SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Public Service Company of North Carolina, Incorporated
(Exact name of registrant as specified in its charter)
North Carolina 56-0233140
(State of Incorporation or Organization) (IRS Employer
Identification No.)
400 Cox Road, P.O. Box 1398, Gastonia, North Carolina 28053-1398
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section
12(b) of the Act:
Name of each exchange
Title of each class on which each class is
to be so registered to be registered
Preferred Stock Purchase New York Stock Exchange
Rights
Securities to be registered pursuant to Section
12(g) of the Act:
None
(Title of Class)
Exhibit Index is on Page 8
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Item 1. Description of Securities To Be Registered.
On April 9, 1997, the Board of
Directors of Public Service Company of North
Carolina, Incorporated (the "Company") declared a
dividend distribution of one Right for each
outstanding share of Common Stock to stockholders
of record at the close of business on April 28,
1997 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one
one-hundredth of a share of Series A Cumulative
Preferred Stock, par value $25 per share (the
"Preferred Stock"), at a Purchase Price of $55.00,
subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between the Company and
First Union National Bank of North Carolina, as
Rights Agent.
By Order issued April 8, 1997,
the North Carolina Utilities Commission authorized
PSNC to reserve for issuance under the Rights
Agreement, up to 1,500,000 shares of preferred
stock and to issue that preferred stock in the
future in accordance with the terms of the Rights
Agreement.
Initially, the Rights will be
attached to all Common Stock certificates
representing shares then outstanding, and no
separate Rights Certificates will be distributed.
The Rights will separate from the Common Stock and
a Distribution Date will occur upon the earlier
of (i) ten (10) days following 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 fifteen percent (15%) or
more of the outstanding shares of Common Stock or,
with respect to persons that beneficially own ten
percent (10%) or more of the outstanding shares of
Common Stock on April 9, 1997, such person has
acquired, or obtained the right to acquire,
beneficial ownership of twenty percent (20%) or
more of the out standing shares of Common Stock
(the "Stock Acquisition Date"), other than as a
result of repurchases of stock by the Company, or
(ii) ten (10) business days (or such later date as
the Board shall determine) following the
commencement of a tender offer or exchange offer
that would result in a person or group becoming an
Acquiring Person. Until the Distribution Date, (i)
the Rights will be evidenced by the Common Stock
certificates and
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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 incorpo rating 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. Pursuant to the
Rights Agreement, the Company reserves the right
to require prior to the occurrence of a Triggering
Event (as defined below) that, upon any exercise
of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock will be
issued.
The Rights are not exercisable
until the Distribution Date and will expire at the
close of business on April 9, 2007, unless earlier
redeemed or exchanged by the Company as described
below.
As soon as practicable after 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, the separate Rights Certificates
alone will represent the Rights. Except as
otherwise determined by the Board, only shares of
Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that a person
becomes an Acquiring Person (except pursuant to an
offer for all out standing shares of Common Stock
that the independent directors determine to be
fair to and otherwise in the best interests of the
Company and its stockholders), each holder of a
Right will thereafter have the right to receive,
upon exercise, at the option of the Board of
Directors, (i) Common Stock,(ii) one
one-hundredths of a share of Series A Cumulative
Preferred Stock, the issu ance of which has been
preapproved by the North Carolina Utilities
Commission, and/or (ii) cash, property or other
securities of the Company, each of (i), (ii) and
(iii) having a value equal to two times the
exercise price of the Right. Notwithstanding any
of the forego ing, following the occurrence of the
event set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in
the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void.
However, Rights are not exercisable following
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the occurrence of the event set forth above until
such time as the Rights are no longer redeemable
by the Company as set forth below.
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
consider ation, as noted above) for $100. Assuming
that the Common Stock had a per share value of
$20.00 at such time, the holder of each valid
Right would be entitled to purchase ten shares of
Common Stock for $100.
In the event that, at any time
following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business
combination transaction in which the Company is
not the surviving corporation (other than a merger
which follows an offer described in the second
preceding paragraph), or (ii) fifty percent (50%)
or more of the Company's assets, cash flow or
earning power is sold or transferred, each holder
of a Right (except Rights which previously have
been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common
stock of the acquiring company having a value
equal to two times the exercise price of the
Right. The events set forth in this para graph and
in the second preceding paragraph are referred to
as the "Triggering Events."
At any time after a person
becomes an Acquir ing Person and prior to the
acquisition by such person or group of fifty
percent (50%) or more of the outstand ing Common
Stock, the Board may exchange the Rights (other
than Rights owned by such person or group which
have become void), in whole or in part, at an
exchange ratio of one share of Common Stock, or
one one-hun dredths of a share of Preferred Stock
(or of a share of a class or series of the
Company's preferred stock having equivalent
rights, preferences and privileges), per Right
(subject to adjustment).
At any time until ten (10) days following the
Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per
Right (payable in cash, Common Stock or other consider
ation deemed appropriate by the Board). Immediately
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upon the action of the Board ordering redemption
of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to
receive the $.01 re demption price. The foregoing
notwithstanding, the Rights generally may not be
redeemed for one hundred eighty (180) days
following a change in a majority of the Board as a
result of a proxy contest.
Until a Right is exercised, the
holder there of, 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
circum stances, recognize taxable income in the
event that the Rights become exercisable for
Common Stock, Preferred 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 may be amended by the Board prior
to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may
be amended by the Board in order to cure any
ambiguity, to make changes which do not adversely
affect the interests of holders of Rights, or to
shorten or lengthen any time period under the
Rights Agreement; provided, however, that no
amendment may be made at such time as the Rights
are not redeem able.
As of March 31, 1997, there were
19,545,517.912 shares of Common Stock of the
Company outstanding and no shares of Common Stock
of the Company in the treasury. As of March 31,
1997, options to pur chase 505,412.500 shares of
Common Stock were outstand ing. Each share of
Common Stock of the Company out standing at the
close of business on April 28, 1997, will receive
one Right. So long as the Rights are attached to
the Common Stock, one additional Right (as such
number may be adjusted pursuant to the provisions
of the Rights Agreement) shall be deemed to be
delivered for each share of Common Stock issued or
transferred by the Company in the future. In
addition, following the Distribution Date and
prior to the expiration or redemp tion of the
Rights, the Company may issue Rights when it
issues Common Stock only if the Board deems it to
be
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necessary or appropriate, or in connection with
the issuance of shares of Common Stock pursuant to
the exercise of stock options or under employee
plans or upon the exercise, conversion or exchange
of certain securities of the Company. One million
shares of Preferred Stock are initially reserved
for issuance upon exercise of the Rights.
The Rights may have certain
anti-takeover effects. The Rights will cause
substantial dilution to a person or group that
attempts to acquire the Company in a manner which
causes the Rights to become discount Rights unless
the offer is conditional on a substantial number
of Rights being acquired. The Rights, however,
should not affect any prospective offeror willing
to make an offer at a fair price and otherwise in
the best interests of the Company and its
stockholders as deter mined by a majority of the
Directors who are not affili ated with the person
making the offer, or willing to negotiate with the
Board. The Rights should not inter fere with any
merger or other business combination approved by
the Board since the Board may, at its option, at
any time until ten days following the Stock
Acquisition Date redeem all but not less than all
the then outstanding Rights at the Redemption
Price.
The Rights Agreement, dated as
of April 9, 1997, between the Company and First
Union National Bank of North Carolina, as Rights
Agent, specifying the terms of the Rights and
including the form of Certificate of Designation,
Preferences and Rights setting forth the terms of
the Preferred Stock as an exhibit thereto, the
press release announcing the declaration of the
Rights and a form of letter to the Company's
stockholders describing the Rights are attached
hereto as exhibits and are incorporated herein by
reference. The foregoing description of the Rights
is qualified in its entirety by reference to such
exhibits.
Item 2. Exhibits.
1 Rights Agreement, dated as of April 9, 1997,
between Public Service Company of North Caro
lina, Incorporated and First Union National
Bank of North Carolina, as Rights Agent, in
cluding the Articles of Amendment setting
forth the terms of the Series A Cumulative
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Preferred Stock, par value $25
per share, as Exhibit A, the
form of Rights Certificate as
Exhibit B and the Summary of
Rights to Purchase Preferred
Stock as Exhibit C. Pursuant to
the Rights Agreement, printed
Rights Certificates will not be
mailed until after the
Distribution Date (as such term
is defined in the Rights
Agreement).
2 Press Release of the Company dated April 10,
1997.
3 Form of letter to the Company's stockholders
describing the Rights.
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SIGNATURE
Pursuant to the requirements of
Section 12 of the Securities Exchange Act of 1934,
the Registrant has duly caused this registration
statement to be signed on its behalf by the
undersigned, thereunto duly autho rized.
Public Service Company of
North Carolina, Incorporated
Date: April 10, 1997 By:s\Jack G. Mason
---------------
Name: Jack G. Mason
Title: Vice President -
Treasurer and Chief
Financial Officer
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EXHIBIT INDEX
Exhibit Description
1 Rights Agreement, dated as of
April 9, 1997, between Public
Service Company of North Carolina,
Incorporated and First Union
National Bank of North Carolina,
as Rights Agent, including the
Articles of Amendment setting
forth the terms of the Series A
Cumulative Preferred Stock, par
value $25 per share, as Exhibit
A, the form of Rights Certificate
as Exhibit B and the Summary of
Rights to Purchase Preferred Stock
as Exhibit C.
Pursuant to the Rights Agreement,
printed Rights Certificates will
not be mailed until after the
Distribution Date (as such term is
defined in the Rights Agree ment).
2 Press Release of the Company dated
April 10, 1997.
3 Form of letter to the Company's
stockholders describing the Rights.
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EXHIBIT A
- -------------------------------------------------------------------------------
Public Service Company of North Carolina, Incorporated
and
First Union National Bank of North Carolina
as Rights Agent
Rights Agreement
Dated as of April 9, 1997
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section Page
1. Certain Definitions................................................ 1
2. Appointment of Rights Agent........................................ 7
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3. Issuance of Rights Certificates.................................... 7
-------------------------------
4. Form of Rights Certificates........................................ 9
---------------------------
5. Countersignature and Registration.................................. 11
6. Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates............................................ 11
7. Exercise of Rights; Purchase Price; Expira
tion Date of Rights............................................ 13
8. Cancellation and Destruction of Rights Cer
tificates...................................................... 16
9. Reservation and Availability of Capital
Stock.......................................................... 16
10. Preferred Stock Record Date....................................... 19
---------------------------
11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights............................. 19
12. Certificate of Adjusted Purchase Price or
Number of Shares............................................... 32
13. Consolidation, Merger or Sale or Transfer
of Assets, Cash Flow or Earning Power.......................... 32
14. Fractional Rights and Fractional Shares........................... 36
---------------------------------------
15. Rights of Action.................................................. 38
16. Agreement of Rights Holders....................................... 38
---------------------------
17. Rights Certificate Holder Not Deemed a
Stockholder.................................................... 39
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18. Concerning the Rights Agent........................................ 40
---------------------------
19. Merger or Consolidation or Change of Name
of Rights Agent................................................. 41
20. Duties of Rights Agent............................................. 42
----------------------
21. Change of Rights Agent............................................. 45
----------------------
22. Issuance of New Rights Certificates................................ 46
-----------------------------------
23. Redemption and Termination......................................... 47
24. Exchange........................................................... 48
25. Notice of Certain Events........................................... 50
------------------------
26. Notices............................................................ 51
27. Supplements and Amendments......................................... 52
28. Successors......................................................... 53
29. Determinations and Actions by the Board,
etc............................................................. 53
30. Benefits of this Agreement......................................... 53
--------------------------
31. Severability....................................................... 54
32. Governing Law...................................................... 54
33. Counterparts....................................................... 54
34. Descriptive Headings............................................... 54
EXHIBITS
Exhibit A -- Form of Aricles of Amendment
Exhibit B -- Form of Rights Certificate
Exhibit C -- Form of Summary of Rights
ii
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of
April 9, 1997 (this "Agreement"), between Public
Service Company of North Carolina, Incorporated, a
North Carolina corpora tion (the "Company"), and
First Union National Bank of North Carolina, a
national banking association, as Rights
Agent (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on April 9, 1997 (the
"Rights Dividend Declaration Date"), the Board of
Directors of the Company (the "Board") authorized
and declared a dividend distri bution of one Right
for each share of common stock, par value $1.00
per share, of the Company (the "Common Stock")
outstanding at the close of business on April 28,
1997 (the "Record Date"), and has authorized the
issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions
of Section 11(p) hereof) for each share of Common
Stock issued between the Record Date (whether
originally issued or delivered from the Company's
treasury) and the Distribution Date (as herein
after defined), each Right initially representing
the right to purchase one one-hundredth of a share
of Series A Cumulative Preferred Stock (the
"Preferred Stock") having the rights, powers and
preferences set forth in the form of the Articles
of Amendment to the Amended and Restated Charter
of the Company attached hereto as Exhib it A, upon
the terms and subject to the conditions here
inafter set forth (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 who or which, together with all Affiliates
and Associates of such Person, shall be the
Beneficial Owner of fifteen percent (15%) or more
of the shares of Common Stock then outstanding,
but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any
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employee benefit plan of the Company or of any
Subsidiary of the Company, (iv) any Person or
entity organized, appointed or established by the
Company for or pursuant to the terms of any such
plan, (v) any Person who, as of the date hereof,
is the Beneficial Owner of ten percent (10%) or
more of the shares of Common Stock then out
standing unless and until such Person, together
with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of twenty percent
(20%) or more of the shares of Common Stock then
outstanding whereupon such Person shall become an
Acquiring Person or (vi) any Person who becomes
the Beneficial Owner of fifteen per cent (15%) or
more, or, with respect to a Person de scribed in
clause (v) above, twenty percent (20%) or more, of
the shares of Common Stock then outstanding as a
result of a reduction in the number of shares of
Common Stock outstanding due to the repurchase of
shares of Common Stock by the Company unless and
until such Person, after becoming aware that such
Person has become the Beneficial Owner of fifteen
percent (15%) or more, or twenty percent (20%) or
more, as the case may be, of the then outstanding
shares of Common Stock, acquires benefi cial
ownership of additional shares of Common Stock
representing one percent (1%) or more of the
shares of Common Stock then outstanding.
(b) "Act" shall mean the Securities Act
of 1933 as amended and in effect on the date of this
agreement.
(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 and in effect on the date of this
Agreement (the "Exchange Act").
(d) A Person shall be deemed the
"Beneficial Owner" of, and shall be deemed to "benefi
cially own," any securities:
(i) which such Person
or any of such Person's Affiliates or
Associates, directly or indirectly, has
the right to acquire (whether such right
is exercisable immediately or only after
the passage of time) pursuant to any
agreement, arrangement or understanding
(wheth er or not in writing) or upon the
exercise of
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conversion rights, exchange rights,
rights, warrants or options, or
otherwise; provided, however, that a
Person shall not be deemed the
"Beneficial Owner" of, or to
"beneficially own," (A) securities
tendered pursuant to a tender or exchange
offer made by such Person or any of such
Person's Affiliates or Associates until
such tendered securities are accepted for
purchase or exchange, (B) securities
issuable upon exercise of Rights at any
time prior to the occurrence of a
Triggering Event or (C) securities
issuable upon exercise of Rights from and
after the occurrence of a Triggering
Event which Rights were acquired by such
Person or any of such Person's Affiliates
or Associ ates 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 Ex change
Act), including pursuant to any
agreement, arrangement or understanding,
whether or not in writing; provided,
however, that a Person shall not be
deemed the "Benefi cial Owner" of, or to
"beneficially own," any security under
this subparagraph (ii) as a result of an
agreement, arrangement or under standing
to vote such security if such agree ment,
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 appli cable
provisions of the General Rules and Regu
lations under the Exchange Act, and (B)
is not reportable by such Person on
Schedule 13D under the Exchange Act (or
any comparable or succes sor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or
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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), for the purpose of acquiring,
holding, voting (except pursuant to a
revocable proxy as described in the
proviso to subparagraph (ii) of this
paragraph (d)) or disposing of any vot
ing securities of the Company;
provided, however, that nothing in this paragraph
(d) shall cause a Person engaged in business as an
underwrit er of securities to be the "Beneficial
Owner" of, or to "beneficially own," any
securities acquired through such Person's
participation in good faith in a firm commitment
underwriting until the expiration of forty (40)
days after the date of such acquisition.
(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 autho rized or obligated by law or
executive order to close.
(f) "Close of business" on any given date
shall mean 5:00 P.M., New York City time, on such
date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., New York
City time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the common
stock, par value $1.00 per share, of the Company,
except that "Common Stock" when used with
reference to any Person other than the Company
shall mean the capital stock 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 Per
son.
(h) "Common Stock Equivalents" shall have
the meaning set forth in Section 11(a)(iii) hereof.
(i) "Current Market Price" shall have the
meaning set forth in Section 11(d)(i) hereof.
(j) "Current Value" shall have the mean
ing set forth in Section 11(a)(iii) hereof.
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(k) "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof.
(l) "Exchange Act" shall have the meaning
set forth in Section 1(c) hereof.
(m) "Expiration Date" shall have the
meaning set forth in Section 7(a) hereof.
(n) "Final Expiration Date" shall mean
the close of business on April 9, 2007.
(o) "Person" shall mean any individual,
firm, corporation, partnership or other entity.
(p) "Preferred Stock" shall mean shares
of Series A Cumulative Preferred Stock, par value
$25.00 per share, of the Company and, to the
extent that there are not a sufficient number of
shares of Series A Cumula tive Preferred Stock
authorized to permit the full exer cise of the
Rights, any other series of preferred stock of the
Company designated for such purpose containing
terms substantially similar to the terms of the
Series A Cumulative Preferred Stock.
(q) "Principal Party" shall have the
meaning set forth in Section 13(b) hereof.
(r) "Purchase Price" shall have the
meaning set forth in Section 4(a) hereof.
(s) "Record Date" shall have the meaning
set forth in the WHEREAS clause at the beginning of this
Agreement.
(t) "Redemption Price" shall have the
meaning set forth in Section 23(a) hereof.
(u) "Rights" shall have the meaning set
forth in the WHEREAS clause at the beginning of the
Agreement.
(v) "Rights Agent" shall have the meaning
set forth in the parties clause at the beginning of this
Agreement.
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(w) "Rights Certificates" shall have the
meaning set forth in Section 3(a) hereof.
(x) "Rights Dividend Declaration Date"
shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(y) "Section 11(a)(ii) Event" shall mean
any event described in Section 11(a)(ii) hereof.
(z) "Section 11(a)(ii) Trigger Date"
shall have the meaning set forth in Section 11(a)(iii)
hereof.
(aa) "Section 13 Event" shall mean any
event described in clauses (x), (y), or (z) of Section
13(a) hereof.
(bb) "Spread" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(cc) "Stock Acquisition Date" shall mean
the first date of public announcement (which, for
purpos es of this definition, shall include,
without limitation, a report filed or amended
pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an
Acquiring Person has become such.
(dd) "Subsidiary" shall mean, with refer
ence to any Person, any corporation of which an
amount of voting securities sufficient to elect at
least a majority of the directors of such
corporation is beneficially owned, directly or
indirectly, by such Person, or other wise
controlled by such Person.
(ee) "Substitution Period" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(ff) "Summary of Rights" shall have the
meaning set forth in Section 3(b) hereof.
(gg) "Trading Day" shall have the meaning
set forth in Section 11(d)(i) hereof.
(hh) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
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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 ap
pointment. The Company may from time to time appoint
such co-rights agents as it may deem necessary or
desirable.
Section 3. Issuance of Rights Certificates.
(a) Until 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 day (or
such later date as the Board shall deter mine)
after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary
of the Company, or any employee benefit 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 pub lished 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 become an Acquiring Person (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
(in cluding a transfer to the Company). As soon as
practica ble after the Distribution Date, the
Rights Agent will send by first-class, insured,
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
right certificates, in substantially the form of
Exhibit B hereto (the "Rights Certificates"),
evidencing one Right for each share of Common
Stock so held, subject to
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adjustment as provided herein. In the event that
an ad justment in the number of Rights per share
of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the
Right 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 such Rights Certificates.
(b) The Company will make available a
copy of a Summary of Rights, in substantially the
form attached hereto as Exhibit C (the "Summary of
Rights"), to any holder of Rights who may so
request from time to time. With respect to
certificates for the Common Stock outstanding as
of the Record Date or were issued subse quent to
the Record Date, unless and until the Distribu
tion Date shall occur, the Rights will be
evidenced by such certificates for the Common
Stock 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 (as
herein after defined), the transfer of any
certificates repre senting shares of Common Stock
in respect of which Rights have been issued shall
also constitute the transfer of the Rights
associated with such shares of Common Stock.
(c) Rights shall be issued in respect of
all shares of Common Stock which are issued
(whether originally issued or from the Company's
treasury) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration
Date. Certificates representing such shares of
Common Stock shall also be deemed to be
certificates for Rights, and shall bear the
following legend:
This certificate also evidences
and enti tles the holder hereof to
certain Rights as set forth in the Rights
Agreement between Public Service Company
of North Carolina, Incorporated (the
"Company") and the Rights Agent
thereunder (the "Rights Agreement"), the
terms of which are hereby incorporated
herein by reference and a copy of which
is on file at the principal of fices of
the Company. Under certain circum
stances, as set forth in the Rights
Agreement, such Rights will be evidenced
by separate cer tificates and will no
longer be evidenced by this certificate.
The Company will mail to the holder of
this certificate a copy of the Rights
Agreement, as in effect on the date of
mailing, without charge, promptly after
receipt of a written request therefor.
Under certain cir cumstances 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.
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
substan tially 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 and on their
face shall entitle the holders thereof to purchase
such number of one one-hundredths of a share of
Preferred Stock as
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<PAGE>
shall be set forth therein at the price set forth
therein (such exercise price per one one-hundredth
of a share, 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 ad justment as
provided herein.
(b) Any Rights Certificate issued pur
suant to Section 3(a), Section 11(i) or Section 22
hereof that represents Rights beneficially owned
by: (i) an Ac quiring Person or any Associate or
Affiliate of an Ac quiring 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 Ac quiring
Person has any continuing agreement, arrangement
or understanding regarding the transferred Rights
or (B) a transfer which the Board has determined
is part of a plan, arrangement or understanding
which has as a primary purpose or effect 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 Cer
tificate are or were beneficially owned
by a Person who was or became an
Acquiring Person or an Affiliate or
Associate of an Acquiring Per son (as
such terms are defined in the Rights
Agreement). Accordingly, this Rights Cer
tificate and the Rights represented
hereby may become null and void in the
circumstances specified in Section 7(e)
of the Rights Agree ment.
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<PAGE>
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 any Vice President,
either manually or by facsimile signature, and
shall have af fixed thereto the Company's seal or
a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer of the
Company, either manually or by facsimile
signature. The Rights Certificates shall be
manually countersigned by the Rights Agent and
shall not be valid for any pur pose unless so
countersigned. In case any officer of the Company
who shall have signed any of the Rights Certifi
cates 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 Certificates 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
prin cipal office or offices designated as the
appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for
registration and transfer of the Rights
Certificates issued hereunder. Such books shall
show the names and addresses of the respective
holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section
4(b), Section 7(e) and Section 14 hereof, at any time
after the close of business on the Distribution Date, and
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<PAGE>
at or prior to the close of business on the
Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates
representing Rights that have been exchanged
pursuant to Section 24 hereof) may be trans
ferred, split up, combined or exchanged for
another Rights Certificate or Certificates,
entitling the regis tered holder to purchase a
like number of one one-hundredths of a share of
Preferred Stock (or, follow ing a Triggering
Event, at the option of the Board (i) one
one-hundredths of a share of Preferred Stock, (ii)
Common Stock or (iii) other securities, cash or
other as sets, as the case may be) as the Rights
Certificate or Certificates surrendered then
entitles such holder (or former holder in the case
of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or
exchange any Rights Certificate or Certifi cates
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 on the reverse side of such Rights
Certificate and shall have provided such
additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company
shall reasonably re quest. Thereupon the Rights
Agent shall, subject to Section 4(b), Section
7(e), Section 14 and Section 24 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 re quire payment of a sum
sufficient to cover any tax or governmental charge
that may be imposed in connection with any
transfer, split up, combination or exchange of
Rights Certificates.
(b) 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
11
<PAGE>
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 provid ed 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 and the certificate on the reverse
side thereof duly executed, to the Rights Agent at
the principal office or offices of the Rights
Agent designated for such purpose, together with
payment of the aggregate Purchase Price with
respect to the total number of one one-hundredths
of a share (or other securities, cash or other
assets, as the case may be) as to which such sur
rendered Rights are then exercisable, at or prior
to the earliest of (i) the close of business on
April 9, 2007 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as
provided in Section 23 hereof, or (iii) the time
at which such Rights are exchanged pursu ant to
Section 24 hereof (the earliest of (i), (ii) and
(iii) being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each one
one-hundredth of a share of Preferred Stock
pursuant to the exercise of a Right shall
initially be $55.00, 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
elec tion to purchase and the certificate duly
executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price per
one one-hundredth of a share of Preferred Stock
(or other shares, securities, cash or other
assets, as the case may be) to be purchased
12
<PAGE>
as set forth below and an amount equal to any
applicable transfer tax, the Rights Agent shall,
subject to Section 20(k) 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 such shares) certificates for the total
number of one one-hundredths of a share of
Preferred Stock to be pur chased and the Company
hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the
Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon
exer cise of the Rights hereunder with a
depositary agent, requisition from the depositary
agent depositary receipts representing such number
of one one-hundredths of a share of Preferred
Stock 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 in cash or by
certified bank check or bank draft payable to the
order of the Company. 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. The Company reserves the
right to require prior to the occurrence of a
Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock would be
issued.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate
13
<PAGE>
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 an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such As sociate 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 Af filiate) who becomes a transferee
prior to or concur rently with the Acquiring
Person becoming such and re ceives such Rights
pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement
or understand ing regarding the transferred Rights
or (B) a transfer which the Board has determined
is part of a plan, ar rangement or understanding
which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null
and void without any further action and no holder
of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any
provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to 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
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<PAGE>
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, com bination 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 Cer tificate 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.
(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, following the occurrence of
a Triggering Event, at the option of the Board,
out of its authorized and unis sued (i) one
one-hundredths of a share of Preferred Stock, (ii)
shares of Common Stock and/or (iii) other
securities or out of its authorized and issued
shares held in its treasury), the number of shares
of Preferred Stock (and, following the occurrence
of a Triggering Event, at the option of the Board,
(i) one one-hundredths of a share of Preferred
Stock, (ii) Common Stock and/or (iii) other
securities) that, as provided in this Agree ment
including Section 11(a)(iii) hereof, will be suffi
cient to permit the exercise in full of all
outstanding Rights.
15
<PAGE>
(b) So long as the shares of Preferred
Stock (and, following the occurrence of a
Triggering Event, at the option of the Board, (i)
one one-hun dredths of a share of Preferred
Stock,(ii) Common Stock and/or (iii) other
securities) issuable and deliverable upon the
exercise of the Rights may be listed on any
national securities exchange, the Company shall
use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such
exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best ef
forts to (i) file, as soon as practicable
following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which
the consideration to be delivered by the Company
upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) hereof, a
registration statement under the Act, with respect
to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such
regis tration statement to become effective as
soon as practi cable after such filing and (iii)
cause such registration statement to remain
effective (with a prospectus at all times meeting
the requirements of the Act) until the earlier of
(A) the date as of which the Rights are no longer
exercisable for such securities and (B) the 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 temporari ly 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 registra
tion statement and permit it to become effective.
Upon any such suspension, the Company shall issue
a public announcement stating that the
exercisability of the Rights has been temporarily
suspended, as well as a public announcement at
such time as the suspension is no longer in
effect. In addition, if the Company shall
determine that a registration statement is
required following the Distribution Date, the
Company may tempo rarily suspend the
exercisability of the Rights until such time as a
registration statement has been declared
effective. Notwithstanding any provision of this
Agree ment to the contrary, the Rights shall not
be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction has
not been obtained, the exercise thereof is not
permitted under applicable law or a regis tration
statement has not been declared effective.
(d) The Company covenants and agrees that
it will take all such action as may be necessary
to ensure that all one one-hundredths of a share
of Preferred Stock (and, following the occurrence
of a Triggering Event, at the option of the Board,
(i) one one-hundredths of a share of Preferred
Stock, (ii) Common Stock and/or (iii) other
securities, as the case may be) 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 one
one-hundredths of a share of Preferred Stock (or
one one-hundredths of a share of Preferred Stock,
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 Certifi cates
to a Person other than, or the issuance or
delivery of a number of one one-hundredths of a
share of Preferred Stock (or one one-hundredths of
a share of Preferred Stock, 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 one
one-hundredths of a share of Preferred Stock (or
one one-hundredths of a share of Preferred Stock,
Common Stock and/or other secu rities, as the case
may be) in a name other 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
Certificate at the time of surrender) or until it
has been established to the Company's satisfaction
that no such tax is due.
16
<PAGE>
Section 10. Preferred Stock Record Date. Each
---------------------------
person in whose name any certificate for a number of one
one-hundredths of a share of Preferred Stock (or one one-
hundredths of a share of Preferred Stock, Common Stock
and/or other securities, as the case may be) is issued
upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such frac
tional shares of Preferred Stock (or one one-hundredths
of a share of Preferred Stock, 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 (or one one-hundredths of
a share of Preferred Stock, 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
(or one one-hundredths of a share of Preferred Stock,
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 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, (B) subdivide the
outstanding Preferred Stock, (C) combine
the outstanding Preferred
17
<PAGE>
Stock into a smaller number of shares or
(D) issue any shares of its capital stock
in a reclassification of the Preferred
Stock (including any such
reclassification in connec tion with a
consolidation or merger in which the
Company is the continuing or surviving
corporation), except as otherwise
provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price
in effect at the time of the record date
for such dividend or of the effec tive
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
Pur chase Price then in effect, the
aggregate num ber 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 transfer books of the Company were
open, such holder would have owned upon
such exercise and been entitled to
receive by virtue of such dividend,
subdivision, combination or reclassi
fication. If an event occurs which would
re quire 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, alone or together with its
Affiliates and Associates, shall, at any
time after the Rights Dividend
Declaration Date, becomes an Acquiring
Person, unless the event causing such
Person to become an Acquiring Person is a
transaction set forth in Section 13(a)
hereof, or is an acquisition of shares of
Common Stock pursuant to a tender offer
or an exchange offer for all outstanding
shares of Common Stock at a price and on
terms determined by at least a majority
of the mem bers of the Board who are not
officers of the
18
<PAGE>
Company and who are not representatives,
nomi nees, Affiliates or Associates of an
Acquiring Person, after receiving advice
from one or more investment banking
firms, to be (a) at a price that is fair
to stockholders (taking into ac count all
factors that such members of the Board
deem relevant including, without limita
tion, prices that could reasonably be
achieved if the Company or its assets
were sold on an orderly basis designed to
realize maximum val ue) and (b) otherwise
in the best interests of the Company and
its stockholders, then, prompt ly
following the occurrence of such event,
proper provision shall be made so that
each holder of a Right (except as
provided below and in Section 7(e)
hereof) shall thereafter have the right
to receive, upon exercise thereof at the
then current Purchase Price in accordance
with the terms of this Agreement, in lieu
of a number of one one-hundredths of a
share of Pre ferred Stock, at the option
of the Board, (i) such number of one
one-hundredths of a share of Preferred
Stock, the issuance of which has been
preapproved by the North Carolina
Utilities Commission, as shall equal the
Adjustment Shares Amount (the "Preferred
Adjustment Shares,") or (ii) such number
of shares of Com mon Stock of the Company
as shall equal the re sult obtained by
(x) multiplying the then cur rent
Purchase Price by the then number of one
one-hundredths of a share of Preferred
Stock for which a Right was exercisable
immediately prior to the first occurrence
of a Section 11(a)(ii) Event, and (y)
dividing that product (which, following
such first occurrence, shall thereafter
be referred to as the "Purchase Price"
for each Right and for all purposes of
this Agreement) by fifty percent (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 (the "Common Adjustment
Shares", and, together with the Common
Adjustment Shares, the "Adjustment
Shares", the number of which is the
"Adjustment Shares Amount")
19
<PAGE>
(iii) In the event that
the number of shares of Preferred Stock
or Common Stock, as the case may be, that
are authorized by the Company's Charter
but not outstanding or re served for
issuance for purposes other than upon
exercise of the Rights are not sufficient
to permit the exercise in full of the
Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a),
the Company shall (A) determine the value
of the Adjustment Shares issuable upon
the exercise of a Right (the "Current
Value"), and (B) with respect to each
Right (subject to Section 7(e) hereof),
make adequate provision to substitute for
the Ad justment Shares, upon the exercise
of a Right and payment of the applicable
Purchase Price, (1) cash, (2) a reduction
in the Purchase Price, (3) Common Stock
or other equity securi ties of the
Company (including, without limita tion,
shares, or units of shares, of preferred
stock, such as the Preferred Stock, which
the Board has deemed to have essentially
the same value or economic rights as
shares of Common Stock (such shares of
preferred stock being referred to as
"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 (less the
amount of any reduction in the Purchase
Price), where such aggregate value has
been determined by the Board based upon
the advice of an investment banking firm
selected by the Board; provided, however,
that if the Company shall not have made
adequate provision to deliver value
pursuant to clause (B) above within
thirty (30) days following the later of
(x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which
the Company's right of redemption
pursuant to Section 23(a) expires (the
later of (x) and (y) being re ferred to
herein as the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obli
gated to deliver, upon the surrender for
exer cise of a Right and without
requiring payment of the Purchase Price,
(i) one one-hundredths of a share of
Preferred Stock (to the extent
available), and then, if necessary, cash,
which
20
<PAGE>
shares and/or cash have an aggregate
value equal to the Spread or (ii) shares
of Common Stock (to the extent
available). For purposes of the preceding
sentence, the term "Spread" shall mean
the excess of (i) the Current Value over
(ii) the Purchase Price. If the Board
determines in good faith that it is
likely that sufficient additional shares
of Common Stock or Preferred Stock could
be authorized for issu ance upon exercise
in full of the Rights, the thirty (30)
day period set forth above may be
extended to the extent necessary, but not
more than ninety (90) days after the
Section 11(a)(ii) Trigger Date, in order
that the Com pany may seek stockholder
approval for the authorization of such
additional shares (such thirty (30) day
period, as it may be extended, is herein
called the "Substitution Period"). To the
extent that action is to be taken pursu
ant to the first and/or third sentences
of this Section 11(a)(iii), the Company
(1) shall pro vide, subject to Section
7(e) hereof, that such action shall apply
uniformly to all outstanding Rights and
(2) may suspend the exercisability of the
Rights until the expiration of the Sub
stitution Period in order to seek such
stock holder approval for such
authorization of addi tional shares
and/or to decide the appropriate form of
distribution to be made pursuant to such
first sentence and to determine the value
thereof. In the event of any such
suspension, the Company shall issue a
public announcement stating that the
exercisability of the Rights has been
temporarily suspended, as well as a
public announcement at such time as the
suspen sion is no longer in effect. For
purposes of this Section 11(a)(iii), the
value of each Adjustment Share shall be
the current market price per share of the
Common Stock on the Sec tion 11(a)(ii)
Trigger Date and the per share or per
unit value of any Common Stock Equiva
lent shall be deemed to equal the current
mar ket price per share of the Common
Stock on such date.
(b) In case the Company shall fix a
record date for the issuance of rights, options or
war rants 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 shares of Preferred Stock
("Equivalent Preferred Stock")) or securities con
vertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred
Stock or per share of Equivalent Preferred Stock
(or having a conver sion price per share, if a
security convertible into Preferred Stock or
Equivalent Preferred Stock) less than the Current
Market Price (as determined pursuant to Sec tion
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 that the aggregate offering price
of the total number of shares of Preferred Stock
and/or Equivalent Preferred Stock so to be offered
(and/or the aggregate initial conversion price of
the convertible securities so to be offered) would
purchase at such Current Market Price, and the
denominator of which shall be the number of shares
of 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
into which the convertible securities so to be
offered are initially convertible). In case such
subscription price may be paid by delivery of
consider ation part or all of which may be in a
form other than cash, the value of such
consideration shall be as deter mined in good
faith by the Board, 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. Shares of Preferred
Stock owned by or held for the account of the
Company shall not be deemed outstanding for the
purpose of any such compu tation. 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 that
would then be in effect if such record date had
not been fixed.
21
<PAGE>
(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 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 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 Pur chase 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, whose
determination shall be de scribed in a statement
filed with the Rights Agent) of the portion of the
cash, assets or evidences of indebted ness so 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 so 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 prices per share of
such Common Stock for the thirty (30)
consecutive Trading Days (as hereinafter
de fined) immediately prior to such date,
and for pur poses 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
prices per share of such Common Stock for
the ten (10) consecutive Trading Days
immediately following such date; pro
vided, however, that in the event that
the Current
22
<PAGE>
Market Price per share of the Common
Stock is deter mined during a period
following the announcement by the issuer
of such Common Stock of (A) a dividend or
distribution on such Common Stock payable
in shares of such securities or Common
Stock convertible into shares of such
Common Stock (other than the Rights), or
(B) any subdivision, combination or
reclassifica tion of such Common Stock,
and the ex-dividend date for such
dividend or distribution, or the record
date for such subdivision, combination or
reclas sification shall not have occurred
prior to the commencement of the
requisite thirty (30) Trading Day or ten
(10) Trading Day period, as set forth
above, then, and 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 secu rities
exchange, the last quoted price or, if
not so quoted, the average of the high
bid and low asked prices in the
over-the-counter market, as reported by
the National Association of Securities
Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in
use, or, if on any such date the 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. 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 deter mined in good faith by
the Board shall be used. The term
"Trading Day" shall mean a day on which
the principal national securities
exchange on which the
23
<PAGE>
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, Cur rent Market
Price per share shall mean the fair value
per share as determined in good faith by
the Board, 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 Stock in
clause (i) of this Section 11(d) (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
clause (i) of this Section 11(d), the
Current Market Price per share of
Preferred Stock shall be conclusively
deemed to be an amount equal to 100 (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) multi
plied by the Current Market Price per
share of the Common Stock. If neither the
Preferred Stock nor the Common Stock is
publicly held or so listed or traded,
Current Market Price per share of the Pre
ferred Stock shall mean the fair value
per share as determined in good faith by
the Board, whose deter mination shall be
described in a statement filed with the
Rights Agent and shall be conclusive for
all purposes.
(e) Anything herein to the contrary not
withstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would
require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided,
however, that any adjustments which by reason of
this Section 11(e) are not required to be made
shall be carried forward and taken into account in
any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent
or to
24
<PAGE>
the nearest ten-thousandth of a share of Common
Stock or other share or 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 ear lier of (i)
three (3) years from the date of the transac tion
that mandates such adjustment or (ii) the
Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a)
hereof, the holder of any Right thereafter
exercised shall become entitled to receive any
shares of capital stock other than Preferred
Stock, thereafter the number of such other shares
so 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), and the provi sions of
Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the
number of one one-hun dredths of a share of
Preferred Stock purchasable from time to time
hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exer
cised 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 pur chase, at the adjusted
Purchase Price, that number of one one-hundredths
of a share of Preferred Stock (calculated to the
nearest one-millionth) obtained by (i) multiplying
(x) the number of one one-hundredths of a share
covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase
Price.
25
<PAGE>
(i) The Company may elect on or after the
date of any adjustment of the Purchase Price to
adjust the number of Rights, in lieu of any
adjustment in the number of one one-hundredths of
a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of
Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to
such ad justment. Each Right held of record prior
to such ad justment 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 im mediately 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 eviden cing all the Rights to which
such holders shall be en titled after such
adjustment. Rights Certificates so to be
distributed shall be issued, executed and counter
signed 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 hold ers of record of Rights
Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or
change in the Purchase Price or the number of one
one-hundredths of a share of Preferred Stock
issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price
per one one-hundredth of a share and the number of
one one-hundredths of a share that were ex pressed
in the initial Rights Certificates issued hereun
der.
(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 one one-hun dredths of a share of Preferred
Stock issuable upon exer cise of the Rights, the
Company shall take any corporate action that may,
in the opinion of its counsel, be neces sary in
order that the Company may validly and legally
issue fully paid and nonassessable such number of
one one-hundredths of a share of Preferred Stock
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 exer cised after such
record date of the number of one one-hundredths of
a share of Preferred Stock and other capital stock
or securities of the Company, if any, issuable
upon such exercise over and above the number of
one one-hundredths of a share of Preferred Stock
and other capital stock or securities of the
Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such
holder's right to receive such additional shares
(frac tional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase
Price, in ad dition to those adjustments expressly
required by this Section 11, as and to the extent
that in their good faith judgment the Board shall
determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the Current Market
26
<PAGE>
Price, (iii) issuance wholly for cash of shares of
Pre ferred 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 holders 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 Sub sidiary of the Company in a transaction
that 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, cash flow or earning
power aggre gating more than fifty percent (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
dimin ish 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 stockholders of
the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution of
Rights previously owned by such Person or any of
its Affiliates 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
27
<PAGE>
shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding
shares of Common Stock pay able in shares of
Common Stock, (ii) subdivide the out standing
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 which shall be the total number of
shares of Common Stock outstanding im mediately
prior to the occurrence of the event and the
denominator of which shall be the total number of
shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certificate of
Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in
Section 11 and 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 cer tificate and (c) if a
Distribution Date has occurred, mail a brief
summary thereof to each holder of a Rights
Certificate 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 and shall not be
deemed to have knowledge of any such adjustment
unless and until it shall have received such a
certificate.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets, Cash Flow 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) here of), and the
Company shall not be the continuing or sur viving
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 Com pany, and the Company shall be the
continuing or sur viving 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 trans fer),
in one transaction or a series of related transac
tions, assets, cash flow or earning power
aggregating more than fifty percent (50%) of the
assets, cash flow 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 (except
as may be contemplated by 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 thereaf ter 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
autho rized and issued, fully paid, non-assessable
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 one one-hundredths of a share of
Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a
Section 13 Event, multiplying the number of such
one one-hundredths of a share for which a Right
was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such
first occurrence), and dividing that product
(which, following the first occur rence of a
Section 13 Event, shall be referred to as the
"Purchase Price" for each Right and for all
purposes of this Agreement) by (2) fifty percent
(50%) of the Current Market Price (determined
pursuant to Section 11(d)(i) hereof) per share of
the Common Stock of such Principal
28
<PAGE>
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 assure that the
provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to its
shares of Common Stock there after 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
Sec tion 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 securi ties 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, cash flow
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
29
<PAGE>
other Person; and (2) in case such Person is a Sub
sidiary, directly or indirectly, of more than one
Person, the Common Stocks 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.
(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 its 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 will:
(i) prepare and file a
registration statement under the 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 Act) until the
Expiration Date; and
(ii) will 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 re
quirements 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).
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(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be
ap plicable 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 which
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 share of
Common Stock of fered in such transaction is not
less than the price per share of Common Stock paid
to all holders of shares of Common Stock whose
shares were purchased pursuant to such tender
offer or exchange offer and (iii) the form of
consideration being offered to the remaining
holders of shares 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.
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the
Distribu tion 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 Certifi cates
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 transac tion 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
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securities listed on the principal national
securities exchange on which the Rights are listed
or admitted to trading, or if the Rights are not
listed or admitted to trading on any national
securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as
reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not
quoted by any such organization, the average of
the closing bid and asked prices as furnished by a
professional market maker making a market in the
Rights selected by the Board. 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 shall be
used.
(b) The Company shall not be required to
issue fractions of shares of Preferred Stock
(other than fractions that are integral multiples
of one one-hundredth of a share of Preferred
Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions
that are integral multiples of one one-hundredth
of a share of Pre ferred Stock). In lieu of
fractional shares of Preferred Stock that are not
integral multiples of one one-hundredth of a share
of Preferred Stock, the Company 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 one-hundredths of
a share of Preferred Stock. For purposes of this
Section 14(b), the current market value of one
one-hundredths of a share of Preferred Stock shall
be one one-hundredths of 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 Trig
gering 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 frac tional 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 (1) share of
Common Stock. For purposes of
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this Section 14(c), the current market value of
one share of Common Stock shall be the closing
price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such
exercise.
(d) The holder of a Right by the accep
tance 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
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 Cer tificate (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 en force, 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.
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;
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(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 (not withstanding any
notations of ownership or writing on the Rights
Certificates or the associated Common Stock cer
tificate made by anyone other than the Company or
the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject
to the last sentence of Section 7(e) hereof, shall
be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor
the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of
its inability to perform any of its obligations
under this Agreement by reason of any preliminary
or permanent injunction or other order, decree or
ruling issued by a court of com petent
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 other wise
overturned as soon as possible.
Section 17. Rights Certificate
Holder Not Deemed a Stockholder. 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 one
one-hundredths of a share of Preferred Stock or
any other securities of the Company that 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
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<PAGE>
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 stockholders at any
meeting thereof, or to give or with hold consent
to any corporate action, or to receive notice of
meetings or other actions affecting stock holders
(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 Cer tificate 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, and its directors, officers,
employees and agents, for, and to hold each of
them harmless against, any loss, liability, or
expense, incurred without gross negligence, bad
faith or willful misconduct on the part of the
Rights Agent or such other identified party, for
anything done or omitted by the Rights Agent or
such other identified party in connection with the
acceptance and administration of this Agreement or
the exercise or performance of its duties
hereunder, 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 or the exercise or performance of its
duties hereunder in reliance upon any Rights
Certificate or certificate for Common Stock or for
other securities of the Company, instrument of as
signment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction,
consent, certifi cate, 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.
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<PAGE>
(c) The Indemnity provided in this Sec
tion 18 shall survive the expiration of the Rights and
the termination of the Agreement.
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 result ing from any merger or
consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or
stock transfer business of the Rights Agent or any
suc cessor 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 suc cessor 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 counter signed but not delivered, any
such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so counter
signed; and in case at that time any of the Rights
Cer tificates shall not have been countersigned,
any succes sor 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 countersig nature under its prior
name and deliver Rights Cer tificates so
countersigned; and in case at that time any of the
Rights Certificates shall not have been counter
signed, 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 Cer tificates and in this
Agreement.
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<PAGE>
Section 20. Duties of Rights
Agent. The Rights Agent undertakes the duties and
obligations im posed by this Agreement upon the
following terms and conditions, by all of which
the Company and the holders of Rights
Certificates, by their acceptance thereof, shall
be bound:
(a) The Rights Agent may consult with
legal counsel (who may be legal counsel for the
Company), and the advice or 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 advice or 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 Price) 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 a person believed by the
Rights Agent to be the Chairman of the Board, the
President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any
Assistant 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.
(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 any
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<PAGE>
provision of this Agreement or the execution and
delivery hereof (except the due execution hereof
by the Rights Agent) or in respect of the validity
or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be
responsible for any breach by the Company of any
covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the
provisions 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 shares
of Preferred Stock or Common Stock to be issued
pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Pre
ferred Stock or Common Stock will, when so issued,
be validly authorized and issued, fully paid and
nonassess able.
(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 car rying out
or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect
to the performance of its duties hereunder from
any person believed by the Rights Agent to be the
Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice
or instructions in connection with its duties, and
it shall not be liable for any action taken or suf
fered to be taken by it in good faith in
accordance with instructions of any such officer
or for any delay in acting while awaiting
instructions. Any application by the Rights Agent
for written instructions from the Compa ny may, at
the option of the Rights Agent, set forth in
writing any action proposed to be taken or omitted
by the Rights Agent under this Agreement and the
date on or after which such action shall be taken
or such omission
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<PAGE>
shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of,
the Rights Agent in accordance with a proposal
included in any such appli cation on or after the
date specified in such application (which date
shall not be less than five Business Days after
the date any officer of the Company actually re
ceives such application, unless any such officer
shall have consented in writing to an earlier
date) unless, prior to taking any such action (or
the effective date in the case of any omission),
the Rights Agent shall have received written
instructions in response to such appli cation
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or
other securities of the Company or become
pecuniarily interested in any transaction in which
the Company may be interested, or contract with or
lend money to the Company or otherwise act as
fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and
exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or
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, that the Rights Agent was not grossly
negligent in the selection or continued employment
thereof.
(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 perfor mance 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 indem nification against
such risk or liability is not reasonably assured
to it.
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<PAGE>
(k) If, with respect to any Rights Cer
tificate surrendered to the Rights Agent for
exercise or transfer, the certificate attached to
the form of as signment or form of election to
purchase, as the case may be, has either not been
completed or indicates an affir mative response to
clause 1 and/or 2 thereof, the Rights Agent shall
not take any further action with respect to such
requested exercise or transfer without first
consul ting with the Company.
(l) The Rights Agent undertakes only the
express duties and obligations imposed on it by
this Agreement and no implied duties or
obligations shall be read into this Agreement
against the Rights Agent.
(m) Anything in this Agreement to the
contrary notwithstanding, in no event shall the
Rights Agent be liable for special, indirect or
consequential loss or damage of any kind
whatsoever (including but not limited to lost
profits).
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 Com pany, and to each
transfer agent of the Preferred Stock and Common
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 Preferred Stock and
Common Stock, by registered or certified mail, and
to the holders of the Rights Cer tificates by
first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to
make such appointment within a period of thirty
(30) days after giving notice of such removal or
after it has been notified in writing of such
resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice,
submit his Rights Certificate for inspection by
the Company), then any registered holder of any
Rights Certificate may apply to any court of
competent jurisdic tion for the appointment of a
new Rights Agent. Any
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<PAGE>
successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a
corporation organized and doing business under the
laws of the United States or of any State thereof,
in good standing, which is autho rized under such
laws to exercise corporate trust or stock transfer
powers and is subject to supervision or
examination by federal or state authority and
which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least
$50,000,000 or (b) an affiliate of a corporation
described in clause (a) of this sentence. 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 Preferred Stock and the
Common Stock , and mail a notice thereof in
writing to the registered holders of the Rights
Certificates. Failure to give any notice provided
for in this Section 21, however, or any defect
therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent,
as the case may be.
Section 22. Issuance of New
Rights Cer tificates. 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 evi dencing Rights
in such form as may be approved by the Board 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 shares of
Common Stock following the Distribution Date and
prior to the redemption or expira tion of the
Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant
to the exercise of stock options or under any
employee plan or arrangement, granted or awarded
as of the Distribution Date, or upon the exercise,
conversion or exchange of
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<PAGE>
securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or
appropri ate by the Board, 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 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, if the Stock Acquisition
Date shall have occurred prior to the Record Date,
the close of business on the tenth day following
the Record Date), or (ii) the Final Expira tion
Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01
per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock
dividend or similar trans action occurring after
the date hereof (such redemption price being
hereinafter referred to as the "Redemption
Price"). Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall
not be exer cisable after the first occurrence of
a Section 11(a)(ii) Event until such time as the
Company's right of redemp tion hereunder has
expired. The Company may, at its op tion, pay the
Redemption Price in cash, shares of Common Stock
(based on the Current Market Price, as defined in
Section 11(d)(i) hereof, of the Common Stock at
the time of redemption) or any other form of
consideration deemed appropriate by the Board.
(b) Immediately upon the action of the
Board 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
ordering the
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<PAGE>
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.
(c) Notwithstanding the provisions of
Section 23(a) hereof, in the event that a majority
of the Board is elected by stockholder action by
written con sent, or is comprised of persons
elected at a meeting of stockholders who were not
nominated by the Board in office immediately prior
to such meeting, then for a period of one hundred
and eighty (180) days following the effectiveness
of such election the Rights shall not be redeemed
if such redemption is reasonably likely to have
the purpose or effect of allowing any Person to
become an Acquiring Person or otherwise
facilitating the occurrence of a Triggering Event
or a transaction with an Acquiring Person.
Section 24. Exchange.
(a) The Board may, at its option, at any
time after any Person becomes an Acquiring Person,
ex change all or part of the then outstanding and
exercis able Rights (which shall not include
Rights that have become void pursuant to the
provisions of Section 7(e) hereof) for 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
ex change ratio being hereinafter referred to as
the "Ex change Ratio"). Notwithstanding the
foregoing, the Board shall not be empowered to
effect such exchange at any time after any Person
(other than the Company, any Sub sidiary of the
Company, any employee benefit plan of the Company
or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any
such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial
Owner of 50% or more of the Common Stock then
outstanding.
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(b) Immediately upon the action of the
Board ordering the exchange of any Rights pursuant
to subsection (a) of this Section 24 and without
any further action and without any notice, the
right to exercise such Rights shall terminate and
the only right thereafter of a holder of such
Rights shall be to receive that number of shares
of Common Stock equal to the number of such Rights
held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public
notice of any such exchange; provided, however,
that the failure to give, or any defect in, such
notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided
shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange
will state the method by which the exchange of the
Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of
Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the
number of Rights (other than Rights which have
become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Sec
tion 24, the Company, at its option, may
substitute Preferred Stock (or Equivalent
Preferred Stock, as such term is defined in
paragraph (b) of Section 11 hereof) for Common
Stock exchangeable for rights, at the initial rate
of one one-hundredths of a share of Preferred
Stock (or Equivalent Preferred Stock) for each
Common Stock, as appropriately adjusted to reflect
stock splits, stock dividends and other similar
transactions after the date hereof.
(d) In the event that there shall not be
sufficient Common Stock or Preferred Stock issued
but not outstanding or authorized but unissued to
permit any ex change of Rights as contemplated in
accordance with this Section 24, the Company shall
take all such action as may be necessary to
authorize additional Common Stock or Preferred
Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to
issue fractions of Common Stock or Preferred Stock or to
44
<PAGE>
distribute certificates which evidence fractional
Common Stock or Preferred Stock. In lieu of such
fractional Common Stock or Preferred Stock, there
may be paid to the registered holders of the Right
Certificates with regard to which such fractional
Common Stock or Preferred Stock would otherwise be
issuable, an amount in cash equal to the same
fraction of the current market value of a whole
Common Stock. For the purposes of this subsection
(e), the current market value of a whole Common
Stock shall be the closing price of a Common Stock
(as determined pursu ant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of exchange pursuant
to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay
any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other
distribution to the holders of Preferred Stock
(other than a regular quarter ly cash dividend 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 reclas
sification of its Preferred Stock (other than a
reclas sification involving only the subdivision
of outstanding shares of Preferred Stock), or (iv)
to effect any con solidation 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 a series of
related transactions, of more than fifty percent
(50%) of the assets, cash flow 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), 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 Certifi
cate, 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
45
<PAGE>
such stock dividend, distribution of rights or
warrants, or the date on which such
reclassification, consolida tion, merger, sale,
transfer, liquidation, dissolution, or winding up
is to take place and the date of participa tion
therein by the holders of the shares 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 shares of 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 hold ers of the shares of Preferred
Stock whichever shall be the earlier.
(b) In case any of the events set forth
in Section 11(a)(ii) hereof shall occur, then, in
any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the
event and the consequences of the event to holders
of Rights under Section 11(a)(ii) hereof, and (ii)
all references in the preceding paragraph to Pre
ferred Stock shall be deemed thereafter to refer
to Common Stock, Preferred Stock and/or other
securities, as the case may be.
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 and return-
receipt requested, addressed (until another
address is filed in writing with the Rights Agent)
as follows:
Public Service Company of North Carolina,
Incorporated
400 Cox Road
Gastonia, North Carolina 28053
Attention: Corporate Secretary
Subject to the provisions of Section 21, any
notice or demand authorized by this Agreement to
be given or made by the Company or by the holder
of any Rights Certificate to or on the Rights
Agent shall be sufficiently given or
46
<PAGE>
made if sent by first-class mail, postage prepaid,
ad dressed (until another address is filed in
writing with the Company) as follows:
First Union National Bank of North Carolina
230 South Tryon Street
Charlotte, North Carolina 28288
Attention: Shareholder Services
Notices or demands authorized by this Agreement to
be given or made by the Company or the Rights
Agent to the holder of any Rights Certificate (or,
if prior to the Distribution Date, to the holder
of certificates representing shares of Common
Stock) shall be suf ficiently 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, the Company and the Rights
Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the ap
proval of any holders of certificates representing shares
of Common Stock. From and after the Distribution Date,
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
shorten or lengthen any time period hereunder or (iv) to
change or supplement the provisions hereunder 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; provided, from and after
--------
the Distribution Date, this Agreement may not be sup
plemented or amended to lengthen any time period hereun
der pursuant to clause (iii) of this sentence 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 compli
ance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights
47
<PAGE>
shall be deemed coincident with the interests of
the holders of Common Stock. Notwithstanding
anything con tained herein to the contrary, (i)
this Agreement may not be amended at a time when
the Rights are not redeemable, and (ii) no
supplement or amendment that changes the rights
and duties of the Right Agent under this Agreement
shall be effective without the consent of the
Rights Agent.
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, etc. For all purposes of
this Agreement, any calculation of the number of
shares of Common Stock outstanding at any
particular time, including for purpos es of
determining the particular percentage of such
outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board
shall have the exclusive power and authority to
adminis ter this Agreement and to exercise all
rights and powers specifically granted to the
Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement,
including, without limitation, the right and power
to (i) interpret the provisions of this Agree
ment, 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 (includ ing,
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 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
48
<PAGE>
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).
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
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.
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 per
formed 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.
49
<PAGE>
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.
Attest: PUBLIC SERVICE COMPANY OF NORTH
CAROLINA, INCORPORATED
By s/J. Paul Douglas By s/Charles E. Zeigler, Jr.
Name: J. Paul Douglas Name: Charles E. Zeigler, Jr.
Title: Vice President - Title: Chairman, President
Corporate Counsel and Chief Executive
and Secretary Officer
Attest: FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By s/Virginia Padgett By s/Patrick J. Edwards
Name: Virginia Padgett Name: Patrick J. Edwards
Title: Support Manager Title: Vice President
50
<PAGE>
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER APRIL 9, 2007 OR EARLIER IF
RE DEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT
TO REDEMP TION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CER TAIN CIRCUMSTANCES,
RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS 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 BECOME AN ACQUIRING
PERSON OR AN AFFIL IATE 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 SUCH AGREEMENT.]*
Rights Certificate
Public Service Company of North Carolina, Incorporated
This certifies that , or
registered assigns, is the registered owner of the
number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement,
dated as of April 9, 1997 (the "Rights
Agreement"), between Public Service Company of
North Carolina, Incorporated, a North Carolina
corporation (the "Company"), and First Union
National Bank of North Carolina (the "Rights
Agent"), to purchase from the Company at any time
prior to 5:00 P.M. (New York City time) on April
9, 2007 at the office or offices of the Rights
Agent designated for such purpose, or its
successors as Rights Agent, one one-hundredth of a
fully paid, non-assessable share of Series A
Cumulative Pre ferred Stock (the "Preferred
Stock") of the Company, at a purchase price of
$55.00 per one one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender
of this Rights Certificate with the Form of
Election to
- --------
* The portion of the legend in brackets shall be
inserted only if applicable and shall replace the
preceding sentence.
51
<PAGE>
Purchase and related Certificate duly executed.
The number of Rights evidenced by this Rights
Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above,
and the Purchase Price per share set forth above,
are the number and Purchase Price as of April 9,
1997, based on the Preferred Stock as constituted
at such date. The Company reserves the right to
require prior to the occurrence of a Triggering
Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so
that only whole shares of Preferred Stock will be
issued.
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 an Affiliate or Associate
of any such 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, 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 right
with respect to such Rights from and after the
occurrence of such Section 11(a)(ii) Event.
As provided in the Rights
Agreement, the Pur chase Price and the number and
kind of shares of Pre ferred 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 Trigger ing Events.
This Rights Certificate is
subject to all of the terms, provisions and
conditions of the Rights Agree ment, which terms,
provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to
which Rights Agreement reference is hereby made
for a full description of the Rights, limitations
of Rights obligations, duties and immunities
hereunder of the Rights Agent, the Company and the
holders of the Rights Certificates, 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 above-mentioned office of the
Rights Agent and are also available upon written
request to the Rights Agent.
52
<PAGE>
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 one one-hundredths of a share
of Preferred Stock 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
Certifi cate or Rights Certificates for the number
of whole Rights not exercised.
Subject to the provisions of the
Rights Agree ment, the Rights evidenced by this
Certificate may be redeemed by the Company at its
option at a redemption price of $.01 per Right at
any time prior to the earlier of the close of
business on (i) the tenth day following the Stock
Acquisition Date (as such time period may be
extended pursuant to the Rights Agreement) and
(ii) the Final Expiration Date. The foregoing
notwithstanding, the Rights generally may not be
redeemed for one hundred eighty (180) days
following a change in a majority of the Board as a
result of a proxy contest.
No fractional shares of
Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other
than, except that the possible requirement that
prior to the occurrence of a Triggering Event only
whole shares of Preferred Stock be issued,
fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced
by depositary receipts), 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 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
stockholder of the Company or any right to vote
for the election of directors or upon any matter
submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate
action, or, to receive notice of meetings or other
actions affecting stockholders (except as provided
in the Rights Agree ment), or to receive dividends
or subscription rights, or
53
<PAGE>
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 __________________
ATTEST: Public Service Company of
North Carolina, Incorporated
By_________________________
Secretary Charles E. Zeigler, Jr.
Chairman, President and
Chief Executive Officer
Countersigned:
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By
Authorized Signature
54
<PAGE>
[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 consti tute and appoint Attorney, to
transfer the within Rights Certificate on the
books of the within- named Company, with full
power of substitution.
Dated: __________________
Signature
Signature Guaranteed:
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
any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the
best knowl edge 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:
Signature
Signature Guaranteed:
1
<PAGE>
NOTICE
The signature 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 whatsoev
er.
2
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder
desires to exercise Rights
represented by the Rights
Certificate.)
To: Public Service Company of
North Carolina, Incorporated
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 insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall
not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the
balance of such Rights shall be registered in the
name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: _____________________
Signature
Signature Guaranteed:
1
<PAGE>
Certificate
The undersigned hereby certifies
by checking the appropriate boxes that:
(1) the Rights evidenced by this
Rights Cer tificate [ ] 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 any such Acquiring Person (as such
terms are defined pursuant to the Rights Agree
ment);
(2) after due inquiry and to the
best knowl edge of the undersigned, it [ ] did [ ]
did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:
Signature
Signature Guaranteed:
2
<PAGE>
NOTICE
The signature to the foregoing Election
to Pur chase 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.
3
<PAGE>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On April 9, 1997, the Board of
Directors of Public Service Company of North
Carolina, Incorporated (the "Company") declared a
dividend distribution of one Right for each
outstanding share of Common Stock to stockholders
of record at the close of business on April 28,
1997 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one
one-hundredth of a share of Series A Cumulative
Preferred Stock, par value $25 per share (the
"Preferred Stock"), at a Purchase Price of $55.00,
subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between the Company and
First Union National Bank of North Carolina, as
Rights Agent.
Initially, the Rights will be
attached to all Common Stock certificates
representing shares then out standing, and no
separate Rights Certificates will be distributed.
The Rights will separate from the Common Stock and
a Distribution Date will occur upon the earlier of
(i) ten (10) days following 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 fifteen percent (15%) or more of the
outstanding shares of Common Stock or, with
respect to persons that beneficially own ten
percent (10%) or more of the outstanding shares of
Common Stock on April 28, 1997, such person has
acquired, or obtained the right to acquire,
beneficial ownership of twenty percent (20%) or
more of the outstanding shares of Common Stock
(the "Stock Acquisition Date"), other than as a
result of repurchases of stock by the Company, or
(ii) ten (10) business days (or such later date as
the Board shall determine) following the
commencement of a tender offer or exchange offer
that would result in a person or group becoming an
Acquiring Person. Until the Distribu tion 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
1
<PAGE>
contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock
outstanding will also con stitute the transfer of
the Rights associated with the Common Stock
represented by such certificate. Pursuant to the
Rights Agreement, the Company reserves the right
to require prior to the occurrence of a Triggering
Event (as defined below) that, upon any exercise
of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock will be
issued.
The Rights are not exercisable
until the Dis tribution Date and will expire at
the close of business on April 9, 2007, unless
earlier redeemed or exchanged by the Company as
described below.
As soon as practicable after 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, the separate Rights Certificates
alone will represent the Rights. Except as
otherwise determined by the Board, only shares of
Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that a person
becomes an Acquiring Person (except pursuant to an
offer for all outstanding shares of Common Stock
that the independent directors determine to be
fair to and otherwise in the best inter ests of
the Company and its stockholders), each holder of
a Right will thereafter have the right to receive,
upon exercise, at the option of the Board, (i)
Common Stock, (ii) one one-hundredths of a share
of Series A Cumulative Preferred Stock, and/or
(iii) cash, property or other securities of the
Company, each of (i), (ii) and (iii) having a
value equal to two times the exercise price of the
Right. Notwithstanding any of the foregoing,
follow ing the occurrence of the event set forth
in this para graph, all Rights that are, or (under
certain circum stances specified in the Rights
Agreement) were, benefi cially owned by any
Acquiring Person will be null and void. However,
Rights are not exercisable following the
occurrence of the event set forth above until such
time as the Rights are no longer redeemable by the
Company as set forth below.
2
<PAGE>
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
consider ation, as noted above) for $100. Assuming
that the Common Stock had a per share value of
$20.00 at such time, the holder of each valid
Right would be entitled to purchase 10 shares of
Common Stock for $100.
In the event that, at any time
following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business
combination transaction in which the Company is
not the surviving corporation (other than a merger
which follows an offer described in the second
preceding paragraph), or (ii) fifty percent (50%)
or more of the Company's assets, cash flow or
earning power is sold or transferred, each holder
of a Right (except Rights which previously have
been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common
stock of the acquiring company having a value
equal to two 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."
At any time after a person
becomes an Acquiring Person and prior to the
acquisition by such person or group of fifty
percent (50%) or more of the outstanding Common
Stock, the Board may exchange the Rights (other
than Rights owned by such person or group which
have become void), in whole or in part, at an
exchange ratio of one share of Common Stock, or
one one-hundredth of a share of Preferred Stock
(or of a share of a class or series of the
Company's preferred stock having equivalent
rights, preferences and privileges), per Right
(subject to adjustment).
At any time until ten (10) days
following the Stock Acquisition Date, the Company
may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (payable in cash,
Common Stock or other consideration deemed
appropriate by the Board). Immediately upon the
action of the Board ordering redemption of the
Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive
the $.01 redemption price. The foregoing
notwithstanding, the Rights gener ally may not be
redeemed for one hundred eighty (180) days
following a change in a majority of the Board as a
result of a proxy contest.
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
circum stances, recognize taxable income in the
event that the Rights become exercisable for
Common Stock or Preferred 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 may be amended by the Board prior
to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may
be amended by the Board in order to cure any
ambiguity, to make changes which do not adverse ly
affect the interests of holders of Rights, or to
shorten or lengthen any time period under the
Rights Agreement; provided, however, that no
amendment may be made at such time as the Rights
are not redeemable.
A copy of the Rights Agreement
has been filed with the Securities and Exchange
Commission as an Exhibit to a Current Report on
Form 8-K. A copy of the Rights Agreement is
available free of charge from the Company. This
summary description of the Rights does not purport
to be complete and is qualified in its entirety by
refer ence to the Rights Agreement, which is
incorporated herein by reference.
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April 10, 1997
For more information contact:
Jack G. Mason
Vice President - Treasurer and
Chief Financial Officer
FOR IMMEDIATE RELEASE
PUBLIC SERVICE COMPANY OF NORTH CAROLINA, INCORPORATED
ANNOUNCES ADOPTION OF STOCKHOLDER RIGHTS PLAN
Public Service Company of North
Carolina, Inc. (NYSE-PGS) announced today that its
Board of Directors adopted a Stockholder Rights
Plan (the "Plan") in which Rights will be
distributed as a dividend at the rate of one Right
for each share of common stock, par value $1.00
per share, of the Company held by stockholders of
record as of the close of business on April 28,
1997.
Regarding the plan, Mr. Charles
E. Zeigler, Jr., chairman, president and chief
executive officer stated, "The Plan was not
adopted in response to any effort to acquire
control of PSNC. It is, however, designed to deter
coercive takeover tactics including the
accumulation of shares in the open market or
through private transactions and to prevent an
acquiror from gaining control of the Company
without offering a fair price to all of the
Company's stockholders."
Each Right initially will
entitle stockholders to buy one unit of a share of
preferred stock for $55.00 per share. The Rights
generally will be exercisable only if a person or
group acquires beneficial ownership of 15% or more
of the Company's common stock or commences a
tender or exchange offer upon consummation of
which such person or group would beneficially own
15% or more of the Company's common stock. The
Rights will expire on April 9, 2007. Details of
the Plan are outlined in a letter which will be
mailed to all stockholders.
By Order issued April 8, 1997, the North
Carolina Utilities Commission authorized PSNC to
reserve for issuance under the Plan, up to
1,500,000 shares of preferred stock and to issue
that preferred stock in the future in accordance
with the terms of the Plan.
- OVER -
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PSNC is franchised to serve a 33-county
service area in North Carolina and distributes
natural gas to approximately 311,000 winter-peak
customers in 92 cities and communities ranging
from the Raleigh, Durham and Chapel Hill areas in
the north central part of the state; the Concord,
Statesville, Gastonia and Forest City areas in the
Piedmont; to the Asheville, Hendersonville and
Brevard areas in the western part of the state.
PSNC, through various subsidiaries and a joint
venture, also participates in nonregulated
businesses such as natural gas brokering and
supply services, and the conversion and fueling of
natural gas vehicles.
# # #
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<PAGE>
[Letterhead of Public Service Company
of North Carolina, Incorporated]
April 10, 1997
Dear Stockholder:
On April 9, 1997, the Company's Board of Directors
adopted a Stockholder Rights Plan. I have enclosed
a summary of the Plan.
Our Stockholder Rights Plan is intended to protect
stock holders in the event of coercive or unfair
takeover tactics or an unsolicited attempt to
acquire control of the Company in a transaction
that the Board believes is not in your best
interests. Over 1,700 other publicly-traded
companies have adopted stockholder rights plans
similar to ours.
Following a thorough review, the Board concluded
that a Stockholder Rights Plan was the best
available means of protecting your right to retain
your equity investment in PSNC and realize the
full value of that investment.
Our Stockholder Rights Plan was not
adopted in response to any effort to
acquire control of PSNC, and the Board is
not aware of any such effort. The Plan
has been adopted in order to strengthen
the ability of the Board to protect your
interests. The Plan is not intended to
prevent a takeover of PSNC at a full and
fair price and will not do so. However,
it should discourage any attempt to
acquire PSNC in a way or on terms not
approved by the Board as being in the
best interests of stockholders.
In adopting the Stockholder Rights Plan, we are
expressing our pride in the Company's performance
as well as our confidence that there are
substantial long-term values inherent in PSNC that
we are working hard to achieve. Building our
business for the future and striving to maximize
value for stockholders remain the preeminent goals
of management and the Board.
Sincerely,
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SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On April 9, 1997, the Board of
Directors of Public Service Company of North
Carolina, Incorporated (the "Company") declared a
dividend distribution of one Right for each
outstanding share of Common Stock to stockholders
of record at the close of business on April 28,
1997 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one
one-hundredth of a share of Series A Cumulative
Preferred Stock, par value $25 per share (the
"Preferred Stock"), at a Purchase Price of $55.00,
subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement
(the "Rights Agreement") between the Company and
First Union National Bank of North Carolina, as
Rights Agent.
Initially, the Rights will be
attached to all Common Stock certificates
representing shares then out standing, and no
separate Rights certificates will be distributed.
The Rights will separate from the Common Stock
upon the earlier of (i) ten (10) days following 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 fifteen percent
(15%) or more of the outstanding shares of Common
Stock or, with respect to persons that
beneficially own ten percent (10%) or more of the
outstanding shares of Common Stock on the Record
Date, such person has acquired, or obtained the
right to acquire, beneficial ownership of twenty
percent (20%) or more of the outstanding shares of
Common Stock (the "Stock Acquisition Date"), other
than as a result of repurchases of stock by the
Company, or (ii) ten (10) business days (or such
later date as the Board shall determine) following
the commencement of a tender offer or exchange
offer that would result in a person or group
becoming an Acquiring Person (the earlier of (i)
and (ii) being herein referred to as the
"Distribution Date"). 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 certifi cates,
(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. Pursuant to the Rights
Agreement, the Company reserves the right to
require prior to the occurrence of a Triggering
Event (as defined below) that, upon any exercise
of Rights,
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<PAGE>
a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.
The Rights are not exercisable
until the Dis tribution Date and will expire at
the close of business on April 9, 2007, unless
earlier redeemed or exchanged by the Company as
described below.
As soon as practicable after 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, the separate Rights certificates
alone will represent the Rights. Except as
otherwise determined by the Board, only shares of
Common Stock issued prior to the Distribution Date
will be issued with Rights.
In the event that a person
becomes an Acquiring Person (except pursuant to an
offer for all outstanding shares of Common Stock
that the independent directors determine to be
fair to and otherwise in the best interests of the
Company and its stockholders), each holder of a
Right will thereafter have the right to receive,
upon exercise, (i) one one-hundredths of a share
of Series A Cumulative Preferred Stock, the
issuance of which has been preapproved by the
North Carolina Utilities Commission (the
"Commission"), (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 times the exercise price of the Right.
Notwithstanding any of the foregoing, following
the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person
will be null and void. However, Rights are not
exercisable following the occurrence of the event
set forth above until such time as the Rights are
no longer redeemable by the Company as set forth
below.
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
consider ation, as noted above) for $100. Assuming
that the Common Stock had a per share value of
$20.00 at such time, the holder of each valid
Right would be entitled to purchase ten shares of
Common Stock for $100.
In the event that, at any time
following the Stock Acquisition Date, (i) the
Company is acquired in a merger or other business
combination transaction in which
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<PAGE>
the Company is not the surviving corporation
(other than a merger which follows an offer
described in the second preceding paragraph), or
(ii) fifty percent (50%) or more of the Company's
assets, cash flow or earning power is sold or
transferred, each holder of a Right (except Rights
which previously have been voided as set forth
above) shall thereafter have the right to receive,
upon exercise, common stock of the acquiring
company having a value equal to two 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."
At any time after a person
becomes an Acquiring Person and prior to the
acquisition by such person or group of fifty
percent (50%) or more of the outstanding Common
Stock, the Board may exchange the Rights (other
than Rights owned by such person or group which
have become void), in whole or in part, at an
exchange ratio of one share of Common Stock, or
one one-hundredths of a share of Preferred Stock
(or of a share of a class or series of the
Company's preferred stock having equivalent
rights, preferences and privileges), per Right
(subject to adjustment).
At any time until ten (10) days
following the Stock Acquisition Date, the Company
may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (payable in cash,
Common Stock, or other consideration deemed
appropriate by the Board). Immediately upon the
action of the Board ordering redemption of the
Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive
the $.01 redemption price. The foregoing
notwithstanding, the Rights generally may not be
redeemed for one hundred eighty (180) days
following a change in a majority of the Board as a
result of a proxy contest.
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
circum stances, recognize taxable income in the
event that the Rights become exercisable for
Common Stock, Preferred 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 may be amended by the Board prior
to the Distribution Date. After the Distribution
Date, the provisions of the Rights Agreement may
be amended by the Board in order to cure any
ambiguity, to make changes which do not adversely
affect
3
<PAGE>
the interests of holders of Rights, or to shorten
or lengthen any time period under the Rights
Agreement; provided, however, that no amendment
may be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement
has been filed with the Securities and Exchange
Commission as an Exhibit to a Current Report on
Form 8-K. A copy of the Rights Agreement is
available free of charge from the Company. This
summary description of the Rights does not purport
to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is
incorporated herein by reference.
4
