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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Western Water Company
(Exact name of registrant as specified in its charter)
Delaware 33-0085833
(State of incorporation or organization) (IRS Employer ID)
4660 La Jolla Village Drive, Suite 825, San Diego, CA 92122
(Address of principal executive offices) (Zip Code)
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective upon filing pursuant to
General Instruction A(c) please check the following box. [ ]
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective upon filing pursuant to
General Instruction A(d) please check the following box. [X]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None
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Securities to be registered pursuant to Section 12(g) of the Act.
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Right to Purchase Series E Junior Participating Preferred Stock
(Title of class)
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Item 1. Description of Registrant's Securities to be Registered
On June 28, 1999, the Board of Directors of Western Water Company (the
"Corporation") declared a dividend distribution of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock, $.001 par value
(the "Common Shares"), of the Corporation and a dividend distribution to the
holders of the Corporation's Series C Convertible Redeemable Preferred Stock
("Series C Preferred Stock") and the Corporation's Series D Convertible
Redeemable Preferred Stock ("Series D Preferred Stock") of one Right for each
Common Share into which each share of Series C Preferred Stock and Series D
Preferred Stock held by each such holder is convertible. The dividend is payable
to the shareholders of record on August 12, 1999 (the "Record Date"), and with
respect to Common Shares or shares of Series C or Series D Preferred Stock
issued thereafter until the Distribution Date (as defined below) and, in certain
circumstances, with respect to Common Stock or shares of Series C or Series D
Preferred Stock issued after the Distribution Date. Except as set forth below,
each Right, when it becomes exercisable, entitles the registered holder to
purchase from the Corporation one one-hundredth of a share of Series E Junior
Participating Preferred Stock, $.001 par value (the "Preferred Shares"), of the
Corporation at a price of $25 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Corporation and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the
"Rights Agent") dated as of July 23, 1999.
Initially, the Rights will be attached to all certificates representing
Common Shares or shares of Series C or Series D Preferred Stock then
outstanding, and no separate Right Certificates will be distributed. The Rights
will separate from the Common Shares or shares of Series C or Series D Preferred
Stock upon the earliest to occur of (i) 10 days after a person or group of
affiliated or associated persons has acquired beneficial ownership of 20% or
more of the outstanding Common Shares (except pursuant to a Permitted Offer or
by certain persons who are excluded from the definition of Acquiring Persons, as
defined in the Rights Agreement); or (ii) 10 Business Days (as defined in the
Rights Agreement) (or such later date as the Board may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group
becoming an Acquiring Person (as hereinafter defined) (the earliest of such
dates being called the "Distribution Date"). A person or group whose acquisition
of Common Shares causes a Distribution Date pursuant to clause (i) above is an
"Acquiring Person." The date that a person or group becomes an Acquiring Person
is the "Shares Acquisition Date."
Until the Distribution Date, the Rights will be transferred solely with
the Common Shares or shares of Series C or Series D Preferred Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates or certificates for Series C or Series D Preferred
Stock issued after the Record Date upon transfer or new issuances of Common
Shares or shares of Series C or Series D Preferred Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Common Shares or shares of Series C or Series D Preferred
Stock outstanding as of the Record Date, even if such notation or a copy of this
Summary of Rights is not attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares or shares of Series C or Series D
Preferred Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date (and to each initial record
holder of certain Common Shares or shares of Series C or Series D Preferred
Stock issued after the
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Distribution Date), and such separate Right Certificates alone will evidence the
Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on July 22, 2004, unless earlier redeemed by the
Corporation as described below.
In the event that any person becomes an Acquiring Person, except
pursuant to a tender or exchange offer which is for all outstanding Common
Shares at a price and on terms which a majority of members of the Board of
Directors (who are not also officers of the Corporation or an Acquiring Person
or affiliate or associate thereof) determines to be adequate and in the best
interests of the Corporation and its shareholders, other than such Acquiring
Person, its affiliates and associates (a "Permitted Offer"), each holder of a
Right will thereafter have the right (the "Flip-In Right") to receive upon
exercise the number of Common Shares (or, in certain circumstances, one
one-hundredths of a share of Preferred Shares or other securities of the
Corporation) having a market value (immediately before such triggering event)
equal to two times the exercise price of the Right. At such time, all Rights
that are beneficially owned by the Acquiring Person or any affiliate, associate
or transferee thereof will be null and void.
In the event that, at any time following the Shares Acquisition Date,
(i) the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately before the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power are sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate or any other person
in which such Acquiring Person, affiliate or associate has an interest or any
person acting on behalf of or in concert with such Acquiring Person, affiliate
or associate, or, if in such transaction all holders of Common Shares are not
treated alike, then each holder of a Right (except Rights which previously have
been voided as set forth above) shall thereafter have the right (the "Flip-Over
Right") to receive, upon exercise, common shares of the acquiring company having
a value equal to two times the exercise price of the Right. The holder of a
Right will continue to have the Flip-Over Right only to the extent that the
Flip-In Right has not previously been exercised.
The Purchase Price payable and the number of Preferred Shares, Common
Shares or other securities issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price (or
conversion price as the case may be), less than the then current market price of
the Preferred Shares or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
The number of outstanding Rights and the number of one one-hundredths of
a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
before the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but, if greater, will be entitled
to an aggregate dividend per share of 100 times
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the dividend declared per Common Share. In the event of liquidation, subject to
the prior and superior rights of holders of any shares of Preferred Stock
ranking prior to and superior to the Preferred Shares, the holders of the
Preferred Shares will be entitled to a minimum preferential liquidation payment
of $100 per share; thereafter, and after the holders of the Common Shares
receive a liquidation payment of $1.00 per share, the holders of the Preferred
Shares and the holders of the Common Shares will share the remaining assets in
the ratio of 1 to 1 (as adjusted) for each Preferred Share and Capital Share so
held, respectively. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 100 times the amount received per Common Share. These rights
are protected by customary antidilution provisions.
With certain exceptions, no adjustment to the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are one one-hundredth or integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Corporation, be
evidenced by depositary receipts) and in lieu thereof, a payment in cash will be
made based on the market price of the Preferred Shares on the last Trading Day
(as defined in the Rights Agreement) before the date of exercise.
At any time before the earlier to occur of (i) a person becoming an
Acquiring Person, (ii) the expiration of the Rights, or (iii) in certain
circumstances, after the Shares Acquisition Date, the Corporation may redeem all
but not less than all of the Rights at a price of $.001 per Right (the
"Redemption Price") which redemption shall be effective upon the action of the
Board of Directors.
All of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Corporation before 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, defect or inconsistency, to make changes
which do not adversely affect the interests of holders of Rights .(excluding the
interests of any Acquiring Person), or, subject to certain limitations, to
shorten or lengthen any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to shareholders of the Corporation, shareholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
A copy of the Rights Agreement is available free of charge from the
Corporation. This description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
Item 2. Exhibits
2.1 Rights Agreement, dated as of July 23, 1999, between the Registrant
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, which includes
the Form of the Certificate of Designations of Series E Participating Preferred
Stock of the Company as Exhibit A, the Form of Right Certificate as Exhibit B,
and the Summary of Rights to Purchase Preferred Stock as Exhibit C.
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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, thereto duly authorized.
WESTERN WATER COMPANY
By: /s/ RONALD I. SIMON
-------------------------------------
Ronald I. Simon, Executive
Vice President and Chief
Financial Officer
Date: August 4, 1999
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EXHIBIT 2.1
RIGHTS AGREEMENT
DATED AS OF JULY 23, 1999
BETWEEN
WESTERN WATER COMPANY
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
AS RIGHTS AGENT
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DEFINED TERM CROSS REFERENCE SHEET
<TABLE>
<S> <C>
Acquiring Person................................................. Section 1(a)
Act.............................................................. Section 1(b)
Adjustment Shares................................................ Section 11(a)(ii)
Adjusted Number of Shares........................................ Section 11(a)(iii)
Adjusted Purchase Price.......................................... Section 11(a)(iii)
Affiliate........................................................ Section 1(c)
Agreement........................................................ Preface
Appointment of Rights Agent...................................... Section 2
Associate........................................................ Section 1(c)
Beneficial Owner................................................. Section 1(d)
Beneficially Own................................................. Section 1(d)
Business Day..................................................... Section 1(e)
Capital Stock Equivalent......................................... Section 11(a)(ii)
Close of Business................................................ Section 1(f)
Common Shares.................................................... Section 1(g)
Corporation...................................................... Preface
Current Per Market Price......................................... Section 11(d)
Current Per Share Market Price................................... Section 11(d)(i)
Distribution Date................................................ Section 3(a)
Equivalent Preferred Shares...................................... Section 11(b)
Exchange Act..................................................... Section 1(c)
Final Expiration Date............................................ Section 7(a)
Interested Shareholder........................................... Section 1(j)
Permitted Offer.................................................. Section 1(k)
Person........................................................... Section 1(l)
Preferred Shares................................................. Section 1(m)
Principal Party.................................................. Section 13(b)
Proration Factor................................................. Section 11(a)(iii)
Purchase Price................................................... Section 4(a)
Record Date...................................................... Preface
Redemption Date.................................................. Section 7(a)
Redemption Price................................................. Section 23
Right............................................................ Preface
Right Certificate................................................ Section 3(a)
Rights Agent..................................................... Preface
Rights Agreement................................................. Section 3
Section 11(a)(ii) Event.......................................... Section 11(a)(ii)
Section 13 Event................................................. Section 13(a)
Security......................................................... Section 11(d)(i)
Shares Acquisition Date.......................................... Section 1(q)
Subsidiary....................................................... Section 1(r)
Summary of Rights................................................ Section 3(b)
Then Outstanding................................................. Section 1(d)(iii)
Trading Day...................................................... Section 11(d)(i)
Triggering Event................................................. Section 1(s)
Voting Securities................................................ Section 13(a)
</TABLE>
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TABLE OF CONTENTS
<TABLE>
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Page
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Section 1. Certain Definitions.............................................. 1.
Section 2. Appointment of Rights Agent...................................... 4.
Section 3. Issuance of Right Certificates................................... 5.
Section 4. Form of Right Certificate........................................ 6.
Section 5. Countersignature and Registration................................ 7.
Section 6. Transfer, Split-Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificate......................................... 8.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.... 8.
Section 8. Cancellation and Destruction of Right Certificates............... 11.
Section 9. Reservation and Availability of Preferred Shares................. 11.
Section 10. Preferred Shares Record Date..................................... 12.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights................................................. 12.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares....... 19.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................................... 19.
Section 14. Fractional Rights and Fractional Shares.......................... 21.
Section 15. Rights of Action................................................. 23.
Section 16. Agreement of Right Holders....................................... 23.
Section 17. Right Certificate Holder Not Deemed a Shareholder................ 24.
Section 18. Concerning the Rights Agent...................................... 24.
Section 19. Merger or Consolidation or Change of Name of Rights Agent........ 25.
Section 20. Duties of Rights Agent........................................... 25.
Section 21. Change of Rights Agent........................................... 27.
Section 22. Issuance of New Right Certificates............................... 28.
Section 23. Redemption and Termination....................................... 29.
Section 24. Exchange......................................................... 30.
Section 25. Notice of Certain Events......................................... 31.
Section 26. Notices.......................................................... 32.
Section 27. Supplements and Amendments....................................... 32.
Section 28. Determination and Actions by the Board of Directors, etc......... 33.
Section 29. Successors....................................................... 33.
Section 30. Benefits of this Agreement....................................... 33.
Section 31. Severability..................................................... 34.
Section 32. Governing Law.................................................... 34.
Section 33. Counterparts..................................................... 34.
Section 34. Descriptive Headings............................................. 34.
</TABLE>
i
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of July 23, 1999 (the "Agreement"), between
Western Water Company, a Delaware corporation (the "Corporation"), and
ChaseMellon Shareholder Services, L.L.C., a New Jersey limited liability company
(the "Rights Agent").
The Board of Directors of the Corporation has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as defined herein) of the Corporation outstanding at the Close of Business (as
defined herein) on August 12, 1999 (the "Record Date") and the issuance to the
holders of the Corporation's Series C Convertible Redeemable Preferred Stock
("Series C Preferred Stock") and the Corporation's Series D Convertible
Redeemable Preferred Stock ("Series D Preferred Stock") of one Right for each
Common Share that each share of Series C Preferred Stock and Series D Preferred
Stock is convertible into on the Record Date, each Right representing the right
to purchase one one-hundredth of a Preferred Share (as defined herein), upon the
terms and subject to the conditions herein set forth, and has further authorized
and directed the issuance of one Right with respect to each Common Share (except
for Common Shares issuable upon conversion of the Series C Preferred Stock and
Series D Preferred Stock) that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date as such terms are defined herein); provided, however, that
Rights may be issued with respect to Common Shares and additional shares of
Series D Preferred Stock that shall become outstanding after the Record Date and
before the earlier of the Redemption Date and the Final Expiration Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as defined
herein) who or which, together with all Affiliates and Associates (as defined
herein) of such Person, shall be the Beneficial Owner (as defined herein) of 20%
or more of the then outstanding Common Shares (other than as a result of a
Permitted Offer (as defined herein) or was such a Beneficial Owner at any time
after the date hereof, whether or not such person continues to be the Beneficial
Owner of 20% or more of the then outstanding Common Shares. Notwithstanding the
foregoing, (A) the term "Acquiring Person" shall not include (i) the
Corporation, (ii) any Subsidiary of the Corporation, (iii) any employee benefit
plan of the Corporation or of any Subsidiary of the Corporation, (iv) any Person
organized, appointed or established by the Corporation for or pursuant to the
terms of any such plan, (v) Interagua, Servicios Integrales Del Agua, S.A.,
Sociedad General de Aguas de Barcelona, S.A. or any entity owned by or
controlled by Sociedad General de Aguas de Barcelona, S.A. (collectively,
"Agbar"), or any Person who or which becomes an Acquiring Person by reason of an
acquisition of Series D
1.
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Preferred Stock or Common Shares from Agbar, or (vi) any Person, who or which
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 20% or more of the then outstanding Common Shares as a
result of the acquisition of Common Shares directly from the Corporation, and
(B) no Person shall be deemed to be an "Acquiring Person" either (X) as a result
of the acquisition of Common Shares by the Corporation which, by reducing the
number of Common Shares outstanding, increases the proportional number of shares
beneficially owned by such Person, together with all Affiliates and Associates
of such Person; except that if (i) a Person would become an Acquiring Person
(but for the operation of this subclause X) as a result of the acquisition of
Common Shares by the Corporation, and (ii) after such share acquisition by the
Corporation, such Person, or an Affiliate or Associate of such Person, becomes
the Beneficial Owner of any additional Common Shares, then such Person shall be
deemed an Acquiring Person, or (Y) if the Board of Directors of the Corporation
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this Section 1(a),
has become such, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of this Section 1(a),
then such Person shall not be deemed as "Acquiring Person" for any purposes of
this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended
and as 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 "beneficially own" any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates directly or indirectly, has "beneficial ownership" as
determined in accordance with Rule 13d-3 of the General Rules and Regulations
under the Exchange Act;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote or dispose of pursuant to any
agreement, arrangement or understanding; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any security if
the agreement, arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant
2.
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to, and in accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule 13D or
Schedule 13G under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities) relating to the acquisition, holding, voting
(except to the extent contemplated by the proviso to Section 1(d)(ii)(B)) or
disposing of any securities of the Corporation.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used herein with reference to
a Person's Beneficial Ownership of securities of the Corporation, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of California or the
city in which the office of the Rights Agent is located are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., California time, on such date; provided, however, that if such date is not
a Business Day it shall mean 5:00 P.M., California time, on the next succeeding
Business Day.
(g) "Common Shares" when used with reference to the
Corporation shall mean the shares of Common Stock, $.001 par value, of the
Corporation or, in the event of a subdivision, combination or consolidation with
respect to such shares of Common Stock, the shares of Common Stock resulting
from such subdivision, combination or consolidation. "Common Shares" when used
with reference to any Person other than the Corporation shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(i) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(j) "Interested Shareholder" shall mean any Acquiring
Person, or any Affiliate or Associate of an Acquiring Person, or any other
Person in which any such Acquiring Person, Affiliate or Associate has an
interest, or any other Person acting directly or indirectly on behalf of or in
concert with any such Acquiring Person, Affiliate or Associate.
3.
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(k) "Permitted Offer" shall mean a tender or exchange offer
which is for all outstanding Common Shares at a price and on terms determined,
before the purchase of shares under such tender or exchange offer, by at least a
majority of the members of the Board of Directors who are not officers of the
Corporation and who are not Acquiring Persons or Affiliates, Associates,
nominees or representatives of an Acquiring Person, to be adequate (taking into
account all factors that such members of the Board of Directors deem relevant
including, without limitation, prices that could reasonably be achieved if the
Corporation or its assets were sold on an orderly basis designed to realize
maximum value) and otherwise in the best interests of the Corporation and its
shareholders (other than the Person or any Affiliate or Associate thereof on
whose basis the offer is being made) taking into account all factors that such
directors may deem relevant.
(l) "Person" shall mean any individual, firm, partnership,
corporation, trust, association, joint venture or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(m) "Preferred Shares" shall mean shares of Series E Junior
Participating Preferred Stock, par value $.001 per share, of the Corporation
having the relative rights, preferences and limitations set forth in the Form of
Certificate of Designations attached to this Agreement as Exhibit A.
(n) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(o) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.
(p) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(q) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to the Exchange Act) by the
Corporation or an Acquiring Person that an Acquiring Person has become such;
provided, that, if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a)(Y) hereof, then no Shares Acquisition Date shall
be deemed to have occurred.
(r) "Subsidiary" of any Person shall mean any corporation or
other Person of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
(s) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
4.
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Section 2. Appointment of Rights Agent. The Corporation hereby appoints
the Rights Agent to act as agent for the Corporation in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable. The Rights Agent shall have no duty to
supervise, and in no event shall be liable for, the acts or omissions of any
such co-Rights Agent.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (i) the tenth day after the Shares
Acquisition Date or (ii) the Close of Business on the tenth Business Day (or
such later date as may be determined by action of the Corporation's Board of
Directors) after the date on which any Person (other than the Corporation, any
Subsidiary of the Corporation, the Subsidiary Officers, any employee benefit
plan of the Corporation or of any Subsidiary of the Corporation or any Person or
entity organized, appointed or established by the Corporation for or pursuant to
the terms of any such plan) commences or first publicly announces the intent to
commence (which intention to commence remains in effect for five Business Days
after such announcement), a tender or exchange offer the consummation of which
would result in any Person becoming an Acquiring Person (including, in the case
of both (i) and (ii), any such date which is after the date of this Agreement
and before the issuance of the Rights), the earlier of such dates being herein
referred to as the "Distribution Date," (x) the Rights will be evidenced by
(subject to the provisions of Section 3(b) hereof) the certificates for Common
Shares or shares of Series C or Series D Preferred Stock registered in the names
of the holders thereof (which certificates shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of the Common Shares or shares of Series C or Series D Preferred Stock
(including a transfer to the Corporation); provided, however, that if a tender
offer is terminated before a Distribution Date occurs, then no Distribution Date
shall occur as a result of such tender offer. As soon as practicable after the
Distribution Date, the Corporation will prepare and execute, the Rights Agent
will countersign, and the Corporation will send or cause to be sent by
first-class, postage-prepaid mail, to each record holder of Common Shares or
shares of Series C or Series D Preferred Stock as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records of the
Corporation, a Right Certificate, substantially in the form of Exhibit B hereto
(a "Right Certificate"), evidencing one Right for each Common Share so held
(including Common Shares into which the Series C and Series D Preferred Stock
are convertible). As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As soon as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares or
shares of Series C or Series D Preferred Stock as of the Close of Business on
the Record Date, at the address of such holder shown on the records of the
Corporation. With respect to certificates for Common Shares or shares of Series
C or Series D Preferred Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will
5.
<PAGE> 9
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Shares or shares
of Series C or Series D Preferred Stock outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also constitute
the transfer of the Rights.
(c) Certificates for Common Shares or shares of Series C or
Series D Preferred Stock, which become outstanding (including, without
limitation, reacquired Common Shares or shares of Series C or Series D Preferred
Stock referred to in the last sentence of this paragraph (c)) after the Record
Date but before the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date, shall be deemed also to be certificates for Rights
and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Western Water
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent,
dated as of July 23, 1999 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of Western Water Company. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Western Water Company will mail to the
holder of this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held by, any
Person who is, was or becomes an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and certain
related persons, whether currently held by or on behalf of such Person
or by any subsequent holder, may become null and void and no longer
transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares or shares of
Series C or Series D Preferred Stock represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights. In the event that
the Corporation purchases or acquires any Common Shares or shares of Series C or
Series D Preferred Stock after the Record Date but before the Distribution Date,
any Rights associated with such Common Shares or shares of Series C or Series D
Preferred Stock shall be deemed cancelled and retired so that the Corporation
shall not be entitled to exercise any Rights associated with the Common Shares
or shares of Series C or Series D Preferred Stock that are no longer
outstanding.
Section 4. Form of Right Certificate.
(a) The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in
6.
<PAGE> 10
Exhibit A hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Corporation may
deem appropriate, which do not affect the duties or responsibilities of the
Rights Agent and as are consistent 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 Right
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per Preferred Share set forth therein (the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights which are null and void pursuant to
Section 7(e) of this Agreement and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby are null and void.
Provisions of Section 7(e) of this Agreement shall be operative whether or not
the foregoing legend is contained on any such Right Certificate.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Corporation by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Corporation's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the Rights
Agent and shall be valid for any purpose unless so countersigned. In the event
that any officer of the Corporation who signs any of the Right Certificates
ceases to be such officer of the Corporation before such countersignature by the
Rights Agent and issuance and delivery by the Corporation, such Right
Certificates may nevertheless be countersigned by the Rights Agent and issued
and delivered by the Corporation with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer of
the Corporation; and any Right Certificate may be signed on behalf of the
Corporation by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Corporation to sign such Right
Certificate, although at the date of the execution of this Agreement any such
person was not such an officer.
7.
<PAGE> 11
Following the Distribution Date and receipt by the Rights Agent of all
necessary information, the Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the appropriate place for surrender or
transfer of such Right Certificate, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the
certificate number and the date of each of the Right Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificate. Subject to
the provisions of Section 4(b), Section 7(e) and Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or before the Close
of Business on the earlier of the Redemption Date or the Final Expiration Date,
any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share (or, following a Triggering Event, other securities, as the
case may be) as the Right Certificate or Right Certificates surrendered then
entitled 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
Right Certificate or Right Certificates shall make such request in writing
delivered to the Rights Agent and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Corporation shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder has completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner), or Affiliates or Associates
thereof, as the Corporation shall reasonably request. Subject to Section 4(b),
Section 7(e) and Section 14 hereof, the Rights Agent shall thereupon countersign
and deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Corporation may require
payment of a sum sufficient to cover any tax or charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates. The Rights Agent shall have no duty or obligation under this
Section unless and until it is satisfied that all such taxes and/or charges have
been paid.
Upon receipt by the Corporation and the Rights Agent of evidence
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Corporation's request,
reimbursement to the Corporation and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Corporation will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
8.
<PAGE> 12
(a) Subject to Section 7(e) hereof, the registered holder of
any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly and
properly executed, to the Rights Agent at the office or offices of the Rights
Agent designated for such purpose, together with payment of the aggregate
Purchase Price for the total number of one one-hundredths of a Preferred Share
(or other securities, as the case may be) as to which such surrendered Rights
are exercised, at or before the earliest of (i) the Close of Business on July
22, 2004, (the "Final Expiration Date"), (ii) the date on which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"), or (iii) the
date on which the Rights are exchanged pursuant to Section 24 hereof.
(b) The Purchase Price for each one one-hundredth of a
Preferred Share pursuant to the exercise of a Right shall initially be $25,
subject to adjustment from time to time as provided in the next sentence and in
Sections 11 and 13(a) hereof, and shall be payable in accordance with paragraph
(c) below. Notwithstanding anything in this Agreement to the contrary, in the
event that at any time after the date of this Agreement and before the
Distribution Date, the Corporation shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares or (ii) effect a subdivision, combination
or consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares) into a greater or lesser number of Common
Shares, then in any such case, each Common Share outstanding following such
subdivision, combination or consolidation shall continue to have a Right
associated therewith and each share of Series C or Series D Preferred Stock
shall have a Right associated with each Common Share into which each share of
Series C or Series D Preferred Stock is convertible, and the Purchase Price
following any such event shall be proportionately adjusted to equal the result
obtained by multiplying the Purchase Price immediately before such event by a
fraction the numerator of which shall be the total number of Common Shares
outstanding immediately before the event occurs and the denominator of which
shall be the total number of Common Shares outstanding immediately after such
event occurs. The adjustment provided for in the preceding sentence shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
(c) Upon receiving a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly and properly executed, accompanied by payment of the Purchase Price for the
Preferred Shares (or other securities, as the case may be) to be purchased, and
an amount equal to any applicable tax or charge required to be paid by the
holder of such Right Certificate in accordance with Section 6 hereof, by
certified check, cashier's check or money order payable to the order of the
Corporation, the Rights Agent shall thereupon promptly (i)(A) requisition from
any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased, and the Corporation hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Corporation, in its sole discretion, shall have elected to deposit the Preferred
Shares issuable upon exercise of the Rights hereunder into a depositary,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a Preferred Share as are to be purchased (in
9.
<PAGE> 13
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent), and the
Corporation will direct the depositary agent to comply with such requests, (ii)
when appropriate, requisition from the Corporation the amount of cash to be paid
in lieu of issuance of fractional shares, in accordance with Section 14 hereof,
and (iii) after receipt of such certificates or depositary receipts, cause the
same, together with any cash to be paid in lieu of fractional shares, to be
delivered to, or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by, such
holder. In the event that the Corporation is obligated to issue other securities
(including Common Shares) of the Corporation pursuant to Section 11(a) hereof,
the Corporation will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if and when
appropriate.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii) hereof, the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement, and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof, or the Rights Agent shall place an appropriate notation on
the Right Certificate with respect to those Rights exercised.
(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 Affiliate or
Associate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any Affiliate or Associate thereof) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any Affiliate or Associate thereof) who becomes a transferee before or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has a continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Corporation, in its sole discretion, has
determined is part of a plan, arrangement or understanding that 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 Corporation 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 Right Certificates or
other Person as a result of its failure to make any determinations with respect
to an Acquiring Person or its Affiliates, Associates or transferees hereunder.
10.
<PAGE> 14
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Corporation 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 Right 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 Corporation or the Rights Agent shall reasonably
request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Corporation or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Agreement. The Corporation shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Corporation otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Corporation, or shall, at the
written request of the Corporation, destroy such cancelled Right Certificates
and in such case, shall deliver a certificate of destruction thereof to the
Corporation.
Section 9. Reservation and Availability of Preferred Shares. The
Corporation covenants and agrees that at all times before a Section 11(a)(ii)
Event occurs it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares, or any authorized and issued Preferred
Shares held in its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding Rights and after a
Section 11(a)(ii) Event occurs, shall, to the extent reasonably practicable, so
reserve and keep available a sufficient number of Common Shares (and/or other
securities) which may be required to permit the exercise in full of the Rights
pursuant to this Agreement.
So long as the Preferred Shares (and, after a Section 11(a)(ii) Event
occurs, Common Shares or any other securities) issuable upon the exercise of the
Rights may be listed on any national securities exchange, the Corporation 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.
The Corporation covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares (or Common Shares and/or
other securities, as the case may be) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and non-assessable shares or securities.
The Corporation further covenants and agrees that it will pay when due
and payable any and all taxes and changes which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred Shares (or
Common Shares and/or other securities, as the
11.
<PAGE> 15
case may be) upon the exercise of Rights. The Corporation shall not, however, be
required to pay any tax or charge which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depository receipts for the Preferred
Shares (or Common Shares and/or other securities, as the case may be) in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise, or to issue or to deliver any certificates or
depositary receipts for Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of any Rights, until any such
tax or charge shall have been paid (any such tax or charge being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Corporation's reasonable satisfaction that no such tax or
charge is due.
The Corporation shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date, a registration statement
under the Act on an appropriate form, with respect to the securities purchasable
upon exercise of the Rights, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the date of the expiration of the rights provided by Section 11(a)(ii).
The Corporation will also take such action as may be appropriate or required
under the Blue Sky laws of the various states.
Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares (or Common Shares 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 the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes or charges) was made; provided, however,
that, if the date of such surrender and payment is a date upon which the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
transfer books of the Corporation are closed, such person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Corporation are open.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights.
The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time
after the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with
12.
<PAGE> 16
a consolidation or merger in which the Corporation 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 effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital stock issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the aggregate number and
kind of shares of capital stock which, if such Right had been exercised
immediately before such date and at a time when the Preferred Shares transfer
books of the Corporation were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Corporation issuable
upon exercise of one Right. If an event occurs which would require an adjustment
under both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for
in this Section 11(a)(i) shall be in addition to, and shall be made before, any
adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with
its Affiliates and Associates, shall become an Acquiring Person, each holder of
a Right (except as provided below and in Section 7(e) hereof) shall, for a
period of 60 days after the later of the occurrence of any such event or the
effective date of an appropriate registration statement under the Act pursuant
to Section 9 hereof, have a right to receive, upon exercise thereof at a price
equal to the then current Purchase Price, in accordance with the terms of this
Agreement, such number of Common Shares (or, in the discretion of the Board of
Directors, one one-hundredth of a Preferred Share) as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-hundredths of a Preferred Share for which a Right was exercisable
immediately before the first occurrence of a Section 11(a)(ii) Event, and
dividing that product by (y) 50% of the then current per share market price of
the Corporation's Common Shares (determined pursuant to Section 11(d) hereof) on
the date of such first occurrence (such number of shares being referred to as
the "Adjustment Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13 hereof
shall apply, and no adjustment shall be made pursuant to this Section 11(a)(ii);
(iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued (and unreserved) Common Shares to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) and the Rights become so exercisable (and the Board has
determined to make the Rights exercisable into fractions of a Preferred Share),
notwithstanding any other provision of this Agreement, to the extent necessary
and permitted by applicable law, each Right shall thereafter represent the right
to receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, (x) a number of (or fractions of)
Common Shares (up to the maximum number of Common Shares which may permissibly
be issued) and (y) one one-hundredth of a Preferred Share or a number of, or
fractions of other equity securities of the Corporation (or, in the discretion
of the Board of Directors, debt) which the Board of Directors of the Corporation
has determined to have the same aggregate current market value (determined
pursuant to Section
13.
<PAGE> 17
11(d)(i) and (ii) hereof, to the extent applicable,) as one Common Share (such
number of, or fractions of, Preferred Shares, debt, or other equity securities
or debt of the Corporation being referred to as a "capital stock equivalent"),
equal in the aggregate to the number of Adjustment Shares; provided, however, if
sufficient Common Shares and/or capital stock equivalents are unavailable, then
the Corporation shall, to the extent permitted by applicable law, take all such
action as may be necessary to authorize additional Common Shares or capital
stock equivalents for issuance upon exercise of the Rights, including, if
necessary, the calling of a meeting of shareholders; and provided, further, that
if the Corporation is unable to cause sufficient Common Shares and/or capital
stock equivalents to be available for issuance upon exercise in full of the
Rights, then each Right shall thereafter represent the right to receive the
Adjusted Number of Shares upon exercise at the Adjusted Purchase Price (as such
terms are hereinafter defined). As used herein, the term "Adjusted Number of
Shares" shall be equal to that number of (or fractions of) Common Shares (and/or
capital stock equivalents) equal to the product of (x) the number of Adjustment
Shares and (y) a fraction, the numerator of which is the number of Common Shares
(and/or capital stock equivalents) available for issuance upon exercise of the
Rights and the denominator of which is the aggregate number of Adjustment Shares
otherwise issuable upon exercise in full of all Rights (assuming there were a
sufficient number of Common Shares available) (such fraction being referred to
as the "Proration Factor"). The "Adjusted Purchase Price" shall mean the product
of the Purchase Price and the Proration Factor. The Board of Directors may, but
shall not be required to, establish procedures to allocate the right to receive
Common Shares and capital stock equivalents upon exercise of the Rights among
holders of Rights.
(b) In case the Corporation shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Preferred Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights, privileges and preferences as the Preferred
Shares ("equivalent preferred shares")) or securities convertible into Preferred
Shares or equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the then current per share market price of the Preferred Shares (as
determined pursuant to Section 11(d) hereof) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately before such record date by a fraction,
the numerator of which shall be the number of Preferred Shares outstanding on
such record date plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares and/or equivalent
preferred shares so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such current
per share market price, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Corporation issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such
14.
<PAGE> 18
consideration shall be determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent. Preferred Shares
owned by or held for the account of the Corporation shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately before such record date by a fraction, the numerator
of which shall be the then current per share market price (as determined
pursuant to Section 11(d) hereof) of the Preferred Shares on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent)
of the portion of the assets or evidences of indebtedness so to be distributed
or of such subscription rights or warrants applicable to one Preferred Share and
the denominator of which shall be such current per share market price of the
Preferred Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Corporation to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
the "current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the average
of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately
before such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and before the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
(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
15.
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the Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Security selected by the
Board of Directors of the Corporation. If on any such date no such market maker
is making market in the Security, the fair value of the Security on such date as
determined in good faith by the Board of Directors of the Corporation shall be
used. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares shall be determined
in accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i),
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Corporation,
whose determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and shall be conclusive for all
purposes.
(e) Notwithstanding anything herein to the contrary, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one-hundredth of a Preferred Share or one
ten-thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Final 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 of the Corporation
other than Preferred Shares, thereafter the number of other shares so receivable
upon exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the
16.
<PAGE> 20
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Corporation
subsequent to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Corporation shall have exercised its election
as provided in Section 11(i) hereof upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c) hereof, each
Right outstanding immediately before the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a Preferred Share (calculated to the nearest one
one-hundredth of a Preferred Share) obtained by (i) multiplying (x) the number
of one one-hundredths of a share covered by a Right immediately before this
adjustment by (y) the Purchase Price in effect immediately before such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Corporation 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 Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately before such adjustment. Each Right held of record before such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten- thousandth) obtained by dividing the
Purchase Price in effect immediately before the Purchase Price is adjusted by
the Purchase Price in effect immediately after such adjustment. The Corporation
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 with prompt notice thereof to the Rights
Agent. This record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have been issued, shall be
at least ten (10) days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Corporation shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates
on such record date Right Certificates evidencing, subject to Section 14 hereof,
the additional Rights to which such holders shall be entitled as a result of
such adjustment, or, at the option of the Corporation, shall cause to be
distributed to such holders of record in substitution and replacement for the
Right Certificates held by such holders before the date of adjustment, and upon
surrender thereof, if required by the Corporation, new Right Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
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<PAGE> 21
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-hundredths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the number of
one one-hundredths of a Preferred Share or other securities issuable upon
exercise of the Rights, the Corporation shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue such number of fully paid and non-assessable one
one-hundredths of a Preferred Share or other securities 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 Corporation may elect to defer with prompt notice thereof
to the Rights Agent until such event occurs the issuance to the holder of any
Right exercised after such record date the Preferred Shares, Common Shares or
other securities of the Corporation, if any, issuable upon such exercise over
and above the Preferred Shares, Common Shares or other securities of the
Corporation, if any, issuable upon exercise on the basis of the Purchase Price
in effect before such adjustment; provided, however, that the Corporation shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the
contrary, the Corporation shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that (i) any consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less than
the current market price, (iii) issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Corporation to
holders of its Preferred Shares shall not be taxable to such shareholders.
(n) The Corporation covenants and agrees that it shall not,
at any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Corporation in a transaction that does not
violate Section 11(n) hereof), (ii) merge with or into any other Person (other
than a Subsidiary of the Corporation in a transaction that does not violate
Section 11(n) hereof) or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Corporation and its Subsidiaries (taken as a whole) to any other Person
or Persons (other than the Corporation and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(n) hereof), if (x)
at the time of or immediately after such consolidation, merger, sale or transfer
there are any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or
18.
<PAGE> 22
agreements in effect or other actions taken, which would materially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
before, simultaneously with or immediately after such consolidation, merger or
sale, the shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates. The Corporation shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Corporation and such other
Person shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this Section 11(n).
(o) The Corporation covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 27
hereof, take (or permit any Subsidiary to take) any action the purpose of which
is to, or if at the time such action is taken it is reasonably foreseeable that
the effect of such action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii) shall
only result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the Rights
under this Agreement, including the rights represented by Section 13 hereof.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Corporation shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts and computations accounting for
such adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares or shares of Series C or Series D Preferred Stock a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 26 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and shall have no duty with respect to and shall not be deemed to have
knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, on or following the Shares
Acquisition Date, directly or indirectly, (x) the Corporation shall consolidate
with, or merge with and into, any Interested Shareholder or, if in such merger
or consolidation all holders of Common Shares are not treated alike, any other
Person, (y) the Corporation shall consolidate with, or merge with, any
Interested Shareholder or, if in such merger or consolidation all holders of
Common Shares are not treated alike, any other Person, and the Corporation shall
be the continuing or surviving corporation of such consolidation or merger
(other than, in a case of any transaction described in (x) or (y), a merger or
consolidation which would result in all of the securities generally entitled to
vote in the election of directors ("voting securities") of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities of the surviving
entity) all of the voting securities of the Corporation or such surviving
19.
<PAGE> 23
entity outstanding immediately after such merger or consolidation and the
holders of such securities not having changed as a result of such merger or
consolidation), or (z) the Corporation shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Corporation and
its Subsidiaries (taken as a whole) to any Interested Shareholder or
Shareholders or, if in such transaction all holders of Common Stock are not
treated alike, any other Person (other than the Corporation or any Subsidiary of
the Corporation in one or more transactions each of which does not violate
Section 11(n) hereof), then, and in each such case (except as provided in
Section 13(d) hereof), proper provision shall be made so that (i) each holder of
a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then current
Purchase Price, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of freely tradeable Common Shares of the Principal
Party (as hereinafter defined), not subject to any liens, encumbrances, rights
of first refusal or other adverse claims, as shall equal the result obtained by
(A) multiplying the then current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable
(without taking into account any adjustment previously made pursuant to Section
11(a)(ii)) and dividing that product by (B) 50% of the then current per share
market price of the Common Shares of such Principal Party (determined pursuant
to Section 11(d) hereof) 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
Corporation pursuant to this Agreement; (iii) the term "Corporation" 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; and (iv)
such Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" shall mean 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 Common Shares
of the Corporation are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such merger or
consolidation (including, if applicable, the Corporation if it is the surviving
corporation); and (ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions provided, however, that in any of the foregoing
cases, (1) if the Common Shares of such Person are not at such time and have not
been continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares 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 Shares
20.
<PAGE> 24
having the greatest aggregate market value; and (3) in case such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in (1) and (2) above shall apply to each of the chains of ownership having
an interest in such joint venture as if such party were a "Subsidiary" of both
or all of such joint venturers, and the Principal Parties in each such chain
shall bear the obligations set forth in this Section 13 in the same ratio as
their direct or indirect interests in such Person bear to the total of such
interests.
(c) The Corporation shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have a
sufficient number of its authorized Common Shares which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13, and unless prior thereto the Corporation 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, sale or transfer mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense shall:
(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 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 Final Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the
contrary, this Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if: (i) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant to a
Permitted Offer (or a wholly owned Subsidiary of any such Person or Persons);
(ii) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of consideration
offered in such transaction is the
21.
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same as the form of consideration paid pursuant to such Permitted 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 Corporation shall not be required to issue fractions
of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately before the date on which such fractional
Rights would have been otherwise issuable. The closing price for any day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Corporation. If on any such date no
such market maker is making a market in the Rights, the fair value of the Rights
on such date as determined in good faith by the Board of Directors of the
Corporation shall be used.
(b) The Corporation shall not be required to issue fractions
of Preferred Shares (other than fractions which are one one-hundredth or
integral multiples of one one-hundredth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred
Shares (other than fractions which are one one-hundredth or integral multiples
of one one-hundredth of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one one-hundredth of a Preferred Share may, at the
election of the Corporation, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Corporation and a depositary selected by it;
provided that such agreement shall provide that the holders of such depositary
receipts shall have the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not one
one-hundredth or integral multiples of one one-hundredth of a Preferred Share,
the Corporation shall pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately before the date of
such exercise.
22.
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(c) Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive Common
Shares, capital stock equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Corporation shall not be required
to issue fractions of shares or units of such Common Shares, capital stock
equivalents or other securities upon exercise of the Rights or to distribute
certificates which evidence fractions of such Common Shares, capital stock
equivalents or other securities. In lieu of fractional shares or units of such
Common Shares, capital stock equivalents or other securities, the Corporation
may pay to the registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same fraction of
the current market value of a share or unit of such Common Shares, capital stock
equivalents or other securities. For purposes of this Section 14(c), the current
market value shall be determined in the manner set forth in Section 11(d) hereof
for the Trading Day immediately before the date of such exercise and, if such
capital stock equivalent is not traded, each such capital stock equivalent shall
have the value of one one-hundredth of a Preferred Share.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
share upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under this
Agreement, are vested in the respective registered holders of the Right
Certificates (and, before the Distribution Date, the registered holders of the
Common Shares or shares of Series C or Series D Preferred Stock); and any
registered holder of any Right Certificate (or, before the Distribution Date, of
the Common Shares or shares of Series C or Series D Preferred Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, before the Distribution Date, of the Common Shares or shares of Series C or
Series D Preferred Stock), may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) before the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares or the
shares of Series C or Series D Preferred Stock;
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(b) after the Distribution Date, the Right 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 purpose,
duly endorsed or accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the
Corporation and the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, before the Distribution Date, the associated Common
Shares certificate or certificate for shares of Series C or Series D Preferred
Stock) is registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Right
Certificate or the associated Common Shares certificate or certificate for
shares of Series C or Series D Preferred Stock made by anyone other than the
Corporation or the Rights Agent) for all purposes whatsoever, and neither the
Corporation 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 Corporation nor the Rights Agent shall have any liability
to any holder of a Right or a beneficial interest in a Right or other Person as
a result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Corporation must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Corporation which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Corporation or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or other distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Corporation agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration, preparation, delivery, amendment and execution of this Agreement
and the exercise and performance of its duties hereunder. The Corporation also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability,
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<PAGE> 28
demand, judgment, fine, penalty, claim, demand, settlement, cost or expense,
incurred without gross negligence, bad faith or willful misconduct, as
determined by a court of competent jurisdiction, on the part of the Rights
Agent, for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance, amendment and administration of this Agreement,
including without limitation the costs and expenses of defending against any
claim of liability in the premises. The indemnity provided herein shall survive
the termination of this Agreement and the termination and the expiration of the
Rights. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Corporation. Anything to the contrary
notwithstanding, in no event shall the Rights Agent be liable for special,
punitive, indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage. Any liability of the
Rights Agent under this Rights Agreement will be limited to the amount of fees
paid by the Corporation to the Rights Agent.
The Rights Agent shall be authorized and protected and shall incur no
liability for, or in respect of, any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for Common Shares, shares of Series C or Series D
Preferred Stock or for other securities of the Corporation, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons or otherwise upon the
advice of counsel as set forth in Section 20.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the stock transfer or all or
substantially all of the shareholder services business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
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<PAGE> 29
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes only
those duties and obligations expressly imposed by this Agreement upon the
following terms and conditions, by all of which the Corporation and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Corporation), 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, suffered 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 an Acquiring Person and
the determination of the current market price of any Security) be proved or
established by the Corporation before taking, suffering or omitting any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent for
any action taken, suffered or omitted 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, as determined by a court
of competent jurisdiction.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature on such Right Certificates) or
be required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any liability or
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof), nor shall it be liable or responsible for any breach
by the Corporation of any covenant or condition contained in this Agreement or
in any Rights Certificate; nor shall it be liable or responsible for any change
in the exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 7(e) hereof) or any adjustment required under the provisions
of Section 11 or Section 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of the certificate described in
Section 12 hereof); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the
26.
<PAGE> 30
authorization or reservation of any Preferred Shares or Common Shares to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
Preferred Shares or Common Shares will, when issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the
Corporation, and to apply to such officers for advice or instructions in
connection with its duties, and shall not be liable for any action taken,
suffered or omitted by it in good faith or lack of action in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Corporation 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,
suffered or omitted shall be effective. The Rights Agent shall not be liable for
any action taken or suffered by, or omission of, the Rights Agent in accordance
with a proposal included in any such application on or after the date specified
in such application (which date shall not be less than five Business Days after
the date any officer of the Corporation actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, before taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instruction in response
to such application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any shareholder, director,
affiliate, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Corporation or become pecuniarily
interested in any transaction in which the Corporation may be interested, or
contract with or lend money to the Corporation 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
Corporation or for any other Person.
(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 Corporation resulting from any
such act, default, neglect or misconduct absent gross negligence, bad faith or
willful misconduct, as determined by a court of competent jurisdiction, in the
selection and 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 performance of any of its
27.
<PAGE> 31
duties hereunder or in the exercise of its rights if there shall be reasonable
grounds for believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the case may be, has not
been completed to certify the holder is not an Acquiring Person, or an Affiliate
or Associate thereof, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with the
Corporation.
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 Corporation and to each
transfer agent of the Common Shares or shares of Series C or Series D Preferred
Stock or Preferred Shares by registered or certified mail, and to the holders of
the Right Certificates by first-class mail. The Corporation may remove the
Rights Agent or any successor Rights Agent upon sixty (60) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares, shares of Series C or
Series D Preferred Stock or Preferred Shares by registered or certified mail,
and to holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Corporation shall appoint a successor to the Rights Agent. If the
Corporation 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 Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Corporation), then
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Corporation or by such a court, shall be
organized and doing business under the laws of the United States or any state of
the United States in good standing, which is authorized under such laws to do
business 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 $10 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Corporation shall file notice thereof in writing with the predecessor Rights
Agent and each transfer agent of the Common Shares or shares of Series C or
Series D Preferred Stock or Preferred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice provided for in this Section 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.
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Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right Certificates
made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Shares or
shares of Series C or Series D Preferred Stock following the Distribution Date
and before the earlier of the Redemption Date and the Final Expiration Date, the
Corporation (a) shall with respect to Common Shares or shares of Series C or
Series D Preferred Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities, notes or debentures issued by the
Corporation, and (b) may, in any other case, if deemed necessary or appropriate
by the Board of Directors of the Corporation, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) the Corporation shall not be obligated to
issue any such Right Certificates if, and to the extent that, the Corporation
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Corporation or the Person to whom
such Right Certificate would be issued, and (ii) no Right 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) (i) The Board of Directors of the Corporation may,
at its option, redeem all but not less than all the then outstanding Rights at
a redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"), at any time before the earlier of (x)
the occurrence of a Section 11(a)(ii) Event, or (y) the Final Expiration Date.
The Corporation may, at its option, pay the Redemption Price either in Common
Shares (based on the "current per share market price," as defined in Section
11(d) hereof, of the Common Shares at the time of redemption) or cash; provided
that if the Corporation elects to pay the Redemption Price in Common Shares, the
Corporation shall not be required to issue any fractional Common Shares and the
number of Common Shares issuable to each holder of Rights shall be rounded down
to the next whole share.
(ii) In addition, the Board of Directors of the
Corporation may, at its option, at any time following the occurrence of a
Section 11(a)(ii) Event and the expiration of any period during which the holder
of Rights may exercise the rights under Section 11(a)(ii) but before any Section
13 Event, redeem all but not less than all of the then outstanding Rights at the
Redemption Price (x) in connection with any merger, consolidation or sale or
other transfer (in one transaction or in a series of related transactions) of
assets or earning power aggregating 50% or more of the earning power of the
Corporation and its subsidiaries (taken as a whole) in which all holders of
Common Shares are treated alike and not involving (other than as a holder
29.
<PAGE> 33
of Common Shares being treated like all other such holders) an Interested
Shareholder or (y)(aa) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of 20% of the Common Shares, and (bb) at the
time of redemption no other Persons are Acquiring Persons.
(b) In the case of a redemption permitted under Section
23(a)(i), immediately upon the date for redemption set forth (or determined in
the manner specified in) in a resolution of the Board of Directors of the
Corporation 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. In the case of a redemption permitted only under Section
23(a)(ii), evidence of which shall have been filed with the Rights Agent, the
right to exercise the Rights will terminate and represent only the right to
receive the Redemption Price upon the later of ten (10) Business Days following
the giving of such notice or the expiration of any period during which the
rights under Section 11(a)(ii) may be exercised. The Corporation shall promptly
give public notice and notice to the Rights Agent of any such redemption;
provided, however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. Within ten (10) days after
such date for redemption set forth in a resolution of the Board of Directors
ordering the redemption of the Rights, the Corporation shall mail a notice of
redemption to the Rights Agent and to all the holders of the then outstanding
Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, before the Distribution Date, on the registry books of the
transfer agent for the Common Shares or shares of Series C or Series D Preferred
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. Neither the Corporation nor any of its Affiliates or Associates
may redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23 and other than in
connection with the purchase of Common Shares or shares of Series C or Series D
Preferred Stock before the Distribution Date.
(c) The Corporation may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release announcing
the manner of redemption of the Rights in accordance with this Agreement and
(ii) mailing payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry books of the
Rights Agent or, before the Distribution Date, on the registry books of the
Transfer Agent of the Common Shares or shares of Series C or Series D Preferred
Stock, and upon such action, all outstanding Rights and Right Certificates shall
be null and void without any further action by the Corporation.
Section 24. Exchange.
(a) The Board of Directors of the Corporation may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares of the Corporation at an exchange
30.
<PAGE> 34
ratio of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Corporation,
any Subsidiary of the Corporation, the Subsidiary Officers, any employee benefit
plan of the Corporation or any such Subsidiary, any entity holding Common Shares
for or pursuant to the terms of any such a plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of
the Corporation 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 Common Shares equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Corporation shall promptly give public notice of any such exchange
with prompt notice thereof to the Rights Agent; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Corporation shall promptly 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 Shares 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 null and void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Corporation, at its option, may substitute Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 11(b) hereof) for some or
all of the Common Shares exchangeable for Rights, at the initial rate of one
one-hundredth of a Preferred Share (or equivalent preferred share) for each
Common Share, as appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Shares pursuant to the terms thereof, so that the
fraction of a Preferred Share delivered in lieu of each Common Share shall have
the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common
Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Corporation shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exchange of the Rights.
Section 25. Notice of Certain Events.
(a) In case the Corporation shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Shares or
to make any other distribution to the holders of its Preferred Shares (other
than a regularly quarterly cash dividend), (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for or to purchase any
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<PAGE> 35
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Corporation in a
transaction which does not violate Section 11(n) 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 or more transactions, of 50% or more of the
assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Corporation and/or any of
its Subsidiaries in one or more transactions each of which does not violate
Section 11(n) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Corporation, then, in each such case, the Corporation shall give to
each holder of a Right Certificate and the Rights Agent, in accordance with
Section 26 hereof, a notice of such proposed action to the extent feasible and
file a certificate with the Rights Agent to that effect, which shall specify the
record date for the purposes of such stock dividend, or distribution of rights
or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days before the
record date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least twenty (20) days
before the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Shares, whichever shall be
the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the
Corporation shall as soon as practicable thereafter give to each holder of a
Right Certificate and the Rights Agent, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph (a) to Preferred
Shares shall be deemed thereafter to refer also to Common Shares and/or, if
appropriate, other securities of the Corporation.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Corporation shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
WESTERN WATER COMPANY
4660 LA JOLLA VILLAGE DRIVE
SUITE 825
SAN DIEGO, CA 92122
ATTENTION: CHIEF FINANCIAL OFFICER
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Corporation or by the holder of any
Right Certificate to
32.
<PAGE> 36
or on the Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Corporation) as follows:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
400 SOUTH HOPE STREET, 4TH FLOOR
LOS ANGELES, CA 90071
ATTENTION: JAMES KIRKLAND
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of any Right Certificate or, if
before the Distribution Date, to the holder of certificates representing Common
Shares or shares of Series C or Series D Preferred Stock shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Corporation.
Section 27. Supplements and Amendments. Before the Distribution Date,
the Corporation and the Rights Agent shall, if the Corporation so directs,
supplement or amend any provision of this Agreement without the approval of any
holders of certificates representing Common Shares or shares of Series C or
Series D Preferred Stock. From and after the Distribution Date, the Corporation
and the Rights Agent shall, if the Corporation so directs, supplement or amend
this Agreement without the approval of any holders of Right 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
Corporation may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Right Certificates (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person); provided, however,
that this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when the Rights may
be redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Corporation
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement or
amendment, provided that such supplement or amendment does not adversely affect
the rights or obligations of the Rights Agent under Sections 2, 18 20 or 21 of
this Agreement. Before the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Shares or shares of Series C or Series D Preferred Stock.
Section 28. Determination and Actions by the Board of Directors, etc.
The Board of Directors of the Corporation shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Corporation, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem
33.
<PAGE> 37
the Rights or to amend the Agreement and whether any proposed amendment
adversely affects the interests of the holders of Right Certificates). For all
purposes of this Agreement, any calculation of the number of Common Shares or
other securities outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares or any
other securities 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 as in effect on the date of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith, shall (x) be
final, conclusive and binding on the Corporation, the Rights Agent, the holders
of the Right Certificates and all other parties, and (y) not subject the Board
to any liability to the holders of the Right Certificates.
Section 29. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Corporation,
the Rights Agent and the registered holders of the Right Certificates (and,
before the Distribution Date, the Common Shares or shares of Series C or Series
D Preferred 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
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, before the Distribution Date, the Common Shares or shares of
Series C or Series D Preferred 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.
Section 32. Governing Law. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of California and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights Agent
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed entirely within such
State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts, and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
34.
<PAGE> 38
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the date and year first above written.
WESTERN WATER COMPANY
Attest:
By /s/ MARK TURFLER By /s/ RONALD I. SIMON
---------------------------------- --------------------------------------
Name: Mark Turfler Name: Ronald I. Simon
Title: Controller Title: Executive Vice President
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C., AS RIGHTS AGENT
Attest:
By /s/ RON LUG By /s/ JAMES KIRKLAND
---------------------------------- --------------------------------------
Name: Ron Lug Name: James Kirkland
Title: Vice President Title: Assistant Vice President
35.
<PAGE> 39
EXHIBIT A
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES E JUNIOR PARTICIPATING PREFERRED STOCK
OF
WESTERN WATER COMPANY
Western Water Company, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation") hereby
certifies that the following resolution was adopted by the Board of Directors of
the Corporation as required by Section 151 of the General Corporation Law at a
meeting duly called and held on June 28, 1999.
WHEREAS, the Board of Directors of the Corporation is authorized, within
the limitations and restrictions stated in the Corporation's Certificate of
Incorporation, as amended, to fix by resolution or resolutions the designation,
powers, preferences, voting rights and other rights of each series of preferred
stock, and the qualifications, limitations or restrictions thereof, and such
other subjects or matters as may be fixed by resolution or resolutions of the
Board of Directors under the General Corporation Law of Delaware; and
WHEREAS, the Board of Directors of the Corporation desires, pursuant to
its authority as aforesaid, to determine and fix the designation, powers,
preferences, voting rights and other rights relating to a series of Series E
Junior Participating Preferred Stock and the number of shares constituting and
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
creates a series of the Preferred Stock, par value $.001 per share (the
"Preferred Stock") of the Corporation, and hereby states the designation and
nomination of shares, and fixes the relative rights, preferences and limitations
thereof as follows:
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Series E Junior Participating Preferred Stock:
Section 1. Designation, Par Value and Amount. The shares of such series
shall be designated as "Series E Junior Participating Preferred Stock"
(hereinafter referred to as "Series E Preferred Stock") and shall have a par
value of $.001 per share, and the number of shares constituting such series
shall be 20,000.
Section 2. Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series E Preferred Stock with respect to dividends, the holders of
shares of Series E Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of assets legally available for the
purpose, quarterly dividends payable in cash on the first business day of
November, February, May and August in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series E Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) subject to the provision
for adjustment hereinafter set forth, 100 times the aggregate per share amount
of all cash dividends, and times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock, without par value, of the Corporation (the
"Common Stock") or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series E Preferred Stock.
(b) The Corporation shall declare a dividend or distribution
on the Series E Preferred Stock as provided in paragraph (a) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series E
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series E Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series E
Preferred Stock, unless the date of issue of such shares is before the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series E Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
E
A-2
<PAGE> 41
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series E Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
before the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series E Preferred
Stock shall have the following voting rights:
(a) Subject to the provision for adjustment hereinafter set
forth, each share of Series E Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareholders of the
Corporation.
(b) Except as otherwise provided herein or by law, the
holders of shares of Series E Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of shareholders of the Corporation.
Section 4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series E Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series E Preferred Stock
outstanding shall have been paid in full, the Corporation shall not
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series E Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series E
Preferred Stock, except dividends paid ratably on the Series E Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration (except as provided in (iv) below) shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series E Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series E
Preferred Stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series E Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series E Preferred Stock,
A-3
<PAGE> 42
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series E Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Articles of Incorporation, in any other Certificate of Amendment creating a
series of Preferred Stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(a) Subject to the prior and superior rights of holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series E Preferred Stock with respect to rights upon liquidation,
dissolution or winding up (voluntary or otherwise), no distribution shall be
made to the holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series E Preferred Stock
unless, prior thereto, the holders of shares of Series E Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series E Liquidation Preference"). Following the payment of
the full amount of the Series E Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series E Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Capital Adjustment") equal to the quotient obtained by
dividing (i) the Series E Liquidation Preference by (ii) 100 (such number in
clause (ii), the "Adjustment Number"). Following the payment of the full amount
of the Series E Liquidation Preference and the Capital Adjustment in respect of
all outstanding shares of Series E Preferred Stock and Common Stock,
respectively, holders of Series E Preferred Stock and holders of Common Stock
shall receive their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series E Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Series E Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of Series E
Preferred
A-4
<PAGE> 43
Stock and the holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are not sufficient
assets available to permit payment in full of the Capital Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series E Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Series E Preferred Stock shall
not be redeemable.
Section 9. Ranking. The Series E Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, and upon dissolution, liquidation or
winding up, unless the terms of any such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series E
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series E
Preferred Stock, voting separately as a class.
A-5
<PAGE> 44
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Corporation by its President and attested by its Secretary this
_______ day of _____________, 1999.
WESTERN WATER COMPANY
By:
-------------------------------------
Name: Michael P. George
Title: President and
Chief Executive Officer
ATTEST:
By:
--------------------------------------
Name: Ronald I. Simon
Title: Secretary
A-6
<PAGE> 45
EXHIBIT B
FORM OF RIGHT CERTIFICATE
NO. R- _______ RIGHTS
NOT EXERCISABLE AFTER JULY 22, 2004 OR EARLIER IF REDEEMED BY THE CORPORATION,
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS OR WAS OR BECOMES AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN RELATED PERSONS, WHETHER CURRENTLY HELD BY OR ON BEHALF
OF ANY SUCH PERSON OR ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
RIGHT CERTIFICATE
WESTERN WATER COMPANY
This certifies that ___________ or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of that certain Rights
Agreement, dated as of July 23, 1999 (the "Rights Agreement"), between Western
Water Company, a Delaware corporation (the "Corporation"), and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent"), to purchase
from the Corporation at any time after the Distribution Date (as such term is
defined in the Rights Agreement) and before 5:00 P.M., California time, on July
22, 2004 unless the Rights evidenced hereby shall have been previously redeemed
by the Corporation, at the office or offices of the Rights Agent designated for
such purpose, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series E Junior
Participating Preferred Stock, par value $.001 (the "Preferred Shares"), of the
Corporation, at a purchase price of $.001 per one one-hundredth of Preferred
Share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-hundredths
of a Preferred Share which may be purchased upon exercise hereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase Price
as of __________, based on the Preferred Shares as constituted at such date.
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 Right
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 who becomes a transferee after the Acquiring Person becomes such, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate who becomes a
transferee before or concurrently with the
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<PAGE> 46
Acquiring Person becoming such, 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 Purchase Price and the number
of one one-hundredths of a Preferred Share or other securities which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Corporation and the holders of the Right 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 principal executive offices of
the Corporation and the office or offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares or other securities as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Corporation at a redemption price of
$.001 per Right (subject to adjustment as provided in the Rights Agreement)
payable in cash.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are one
one-hundredth or integral multiples of one one-hundredth of a Preferred Share,
which may, at the election of the Corporation, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Corporation 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 Corporation 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
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<PAGE> 47
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or other distributions or to exercise any
preemptive or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal. Dated as of ________________.
WESTERN WATER COMPANY
Attest:
By By
---------------------------------- ----------------------------------
Name: Name:
Title: Title:
Countersigned:
By
----------------------------------
Name:
Title:
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<PAGE> 48
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ________________________________ hereby sells,
assigns and transfers unto______________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________ Attorney, to
transfer the within Right Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated:
-----------------------------
----------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
----------------------------------------
Signature
B-4
<PAGE> 49
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to exercise
Rights represented by the Right Certificate.)
To: the Rights Agent:
The undersigned hereby irrevocably elects to exercise __________________
Rights represented by this Right Certificate to purchase the Preferred Shares,
Common Shares or other securities issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares, Common Shares or other
securities to be issued in the name of:
Please insert social security___________________________________________________
or other identifying number_____________________________________________________
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining 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
B-5
<PAGE> 50
Form of Reverse Side of Right Certificate -- continued
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
----------------------------------------
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase,
as the case may be, must conform to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of Assignment
or the Form of Election to Purchase, as the case may be, is not completed, the
Corporation and the Rights Agent will deem the Beneficial Owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement), and such Assignment or
Election to Purchase will not be honored.
B-6
<PAGE> 51
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
On June 28, 1999, the Board of Directors of Western Water Company (the
"Corporation") declared a dividend distribution of one preferred share purchase
right (a "Right") for each outstanding share of Common Stock, $.001 par value
(the "Common Shares"), of the Corporation and a dividend distribution to the
holders of the Corporation's Series C Convertible Redeemable Preferred Stock
("Series C Preferred Stock") or the Corporation's Convertible Redeemable
Preferred Stock ("Series D Preferred Stock") of one Right for each Common Share
into which each share of Series C Preferred Stock and Series D Preferred Stock
held by each such holder is convertible. The dividend is payable to the
shareholders of record on August 12, 1999 (the "Record Date"), and with respect
to Common Shares or shares of Series C or Series D Preferred Stock issued
thereafter until the Distribution Date (as defined below) and, in certain
circumstances, with respect to Common Stock or shares of Series C or Series D
Preferred Stock issued after the Distribution Date. Except as set forth below,
each Right, when it becomes exercisable, entitles the registered holder to
purchase from the Corporation one one-hundredth of a share of Series E Junior
Participating Preferred Stock, $.001 par value (the "Preferred Shares"), of the
Corporation at a price of $25 per one one-hundredth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Corporation and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the
"Rights Agent") dated as of July 23, 1999.
Initially, the Rights will be attached to all certificates representing
Common Shares or shares of Series C or Series D Preferred Stock then
outstanding, and no separate Right Certificates will be distributed. The Rights
will separate from the Common Shares or shares of Series C or Series D Preferred
Stock upon the earliest to occur of (i) ten days after a person or group of
affiliated or associated persons has acquired beneficial ownership of 20% or
more of the outstanding Common Shares (except pursuant to a Permitted Offer or
by certain persons who are excluded from the definition of Acquiring Persons, as
defined in the Rights Agreement); or (ii) 10 Business Days (as defined in the
Rights Agreement) (or such later date as the Board may determine) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in a person or group
becoming an Acquiring Person (as hereinafter defined) (the earliest of such
dates being called the "Distribution Date"). A person or group whose acquisition
of Common Shares causes a Distribution Date pursuant to clause (i) above is an
"Acquiring Person." The date that a person or group becomes an Acquiring Person
is the "Shares Acquisition Date."
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred solely with the Common Shares or shares of Series C
or Series D Preferred Stock. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates or certificates for
Series C or Series D Preferred Stock issued after the Record Date upon transfer
or new issuances of Common Shares or shares of Series C or Series D Preferred
Stock will contain a notation incorporating the Rights Agreement by reference.
Until
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<PAGE> 52
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares or shares of Series
C or Series D Preferred Stock outstanding as of the Record Date, even if such
notation or a copy of this Summary of Rights is not attached thereto, will also
constitute the transfer of the Rights associated with the Common Shares or
shares of Series C or Series D Preferred Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the Distribution Date (and
to each initial record holder of certain Common Shares or shares of Series C or
Series D Preferred Stock issued after the Distribution Date), and such separate
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the Close of Business on July 22, 2004, unless earlier redeemed by the
Corporation as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding Common
Shares at a price and on terms which a majority of members of the Board of
Directors (who are not also officers of the Corporation or an Acquiring Person
or affiliate or associate thereof) determines to be adequate and in the best
interests of the Corporation and its shareholders, other than such Acquiring
Person, its affiliates and associates (a "Permitted Offer"), each holder of a
Right will thereafter have the right (the "Flip-In Right") to receive upon
exercise the number of Common Shares (or, in certain circumstances, one
one-hundredths of a share of Preferred Shares or other securities of the
Corporation) having a market value (immediately before such triggering event)
equal to two times the exercise price of the Right. At such time, all Rights
that are beneficially owned by the Acquiring Person or any affiliate, associate
or transferee thereof will be null and void.
In the event that, at any time following the Shares Acquisition Date,
(i) the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately before the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power are sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate or any other person
in which such Acquiring Person, affiliate or associate has an interest or any
person acting on behalf of or in concert with such Acquiring Person, affiliate
or associate, or, if in such transaction all holders of Common Shares are not
treated alike, then each holder of a Right (except Rights which previously have
been voided as set forth above) shall thereafter have the right (the "Flip-Over
Right") to receive, upon exercise, common shares of the acquiring company having
a value equal to two times the exercise price of the Right. The holder of a
Right will continue to have the Flip-Over Right only to the extent that the
Flip-In Right has not previously been exercised.
The Purchase Price payable and the number of Preferred Shares, Common
Shares or other securities issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price (or
conversion
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price as the case may be), less than the then current market price of the
Preferred Shares or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than those referred to
above).
The number of outstanding Rights and the number of one one-hundredths of
a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
before the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but, if greater, will be entitled
to an aggregate dividend per share of 100 times the dividend declared per Common
Share. In the event of liquidation, subject to the prior and superior rights of
holders of any shares of Preferred Stock ranking prior to and superior to the
Preferred Shares, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $100 per share; thereafter, and
after the holders of the Common Shares receive a liquidation payment of $1.00
per share, the holders of the Preferred Shares and the holders of the Common
Shares will share the remaining assets in the ratio of 1 to 1 (as adjusted) for
each Preferred Share and Capital Share so held, respectively. Finally, in the
event of any merger, consolidation or other transaction in which Common Shares
are exchanged, each Preferred Share will be entitled to receive 100 times the
amount received per Common Share. These rights are protected by customary
antidilution provisions.
With certain exceptions, no adjustment to the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are one one-hundredth or integral multiples of one one-hundredth
of a Preferred Share, which may, at the election of the Corporation, be
evidenced by depositary receipts) and in lieu thereof, a payment in cash will be
made based on the market price of the Preferred Shares on the last Trading Day
(as defined in the Rights Agreement) before the date of exercise.
At any time before the earlier to occur of (i) a person becoming an
Acquiring Person, (ii) the expiration of the Rights, or (iii) in certain
circumstances, after the Shares Acquisition Date, the Corporation may redeem all
but not less than all of the Rights at a price of $.001 per Right (the
"Redemption Price") which redemption shall be effective upon the action of the
Board of Directors.
All of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Corporation before 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, defect or inconsistency, to make changes
which do not adversely affect the interests of holders of Rights .(excluding the
interests of any Acquiring Person), or, subject to certain limitations, to
shorten or lengthen any time period under the Rights Agreement.
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Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to shareholders of the Corporation, shareholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
__________. A copy of the Rights Agreement is available free of charge from the
Corporation. 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 hereby incorporated herein by reference.
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