of this paragraph (d),
the current market value of a whole share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to Section 11(d)
hereof) for the Trading Day (as defined in Section 11(d) hereof) immediately
prior to the date of exchange pursuant to this Section 24.
(e) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional shares of Common stock or Preferred Stock for issuance upon exchange
of the Rights.
SECTION 25. 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 shares of any class of capital stock to the holders of Preferred
Stock or to make any other distribution to the holders of Preferred Stock (other
than a regular quarterly cash dividend paid out of earnings or retained earnings
of the Company), or (ii) to offer to the holders of Preferred Stock rights or
warrants to subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one transaction or series of related 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 (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o) hereof), 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 Rights
Certificate, to the extent feasible, and in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such share dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Preferred Stock, whichever shall be the earlier.
(b) Upon the occurrence of a Section 11(a)(ii) Event, (i) the Company
shall as soon as practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible, in accordance
-32-
<PAGE> 36
with Section 26 hereof, a notice of the occurrence of such 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 Preferred Stock shall be
deemed thereafter to refer to Common Stock and/or, if appropriate, other
securities.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Piedmont Natural Gas Company
1915 Rexford Road
P.O. Box 33068
Charlotte, North Carolina 28233
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Wachovia Bank, N.A.
P.O. Box 3001
Winston-Salem, North Carolina 27102
Attention: Manager, 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 Rights Certificate (or if prior
to the Distribution Date, to the holder of certificates representing Common
Stock) shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the next to last sentence of this Section 27, the Company may, by
resolution of its Board of Directors an the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing Common Stock. From and
after the Distribution Date and subject to the next to last sentence of this
Section 26, the Company and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
Certificates in order (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 change or supplement the provisions hereunder
-33-
<PAGE> 37
in any manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person),
or (iv) to shorten or lengthen any time period hereunder; provided, this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iv) of this sentence, (A) a time period relative to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. 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 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price, or the number of Preferred Stock
Fractions for which a Right is exercisable. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Stock of which
any Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d(1)(i) of the General Rules and Regulations under the
Exchange Act as in effect as of the date hereof. 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 or 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 redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of Clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board 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 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
-34-
<PAGE> 38
SECTION 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the Close of Business on the
tenth day following the date of such determination by the Board of Directors.
SECTION 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the state of North Carolina and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
PIEDMONT NATURAL GAS COMPANY, INC.
By
---------------------------------
Name:
Title:
WACHOVIA BANK, N.A.
By
---------------------------------
Name:
Title:
-35-
<PAGE> 39
EXHIBIT A
Form of
ARTICLES OF AMENDMENT
of
PIEDMONT NATURAL GAS COMPANY, INC.
The undersigned, a North Carolina corporation, (the "Corporation")
hereby submits these Articles of Amendment for the purposes of amending its
Articles of Incorporation:
(1) The name of Corporation is Piedmont Natural Gas Company, Inc.
(2) The Articles of Incorporation of the corporation are hereby
amended by the addition of a subparagraph (b)(1) to Article 3
for the purpose of creating and designating a series of
preferred stock and establishing the amount thereof and the
voting powers, preferences and relative, participating,
optional, and other special rights of the shares of such
series, and the qualifications, limitations or restrictions
thereof are as follows:
(b) (1) Series A Junior Participating Preferred Stock
1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the
number of shares constituting such series shall initially be one
hundred thousand (100,000), no par value, such number of shares to be
subject to increase or decrease by action of the Board of Directors as
evidenced by a certificate of designations.
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock ranking
prior and superior to the shares of Series A Junior
Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on or about
the 15th day of January, April, July and October in each year
(each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $10 or (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash
A-1
<PAGE> 40
dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on
the Common Stock, no par value, of the Corporation (the
"Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly
Dividend payment Date, since the first issuance of any share
or fraction of a share of Series A Junior Participating
Preferred Stock. In the event the Corporation shall at any
time after February 27, 1998 (the "Rights Declaration Date")
(i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which
holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which
is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred
Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any
quarterly Dividend Payment Date and the next subsequent
quarterly Dividend Payment Date, a dividend of $10 per share
on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative
on outstanding shares of Series A Junior Participating
Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Junior
Participating Preferred Stock, unless the date of issue of
such share is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination
of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive a Quarterly Dividend and
before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be
cumulative from such quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid
on the shares of Series A Junior Participating Preferred Stock
in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated
pro rata
A-2
<PAGE> 41
on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date
shall be no more than 30 days prior to the date fixed for the
payment thereof.
3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior
Participating Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the corporation
shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of
Common stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the number of votes
per share to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law,
the holders of shares of Series A Junior Participating
Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(C) Except as set forth herein, holders of Series A
Junior Participating Preferred Stock shall have no special
voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any
other distributions on, or redeem or purchase or otherwise
acquire for consideration any shares of stock
A-3
<PAGE> 42
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A
Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Junior Participating
Preferred Stock, or any shares of stock ranking on a parity
with the Series A Junior Participating Preferred Stock, except
in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless
the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares upon their
cancellation become authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Corporation, no distribution
shall be made to the holders of shares of stock
A-4
<PAGE> 43
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the
holders of shares of Series A Junior Participating Preferred
Stock shall have received $1,000 per share, plus an amount
equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment
of the full amount of the Series A Liquidation Preference, no
additional distributions shall be made to the holders of
shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock
shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 1,000 (as
appropriately adjusted as set forth in subparagraph C below to
reflect such events as stock splits, stock dividends and
recapitalization with respect to the Common Stock) (such
number in clause (ii), the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A
Junior Participating Preferred Stock and holders of shares of
Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio
of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the
Series A Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any,
which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the
event, however, that there are not sufficient assets available
to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders
of Common Stock.
(C) In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding
Common Stock into a smaller number of shares, then in each
such case the Adjustment Number in effect immediately prior to
such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of
Common Stock that were outstanding immediately prior to such
event.
7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction
in which the shares of Common
A-5
<PAGE> 44
Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series A
Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 1,000 times
the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on Common Stock payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the amount set forth in the preceding sentence with respect
to the exchange or change of shares of Series A Junior Participating
Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise.
10. Amendment. The Articles of Incorporation of the
Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of
the Series A Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of two-thirds
(2/3) or more of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a class.
11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.
(3) The foregoing amendment was duly adopted on the __ day of ________,
____, by the Board of Directors of the Corporation without Shareholder action,
which action was not required under North Carolina law or the Articles of
Incorporation of the Corporation.
A-6
<PAGE> 45
This the __ day of ___________, ____.
Piedmont Natural Gas Company, Inc.
Name:_____________________________
Title:____________________________
A-7
<PAGE> 46
EXHIBIT B
[Form of Rights Certificate]
Certificate No. R- _________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS SUCH TERM IS DEFINED IN
THE RIGHTS AGREEMENT REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE
AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]1
Rights Certificate
PIEDMONT NATURAL GAS COMPANY, INC.
This certifies that ____________________________, or registered
assigns, is the registered holder of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of February 27, 1998 (as it may be
amended, modified or supplemented from time to time, the "Rights Agreement"),
between Piedmont Natural Gas Company, Inc., a North Carolina corporation (the
"Company"), and Wachovia Bank, N.A. (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 P.M. (New York time) on the Expiration Date
(as defined in the Rights Agreement), which shall not be later than February 26,
2008 at the office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one one-thousandth of a share of the
Company's Series A Junior Participating Preferred stock, no par value (the
"Preferred Stock"), at a purchase price of $100 (the "Purchase Price") per one
one-thousandth of a Preferred Stock (such fraction, a "Preferred Stock
Fraction"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase set forth on the reverse hereof and the Certificate
contained therein duly executed. Except as otherwise provided in Section 11(q)
of the Rights Agreement, the Purchase Price shall be paid at the election of the
holder in cash or by certified bank check or money order payable to the order of
- --------
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
<PAGE> 47
the Company. The number of Rights evidenced by this Rights Certificate and the
number of Preferred Stock Fractions which may be purchased upon exercise thereof
and the Purchase Price per Preferred Stock Fraction, set forth above, are the
number of Rights, number of one Preferred Stock Fractions and Purchase Price as
of _____________, 19__,2 based on the Preferred Stock as constituted at such
date.
Except as otherwise provided in the Rights Agreement, upon the
occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or any Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement), (ii) a transferee of
any such Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a person who,
concurrently with or after such transfer, became an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, such Rights shall become null and
void and no holder hereof shall have any rights with respect to such Rights from
and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of Preferred Stock or other securities, which may be purchased upon the
exercise of the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holder of the Rights Certificate, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights Agent as
set forth in the Rights Agreement and are also available upon written request to
the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Stock Fractions as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
not exercised.
- --------
(2) Insert the Distribution Date.
B-2
<PAGE> 48
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Board of Directors of the
Company at its option at a redemption price of $.001 per Right at any time prior
to the earlier of (i) the date on which a Section 11(a)(ii) Event occurs and
(ii) the Final Expiration Date.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of __________, 19__
ATTEST: PIEDMONT NATURAL GAS COMPANY, INC.
___________________________ By_________________________
Name: Name:
Title: Title:
Countersigned:
----------------------------
WACHOVIA BANK, N.A.
By__________________________
Name:
Title:
B-3
<PAGE> 49
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED __________________________________ hereby sells, assigns and
transfers unto (Please print name and address of transferee) this Rights
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________ Attorney, to transfer the
within Rights Certificate on the books of the within-named Company with full
power of substitution.
Dated: ____________________, 19____
---------------------------------
Signature
Signature Medallion Guaranteed:
B-4
<PAGE> 50
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is 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, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: _______________ ___, 19__
------------------------------
Signature
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-5
<PAGE> 51
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise Rights
represented by the Rights Certificate.)
TO: PIEDMONT NATURAL GAS COMPANY, INC.
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
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
and delivered to:
-------------------------------------------------------------------
(Please print name and address)
Please insert social security
or other identifying number: ________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
-------------------------------------------------------------------
(Please print name and address)
Please insert social security
or other identifying number:___________________________________________
Dated: ____________, 19____
---------------------------------
Signature
Signature Medallion Guaranteed:
B-6
<PAGE> 52
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights 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 Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ______________, 19____
---------------------------
Signature
Signature Guaranteed:
NOTICE
The signatures to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
B-7
<PAGE> 53
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On February 27, 1998, the Board of Directors of Piedmont Natural Gas
Company, Inc., a North Carolina corporation (the "Company"), declared a dividend
distribution of one Right for each outstanding share of common stock, no par
value (the "Common Stock") of the Company, to shareholders of record at the
close of business on March 12, 1998 (the "Record Date"). Each Right entitles the
record holder to purchase from the Company one one-thousandth of a share
("Preferred Stock Fraction") of the Company's Series A Junior Participating
Preferred Stock, no par value (the "Preferred Stock") at a price of $100 (the
"Purchase Price"), subject to adjustment in certain circumstances. Except as
otherwise provided in the Rights Agreement, the Purchase Price may be paid, at
the election of the registered holder, in cash or by certified bank check or
money order payable to the order of the Company. The description and terms of
the Rights are set forth in a Rights Agreement, dated as of February 27, 1998
(as it may be amended, modified or supplemented from time to time, the "Rights
Agreement"), between the Company and Wachovia Bank of North Carolina, N.A., as
Rights Agent.
Initially, the Rights will be attached to the certificates representing
outstanding shares of Common Stock, and no Rights Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) the close of business on the tenth day
after the date of a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), or (ii) the close of business on
the tenth Business Day (or such later date as may be determined by the Company's
Board of Directors prior to such time as any person becomes an Acquiring Person)
after the commencement of a tender offer or exchange offer if, upon consummation
thereof, the person or group making such offer would be the beneficial owner of
15% or more of the outstanding shares of Common Stock. Until the Distribution
Date, (i) the Rights will be evidenced by the Common Stock certificates and will
be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after the Record Date will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, such separate Rights
Certificates alone will evidence the Rights. Except in certain limited
circumstances, only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on February 26, 2008 unless earlier redeemed by
the Company as described below.
C-1
<PAGE> 54
Except in the circumstances described below, after the Distribution
Date each Right will be exercisable into a Preferred Stock Fraction. Each
Preferred Stock Fraction carries voting and dividend rights that are intended to
produce the equivalent of one share of Common Stock. The voting and dividend
rights of the Preferred Stock are subject to adjustment in the event of
dividends, subdivisions and combinations with respect to the Common Stock of the
Company. In lieu of issuing certificates for fractions of shares of Preferred
Stock (other than fractions which are integral multiples of Preferred Stock
Fractions), the Company may pay cash in accordance with the Rights Agreement.
In the event that, at any time following the Distribution Date, a
Person becomes an Acquiring Person (other than pursuant to an offer for all
outstanding shares of Common Stock at a price and on terms which the majority of
the independent Directors determine to be fair to, and otherwise in the best
interests of, shareholders), the Rights Agreement provides that proper provision
shall be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof, (i) one one-thousandth of a share of
Preferred Stock, the issuance of which has been preapproved by the North
Carolina Utilities Commission and the Tennessee Regulatory Authority, (ii)
Common Stock, and/or (iii) cash, property or other securities of the Company,
each of (i), (ii) and (iii) having a value equal to two (2) times the exercise
price of the Right. In lieu of requiring payment of the Purchase Price upon
exercise of the Rights following any such event, the Company may provide that
each Right be exchanged for one share of Common Stock (or Preferred Stock, cash,
property or other securities, as the case may be). The only right of a holder of
Rights following the Company's election to provide for such exchange shall be to
receive the above-described securities. Notwithstanding any of the foregoing,
following the occurrence of any of the events set forth in this paragraph, any
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by an Acquiring Person shall immediately
become null and void.
For example, at an exercise price of $100 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following an event
set forth in the preceding paragraph would entitle its holder to purchase $200
worth of Common Stock (or other consideration, as noted above) for $100.
Assuming that the Common Stock had a per share value of $50 at such time, the
holder of each valid Right would be entitled to purchase four shares of Common
Stock for $100. Alternatively, the Company could permit the holder to surrender
each Right in exchange for one share of Common Stock (with a value of $50)
without the payment of any consideration other than the surrender of the Right.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company engages in a merger or consolidation in which the Company is not
the surviving corporation, (ii) the Company engages in a merger or consolidation
with another person in which the Company is the surviving corporation, but in
which all or part of its Common Stock is changed or exchanged, or (iii) 50% or
more of the Company's assets or earning power is sold or transferred (except
with respect to clauses (i) and (ii), a merger or consolidation (a) which
follows an offer described in the second preceding paragraph and (b) in which
the amount and form of consideration is the same as was paid in such offer), the
Rights Agreement provides that proper provision shall be made so that each
holder
C-2
<PAGE> 55
of a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon the exercise thereof, common
stock of the acquiring company having a value equal to two (2) times the
exercise price of the Right. The events set forth in this paragraph and in the
second preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Preferred Stock Fractions
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on the Preferred Stock or other capital stock, or a
subdivision, combination or reclassification of the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for Preferred Stock or securities convertible into Preferred Stock at
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends or dividends payable in
Preferred Stock) or of subscription rights or warrants (other than those
referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Preferred Stock (other than
fractions which are integral multiples of Preferred Stock Fractions) will be
issued upon exercise of the Rights and, in lieu thereof, a cash payment will be
made based on the market price of the Preferred Stock on the last trading date
prior to the date of exercise.
At any time prior to the earlier of (i) the close of business on the
tenth day following the Stock Acquisition Date and (ii) the Final Expiration
Date, the Board of Directors of the Company may redeem the Rights in whole, but
not in part, at a price of $.001 per Right, payable in cash or securities or
both (the "Redemption Price"). Immediately upon the action of the Board of
Directors of the Company ordering redemption of the Rights, 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 shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholder or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Preferred Stock, Common Stock or other consideration of the
Company or for common stock of the acquiring company as set forth above.
Any of the provisions of the Rights Agreement, other than certain
provisions relating to the principal economic terms of the Rights, may be
amended by the Board of Directors of the Company prior to the Distribution Date.
Thereafter, the provisions, other than certain provisions relating to the
principal economic terms of the Rights, of the Rights Agreement may be amended
by the Board in order to cure any ambiguity, defect or inconsistency; to shorten
or lengthen any time period under the Rights Agreement; or in any other respect
that will not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person); provided that no amendment to adjust
C-3
<PAGE> 56
the time period governing redemption shall be made at such time as the Rights
are not redeemable.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement of the Company on
Form 8-A. A copy of the Rights Agreement is available free of charge from the
Company upon written request therefore. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by reference.
C-4
