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
SOUTH JERSEY INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-1901645
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
Number One South Jersey Plaza, Route 54, Folsom, NJ 08037
(Address of principal executive offices) (Zip Code)
If this Form relates to the If this Form relates to the
registration of a class of debt registration of a class of debt
securities and is effective securities and is to become
upon filing pursuant to effective simultaneously with
General Instruction A(c)(1) the effectiveness of a
please check the following concurrent registration
box. ( ) statement under the Securities
Act of 1933 pursuant to General
Instruction Act A(c)(2) please
check the following box. ( )
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
Rights to Purchase Series A
Junior Participating
Preference Stock New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act:
None
Page 1 of 8
Exhibit Index appears on page 8
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Item 1. Description of Securities to be Registered
The Board of Directors of South Jersey Industries, Inc.
(the "Company") has declared a dividend of one stock purchase right
(the "Rights") for each share of the Company's Common Stock, par
value $1.25 per share (the "Common Stock"), to be paid on October 11,
1996 (the "Record Date") to shareholders of record of the Common
Stock issued and outstanding on the Record Date. Each Right entitles
the registered holder to purchase from the Company one one-thousandth
of a share of the Company's Series A Junior Participating Preference
stock, without par value (the "Series A Preference Stock").
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The
Farmers & Merchants National Bank of Bridgeton, the Rights Agent.
Capitalized terms used but not otherwise defined herein shall
have the meaning given such terms in the Rights Agreement.
Initially, the Rights will be evidenced by the Common
Stock certificates representing shares then outstanding, and no
separate Right Certificates will be distributed. The Rights will
become exercisable and will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten calendar
days after a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the "Shares
Acquisition Date") or (ii) ten business days (or such later date as
the Board of Directors determines, or if an Adverse Change of
Control, as a majority of the Continuing Directors determines (as
such terms are defined herein)) after the public announcement of a
tender offer or exchange offer that, if successful, would result in a
person or group beneficially owning 10% or more of such outstanding
shares of Common Stock.
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred
with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after October 11, 1996 will contain a
notation incorporating the Rights Agreement by reference and (iii)
the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on September 20, 2006,
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Right
Certificates will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and, thereafter,
the separate Right Certificates alone will represent the Rights.
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Except as otherwise determined by the Board of Directors, only shares
of Common Stock issued prior to the Distribution Date will be issued
with Rights.
The new series of Preference Stock issuable upon exercise
of the Rights will be non-redeemable and will rank junior to all
other series of the Company's preference stock. Each whole share of
Preference Stock will be entitled to receive a quarterly preferential
dividend of $10 per share and will be entitled to receive, in the
aggregate, a dividend of 1,000 times the dividend declared on the
Common Stock. In the event of liquidation, the holders of the
Preference Stock will be entitled to receive a preferential
liquidation payment of $10 per share and will be entitled to receive,
in the aggregate, a liquidation payment equal to 1,000 times the
payment made per share of Common Stock. Each share of Preference
Stock will have 1,000 votes, voting together with the Common
Stock. Finally, in the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged for or
converted into other stock or securities, cash and/or other property,
each share of Preference Stock will be entitled to receive 1,000
times the amount received per share of Common Stock. The foregoing
rights will be protected against dilution in the event additional
shares of Common Stock or Preference Stock are issued. The
dividends, liquidation and voting rights, and the non-redemption
feature of the Preference Stock are designed so that the value of the
one one-thousandth interest in a share of Preference Stock
purchasable with each Right will approximate the value of one
share of Common Stock.
In the event that, at any time following the Shares
Acquisition Date, the Company is acquired in a merger or other
business combination transaction (except certain transactions with a
person who became an Acquiring Person as a result of a tender offer
described in the next succeeding paragraph) or 50% or more of its
assets, cash flow or earning power is sold, proper provision shall be
made so that each holder of a Right shall thereafter have the right
to receive, upon the exercise thereof at the then current exercise
price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a
market value (as defined in the Rights Agreement) of two times the
Purchase Price of the Right. In the event that, after the Shares
Acquisition time, the Company were the surviving corporation of a
merger and the Common Stock was changed or exchanged, proper
provision shall be made so that each holder of a Right will
thereafter have the right to receive upon exercise that number of
shares of Common Stock having a market value of two times the
exercise price of the Right.
In the event that a person or group becomes an Acquiring
Person, proper provision shall be made so that each holder of a Right
(other than the Acquiring Person) will thereafter have the right to
receive upon exercise that number of shares of Common Stock (or, in
certain circumstances, cash, a reduction in the Purchase Price,
Common Stock, or other equity securities of the Company, debt
securities of the Company, other property or a combination thereof)
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having a market value (as defined in the Rights Agreement) of two
times the Purchase Price of the Right. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in
this paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person (or an affiliate, associate or transferee thereof)
will be null and void. A person will not be an Acquiring Person if
the Board of Directors of the Company determines that such person or
group became an Acquiring Person inadvertently and such person or
group promptly divests itself of a sufficient number of shares of
Common Stock so that such person or group is no longer an Acquiring
Person.
The Purchase Price payable, and the number of shares of
Preference Stock or other securities or property issuable, upon
exercise of the Rights are subject to customary adjustments from time
to time to prevent dilution in the event of certain changes in the
Preference Stock or Common Stock or distributions on such stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the
Purchase Price. The Company will not be required to issue fractional
shares of Preference Stock (other than fractions that are integral
multiples of one one-thousandth of a share, which may, at the
election of the Company, be evidenced by depositary receipts) and in
lieu thereof, a payment in cash will be made based on the then
current market value of the Preference Stock.
In general, the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right, at any time until ten
days following the Shares Acquisition Date, upon the affirmative vote
of a majority of the Board of Directors; provided, however, that
if the authorization to redeem the Rights occurs on or after the date
of a change in a majority of the Board of Directors of the company as
a result of a proxy or consent solicitation and a person who was a
participant in such solicitation has stated that such person (or any
of its affiliates or associates) has taken or intends to take or may
consider taking actions that would result in such person becoming an
Acquiring Person or cause the Company to be acquired in a merger or
other similar business combination (the existence of these
circumstances being an "Adverse Change of Control"), then the
redemption of the Rights will require the approval of a majority of
the Continuing Directors. Immediately upon the action of the Board
of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to
receive the $.001 redemption price.
The term "Continuing Director" means a director of the
Company who is not an Acquiring Person or an affiliate or associate
of an Acquiring Person (or a representative of an Acquiring Person or
an affiliate or associate of an Acquiring Person), and who either
was a member of the Board of Directors prior to September 20, 1996 or
who subsequently became a director of the Company and whose initial
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election or initial nomination for election by the Company's
shareholders subsequent to such date was approved by a vote of a
majority of the Continuing Directors then on the Board of Directors.
At any time after any person becomes an Acquiring Person
and prior to the acquisition by any person of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may
exchange the then outstanding and exercisable Rights (other than
Rights owned by an Acquiring Person, which will have become null and
void), in whole or in part, for Common Shares, each Right being
exchangeable for one Common Share, subject to adjustment. The
Company, at its option, may substitute one one-thousandth of a share
of preference stock (or other series substantially similar preferred
stock of the Company) for each share of Common Stock to be exchanged.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the
earliest of the Distribution Date or an Adverse Change of Control.
After the first to occur of such events, the provisions of the Rights
Agreement may be amended with the approval of a majority of the
Continuing Directors in order (x) to make changes that do not
adversely affect the interests of holders of the Rights (other than
the interests of any Acquiring Person), (y) to cure any ambiguity or
correct or supplement any provision which may be defective or
inconsistent with other provisions contained in the Rights Agreement,
or (z) to shorten or lengthen any time period under the Rights
Agreement, but after the Distribution Date or an Adverse Change of
Control, no time period relating to redemption of the Rights may be
lengthened so as to make the Rights redeemable at a time at which the
Rights had not been redeemable and no other time period may be
lengthened unless for the purpose of protecting, enhancing or
clarifying the rights or benefits of holders of the Rights.
The Rights have certain anti-takeover effects. The
Rights will cause substantial dilution to a person or group that
attempts to acquire the Company without conditioning the offer on a
substantial number of Rights being acquired. Accordingly, the
existence of the Rights may deter certain acquirors from making
takeover proposals or tender offers. However, the rights plan helps
ensure that the Company's shareholders receive fair and equal
treatment in the event of any proposed takeover of the Company.
The adoption of the plan is not in response to any specific takeover
threat or proposal, but is a precaution taken to protect the rights
of the Company's shareholders.
A copy of the Rights Agreement, dated as of September 20,
1996, between the Company and the Rights Agent, specifying the terms
of the Rights (which Rights Agreement includes as exhibits the form
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of Right Certificate and the Summary of Rights to Purchase Common
Shares) is attached hereto as an exhibit and is incorporated herein
by reference. The foregoing description of the Rights is qualified
by reference to such exhibit.
Item 2. Exhibits
99.1 Rights Agreement, dated as of September 20,
1996 between South Jersey Industries, Inc. and
The Farmers & Merchants National Bank of
Bridgeton, which includes the resolutions
establishing the terms of the preference stock
as Exhibit A, the form of Right Certificate as
Exhibit B and the Summary of Rights to Purchase
Common Stock as Exhibit C.
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<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: October 7, 1996
SOUTH JERSEY INDUSTRIES, INC.
By: /s/ George L. Baulig
George L. Baulig
Secretary and Assistant Treasurer
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EXHIBIT INDEX
These exhibits are numbered in accordance with the exhibit numbers
assigned in Item 2 of Form 8-A.
Exhibit No. Description
99.1 Rights Agreement dated as of
September 20, 1996 between South
Jersey Industries, Inc. and The
Farmers & Merchants National
Bank of Bridgeton, which includes
the resolutions establishing the
terms of the preference stock as
Exhibit A, form of Right Certificate
as Exhibit B and the Summary of
Rights to Purchase Common
Shares as Exhibit C.
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<PAGE>
_____________________________________________________________________
SOUTH JERSEY INDUSTRIES, INC.
and
THE FARMERS & MERCHANTS NATIONAL BANK OF BRIDGETON
RIGHTS AGREEMENT
Dated as of September 20, 1996
_____________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . 5
Section 3. Issue of Right Certificates . . . . . . . . . 5
Section 4. Form of Right Certificates. . . . . . . . . . 7
Section 5. Countersignature and Registration . . . . . . 8
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates . . . . . . . . . 9
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . 10
Section 8. Cancellation and Destruction of Right
Certificates. . . . . . . . . . . . . . . . 12
Section 9. Reservation and Availability of Preference Shares . 12
Section 10. Preference Shares Record Date . . . . . . . . . 14
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights . . . . . . . . 14
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares . . . . . . . . . . . . . . . . . . . . 23
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . . . 23
Section 14. Fractional Rights and Fractional Shares . . . . 26
Section 15. Rights of Action. . . . . . . . . . . . . . . . . 28
Section 16. Agreement of Right Holders. . . . . . . . . . . . 28
Section 17. Right Certificate Holder Not Deemed a Shareholder . 29
Section 18. Concerning the Rights Agent . . . . . . . .. . . 29
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Section 19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . . 30
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . 30
Section 21. Change of Rights Agent. . . . . . . . . . . . . . 32
Section 22. Issuance of New Right Certificates. . . . . . . . 33
Section 23. Redemption and Termination. . . . . . . . . . . . 33
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . 34
Section 25. Notice of Certain Events. . . . . . . . . . . . . 36
Section 26. Notices . . . . . . . . . . . . . . . . . . . . 37
Section 27. Supplements and Amendments. . . . . . . . . . . 37
Section 28. Successors. . . . . . . . . . . . . . . . . . . 38
Section 29. Determinations and Actions by the Board of
Directors . . . . . . . . . . . . . . . . . . . . 38
Section 30. Benefits of this Agreement. . . . . . . . . . 39
Section 31. Severability. . . . . . . . . . . . . . . . . 39
Section 32. Governing Law . . . . . . . . . . . . . . . . 39
Section 33. Counterparts. . . . . . . . . . . . . . . . . 39
Section 34. Descriptive Headings. . . . . . . . . . . . . 39
Exhibit A Certificate of Amendment of Certificate of Incorporation
Exhibit B Form of Right Certificate
Exhibit C Form of Summary of Rights
ii
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RIGHTS AGREEMENT
Rights Agreement, dated as of September 20, 1996 between
South Jersey Industries, Inc., a New Jersey corporation (the
"Company"), and The Farmers & Merchants National Bank of Bridgeton,
as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend distribution of one preference share purchase
right (a "Right") for each Common Share (as hereinafter defined) of
the Company outstanding as of the Close of Business on September 10,
1996 (the "Record Date"), each Right initially representing the right
to purchase one one-thousandth of a share of the Company's Series A
Junior Participating Preference Stock, without par value and
liquidation preference $10 per share (the "Preference Shares"), upon
the terms and subject to the conditions herein set forth, and has
further authorized (i) the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date (as such term is defined in
Section 3), the Redemption Date and the Final Expiration Date (as
such terms are defined in Section 7) and (ii) in certain
circumstances provided in Section 22, the issuance of one Right with
respect to each Common Share that shall become outstanding between
the Distribution Date and the earlier of the Redemption Date and the
Final Expiration Date.
Accordingly, in consideration of the premises and the
mutual agreements herein set forth, and intending to be legally bound
hereby, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 10% or more of the Common Shares
then outstanding, but shall not include any Exempt Person.
Notwithstanding the foregoing:
(i) no Person shall become an "Acquiring
Person" as the result of an acquisition of beneficial ownership
of Common Shares by the Company that, by reducing the number of
Common Shares (or securities convertible into or exchangeable
for Common Shares) outstanding, increases the percentage of
Common Shares beneficially owned by such Person (together with
all Affiliates and Associates of such Person) to 10% or more of
the Common Shares then outstanding; provided, however, that if
any Person (other than Exempt Persons) shall become the
Beneficial Owner of 10% or more of the Common Shares then
outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the
<PAGE>
Beneficial Owner of any additional Common Shares of the
Company, then such Person shall be an "Acquiring Person;"
(ii) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be
an "Acquiring Person" as defined pursuant to the first sentence
of this paragraph (a), has become such inadvertently, 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 paragraph (a), then such Person shall not,
solely as a result of such inadvertent acquisition, be deemed
to be an "Acquiring Person" for any purpose of this Agreement;
and
(iii) no Person shall become an "Acquiring
Person" by virtue of ownership of Common Shares by an Affiliate
and/or Associate of such Person, which Affiliate and/or
Associate is deemed to be an Affiliate and/or Associate of such
Person solely by reason of such Affiliate and/or Associate
being a director of officer of the Company.
(b) "Adjustment Shares" shall have the meaning set
forth in Section 11(a)(ii).
(c) "Adverse Change of Control" shall have the
meaning set forth in Section 23(a).
(d) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such rule
is in effect on the Record Date.
(e) A Person shall be deemed the "Beneficial Owner"
of, shall be deemed to "beneficially own," and shall be deemed to
have "beneficial ownership" of, any securities:
(i) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly has
(A) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement
or understanding (whether or not in writing), 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 (1) 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, (2) securities issuable upon exercise of
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Rights at any time prior to the occurrence of a
Triggering Event, or (3) securities issuable upon
exercise of Rights from and after the occurrence of a
Triggering Event, if such Rights were acquired by such
Person or such Person's Affiliates or Associates prior
to the Distribution Date or pursuant to Section 3(a) or
Section 22 or pursuant to Section 11(a)(i) in connection
with an adjustment made with respect to any of the
Rights heretofore specified in this clause (3); or
(B) the right to vote, including
pursuant to any agreement, arrangement or understanding
(whether or not in writing), or otherwise has
"beneficial ownership" (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the
Exchange Act); provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own, pursuant to this subparagraph (B), any
security as a result of any agreement, arrangement or
understanding to vote such security if such agreement,
arrangement or understanding (1) arises solely from a
revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange
Act (or any comparable or successor report); or
(ii) that are beneficially owned,
including pursuant to subparagraphs (i)(A) and (B) of
this subsection (c), directly or indirectly, by
any other Person (or Affiliate or Associate thereof)
with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting (except pursuant
to a revocable proxy as described in the provision in
subparagraph (i)(B) of this subsection (c)) or disposing
of any securities of the Company;
provided, however, that nothing in this subsection (c) shall cause a
Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities
acquired through such Person's participation in good faith in a firm
commitment underwriting until the expiration of forty days after the
date of such acquisition.
(f) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State
of New Jersey are authorized or obligated by law or executive order
to close.
(g) "Certificate of Amendment" shall mean the
Certificate of Amendment of Certificate of Incorporation establishing
Series A Junior Participating Preference Stock attached hereto as
Exhibit A.
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(h) "Close of Business" on any given date shall mean
5:00 P.M., Eastern time, on such date; provided, however, that if
such date is not a Business Day, it shall mean 5:00 P.M., Eastern
time, on the next succeeding Business Day.
(i) "Common Shares" when used with reference to the
Company shall mean the shares of Common Stock, par value $1.25 per
share, of the Company. "Common Shares" when used with reference to
any Person other than the Company which is organized in corporate
form shall mean the capital stock with the greatest voting power, or
the equity securities or other equity interest having power to
control or direct the management, of such Person, or, if such Person
is a Subsidiary of another Person, the capital stock with the
greatest voting power of the Person that ultimately controls such
first-mentioned Person. "Common Shares" when used with reference to
any Person that is not organized in corporate form shall mean units
of beneficial interest that (i) shall represent the right to
participate generally in the profits and losses of such Person
(including, without limitation, any flow-through tax benefits
resulting from an ownership interest in such Person) and that
(ii) shall be entitled to exercise the greatest voting power of such
Person or, in the case of a limited partnership, shall have the power
to remove the general partner or partners.
(j) "Continuing Director" shall mean (i) any member
of the Board of Directors of the Company who, while such person is a
member of the Board, is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person (or a representative of an Acquiring
Person or of any such Affiliate or Associate) and was a member of the
Board prior to the Record Date, or (ii) any Person who subsequently
becomes a member of the Board who, while such Person is a member of
the Board, is not an Acquiring Person, or an Affiliate or Associate
of an Acquiring Person (or a representative of an Acquiring Person or
of any such Affiliate or Associate) if such Person's nomination for
election or election to the Board is recommended or approved by a
majority of the Continuing Directors.
(k) "Distribution Date" shall have the meaning set
forth in Section 3.
(l) "Exempt Person" shall mean (i) the Company, (ii)
any Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company or, (iv) any entity
holding Common Shares for the benefit of present or future
participants (e.g., a trustee or plan fiduciary) pursuant to the
terms of any such plan.
(m) "Final Expiration Date" shall have the meaning
set forth in Section 7.
(n) "Person" shall mean any individual, firm,
corporation, partnership, trust
or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(o) "Preference Shares" shall mean shares of Series A
Junior Participating Preference Stock, without par value and
liquidation preference of $10 per share, of the Company.
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(p) "Principal Party" shall have the meaning set
forth in Section 13(b).
(q) "Purchase Price" shall have the meaning set forth
in Section 4(a).
(r) "Redemption Date" shall have the meaning set
forth in Section 7.
(s) "Redemption Price" shall have the meaning set
forth in Section 23(a).
(t) "Section 11(a)(ii) Event" shall mean the event
described in Section 11(a)(ii).
(u) "Section 13 Event" shall mean any event described
in clauses (x), (y) or (z) of Section 13(a).
(v) "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 Section
13(d) under the Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such.
(w) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the voting power
of the voting equity securities or equity interests is owned,
directly or indirectly, by such Person.
(x) "Triggering Event" shall mean any Section
11(a)(ii) Event or Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company and
the holders of the Rights (who, in accordance with Section 3, prior
to the Distribution Date shall also be the holders of the Common
Shares) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from
time to time appoint such co-Rights Agents as it may deem necessary
or desirable. In the event the Company appoints one or more co-
Rights Agents, the respective duties of the Rights Agent and any co-
Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the Close of Business on
the tenth calendar day after the Shares Acquisition Date or (ii) the
Close of Business on the tenth Business Day (or such later date as
the Board of Directors shall determine; provided that if such
determination occurs on or after the date of an Adverse Change of
Control, then such date may be extended only if there are Continuing
Directors in office and such extension is authorized by a majority of
such Continuing Directors) after the date that a tender or exchange
offer by any Person (other than an Exempt Person) is first published
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or sent or given within the meaning of Rule 14d-4(a) of the General
Rules and Regulations under the Exchange Act, the consummation of
which would result in beneficial ownership by a Person (other than an
Exempt Person) of 10% or more of the outstanding Common Shares
(including any such date that is after the date of this Agreement and
prior to the issuance of the Rights) (the earlier of (i) and (ii)
being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for Common Shares 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 Common Shares. As soon as
practicable after the Distribution Date, the Rights Agent will send,
by first-class, insured, postage-prepaid mail, to each record holder
of Common Shares as of the Close of Business on the Distribution
Date, or, with respect to Common Shares so issued on or after the
Distribution Date (unless otherwise provided with respect thereto as
aforesaid), to the record holder of such Common Shares on the date of
issuance, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of Exhibit B,
evidencing one Right for each Common Share so held, subject to
adjustments as provided herein. In the event that an adjustment in
the number of Rights per Common Share has been made pursuant to
Section 11(i), at the time of distribution of the Right Certificates,
the Company may make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a)) so that Right
Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely
by such Right Certificates.
(b) As promptly as practicable following the Record
Date, the Company will send a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution
Date, the Rights will be evidenced by such certificates for Common
Shares registered in the names of the holders thereof (together with
a copy of the Summary of Rights). Until the earlier of the
Distribution Date or Final Expiration Date, the surrender for
transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby.
(c) Rights shall be issued in respect of all Common
Shares which are issued (whether originally issued or delivered from
the Company's treasury) after the Record Date but prior to the
earlier of the Distribution Date or Final Expiration Date, or in
certain circumstances provided in Section 22, after the Distribution
Date. Certificates for Common Shares issued after the Record Date
but prior to the earlier of the Distribution Date or the Final
Expiration Date (including, without limitation, reacquired Common
Shares referred to in the last sentence of this paragraph (c)) shall
have impressed on, printed on, written on or otherwise affixed to
them the following legend:
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This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights
Agreement between South Jersey Industries, Inc. (the
"Company") and The Farmers & Merchants National Bank of
Bridgeton, as Rights Agent, dated as of September 20,
1996 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of
the Company.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge promptly
following receipt of a written request therefor.
Under certain circumstances, Rights beneficially owned
by Acquiring Persons or Associates or Affiliates of
Acquiring Persons (as such terms are defined in the
Rights Agreement) and any subsequent holder of such
Rights may become null and void.
With respect to such certificates bearing the foregoing legend, until
the earlier of the Distribution Date or the Final Expiration Date,
the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Shares shall also be the registered
holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights
associated with the Common Shares represented by such certificates.
In the event that the Company purchases or acquires any Common Shares
after the Record Date but prior to the earlier of the Distribution
Date or the Final Expiration Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the
Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit B and may have such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or
as may be required to comply with any applicable law or with any rule
or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be
listed or any securities association on whose interdealer quotation
system the Rights may from time to time be authorized for quotation,
or to conform to usage. Subject to the provisions of Section 22, the
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Right Certificates that are issued in respect of Common Shares that
were issued and outstanding as of the Record Date, shall be dated as
of the Record Date, and all Right Certificates that are issued in
respect of other Common Shares shall be dated as of the respective
dates of issuance of such Common Shares, and in either case on their
faces shall entitle the holders thereof to purchase such number of
one one-thousandths of a Preference Share as shall be set forth
therein at the price per one one-thousandths of a Preference Share
set forth therein (the "Purchase Price"), but the number and type of
securities purchasable upon the exercise of each Right and the
Purchase Price shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section
3 or Section 22 that represents Rights beneficially owned by (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or any Associate or
Affiliate of an Acquiring Person) which becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or any Associate or Affiliate of an Acquiring
Person) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) to holders of equity interests in such Acquiring Person (or
of such Associate or Affiliate) or to any Person with whom the
Acquiring Person has any agreement, arrangement or understanding
regarding the transferred Rights, or (B) a transfer that the
Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect
the avoidance of Section 7(e), Section 11 or Section 13, and any
Right Certificate issued pursuant to Section 6 or Section 11 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 an Associate of an
Acquiring Person. This Right Certificate and the Rights
represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights
Agreement.
The absence of the foregoing legend on any Right
Certificate shall in no way affect any of the other provisions of
this Agreement, including, without limitation, the provisions of
Section 7(e). The Company shall instruct the Rights Agent in writing
of the Rights which should be so legended and shall supply the Rights
Agent with such legended Right Certificates.
Section 5. Countersignature and Registration. (a) The
Right Certificates shall be executed on behalf of the Company by its
chairman, its president or a vice president, either manually or by
facsimile signature, and have affixed thereto the Company's
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seal or a facsimile thereof that shall be attested by the secretary,
or an assistant secretary or treasurer, of the Company, either
manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by
the Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had
not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at the office of the Rights Agent
designated for such purposes, 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 as evidenced on the face of each
of the Right Certificates and the date and certificate number of each
of the Right Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates. (a) Subject to the provisions of Section 4(b),
Section 7(e), Section 11 and Section 14, at any time after the
Close of Business on the Distribution Date, and at or prior to the
Close of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to
purchase a like number of Preference Shares (or other securities or
other assets, as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange
any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged,
with the form of assignment and certificate appropriately executed,
at the office of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have
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 Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section
7(e), Section 11 and Section 14, countersign and deliver to the
person entitled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require payment of
a sum sufficient to cover any tax or governmental charge that may
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<PAGE>
be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will
make and deliver a new Right Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(e), the registered holder of
any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein, including, without limitation,
the restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a)) in whole or in part at any time after
the Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Purchase
Price for each one one-thousandth of a Preference Share (or other
securities, cash or other assets, as the case may be) as to which
the Rights are exercised, at or prior to the earliest of (i) the
Close of Business on September 20, 2006 (the "Final Expiration
Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 (the "Redemption Date"), or (iii) the time at
which such Rights are exchanged as provided in Section 24.
(b) The Purchase Price for each one one-thousandth of
a Preference Share pursuant to the exercise of a Right shall
initially be $90.00, shall be subject to adjustment from time to time
as provided in Sections 11 and 13 and shall be payable in lawful
money of the United States of America, subject to paragraph (c)
below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares
(or other securities or other assets, as the case may be) to be
purchased and an amount equal to any applicable transfer tax required
to be paid by the holder of such Right Certificate in accordance with
Section 9(e) (as determined by the Rights Agent) the Rights Agent
shall, subject to Section 20(j), thereupon promptly (i) (A)
requisition from any transfer agent of the Preference Shares
certificates for the number of Preference Shares to be purchased, and
the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) if the Company shall have
elected to deposit the total number of Preference Shares issuable
upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a Preference Share
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<PAGE>
to be purchased (in which case certificates for the Preference Shares
represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional interests in shares in accordance with Section
14, (iii) after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered
holder of such Right Certificates registered in such name or names as
may be designated by such holder and (iv) when appropriate, after
receipt, deliver such cash to or upon the order of the registered
holder of such Right Certificate. The payment of the Purchase Price
(as such amount may be reduced pursuant to Section 11(a)(iii)) may be
made in cash or by certified or bank check or money order payable to
the order of the Company. In the event the Company is obligated to
issue other securities (including Common Shares) of the Company or
distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other
securities or property are available for distribution by the Rights
Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon any
exercise of Rights, a number of Rights be exercised so that
only whole Preference Shares would be issued.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the
provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of any Triggering
Event, any Rights beneficially owned by (i) any Acquiring Person (or
any Associate or Affiliate of an Acquiring Person), (ii) a transferee
of an Acquiring Person (or any Associate or Affiliate of an Acquiring
Person) which becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or any Associate
or Affiliate of an Acquiring Person) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or of such Associate or Affiliate) or to
any Person with whom the Acquiring Person has any agreement,
arrangement or understanding regarding the transferred Rights, or (B)
a transfer that the Board of Directors of the Company has determined
is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall
be null and void without any further action, and no holder of such
Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with,
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<PAGE>
but shall have no liability to any holder of Rights or any other
Person as a result of its failure to make any determination under
this Section 7(e) or such Section 4(b) with respect to any Acquiring
Person or an Associate or Affiliate of an Acquiring Person or their
transferees.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported transfer or exercise unless such
registered holder shall have (i) completed and signed the certificate
following the form of assignment or election to purchase set forth on
the reverse side of the Right Certificate surrendered for such
assignment or exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in 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 Rights
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired
by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such
cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preference
Shares. (a) Subject to the Company's rights under Section
11(a)(iii) to otherwise fulfill its obligations hereunder,
the Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preference
Shares or any Preference Shares held in its treasury (or, following
the modification of the Rights in accordance with Section 11(a)(ii),
Common Shares and/or other securities), the number of Preference
Shares (or, following the modification of the Rights in accordance
with Section 11(a)(ii), Common Shares and/or other securities) that
will be sufficient to permit the exercise in full of all outstanding
Rights pursuant to the terms of this Agreement; provided, however,
that such action need not be taken with respect to Preference Shares
(or other securities) issuable upon exercise of the Rights until
after such time as the Rights become exercisable, and with respect to
Preference Shares (or other securities) issuable upon occurrence of a
Triggering Event until the occurrence of such event.
(b) So long as the Preference Shares issuable upon
the exercise of Rights may be listed on any national securities
exchange, or authorized for quotation on any interdealer quotation
system of any securities association, the Company shall use its best
efforts to cause, from and after such time as the Rights become
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exercisable, all shares reserved for such issuance to be listed on
such exchange or quoted on such system upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts to (i)
file, as soon as is practicable following the earliest date after the
first occurrence of a Triggering Event in which the consideration to
be delivered by the Company upon exercise of the Rights has been
determined in accordance with Sections 11(a)(ii) (or Sections
11(a)(iii) and 13), or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities purchasable upon exercise of the Rights on
an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing and (iii) cause
such registration statement to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for such securities or (B) the Final Expiration Date.
The Company will also take such action as may be appropriate under,
or to ensure compliance with, the securities or "blue sky" laws of
the various states and other appropriate jurisdictions in connection
with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this
paragraph, the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective
and to take such actions under such other securities or blue sky laws
and permit them to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer
in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if
the requisite qualification in such jurisdiction shall not have been
obtained or the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been
declared effective.
(d) The Company covenants and agrees that it will
take all such action as may be necessary to ensure that all
Preference Shares or other securities delivered upon exercise of
Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable
shares.
(e) The Company further covenants and agrees that,
subject to Sections 6 and 7(c), it will pay when due and payable any
and all foreign, federal and state transfer taxes and charges that
may be payable in respect of the issuance or delivery of the Right
Certificates or of any Preference Shares (or, following the
modification of the Rights in accordance with Section 11(a)(ii),
Common Shares and/or other securities or property) upon the exercise
of Rights. The Company shall not, however, be required to pay any
transfer tax that may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the
Preference Shares (or, following the modification of the Rights in
accordance with Section 11(a)(ii), Common Shares and/or other
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<PAGE>
securities or property) in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates or depositary
receipts for Preference Shares (or, following the modification of the
Rights in accordance with Section 11(a)(ii), Common Shares other
securities or property) upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until
it has been established to the Company's satisfaction that no such
tax is due.
Section 10. Preference Shares Record Date. Each person
in whose name any certificate for Preference Shares (or, following
the modification of the Rights in accordance with Section 11(a)(ii)
hereof, and/or other securities) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of
record of the Preference Shares (or, following the modification of
the Rights in accordance with Section 11(a)(ii), Common Shares and/or
other securities) represented thereby on, and such certificate shall
be dated, the date upon which the Right Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and
any applicable transfer taxes) was made; provided, however, that if
the date of such surrender and payment is a date upon which the
Preference Shares (or, following the modification of the Rights in
accordance with Section 11(a)(ii), Common Shares and/or other
securities) transfer books of the Company are closed or a date on
which the exercisability of the Rights is suspended pursuant to
Section 9(c), such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, as
applicable, the next succeeding Business Day on which the Preference
Shares (or, following the modification of the Rights in accordance
with Section 11(a)(ii), Common Shares and/or other securities)
transfer books of the Company are open or the next succeeding
Business Day on which such suspension is no longer in effect. Prior
to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any rights of a
holder of Preference Shares (or, following the modification of the
Rights in accordance with Section 11(a)(ii), Common Shares and/or
other securities) for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. The Purchase Price, the number
and kind of securities covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preference Shares payable in Preference Shares, (B) subdivide
the outstanding Preference Shares into a greater number of
shares, (C) combine or consolidate the outstanding Preference
Shares into a smaller number of Preference Shares or (D) issue
any shares of its capital stock in a reclassification of the
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Preference Shares (including any such reclassification in
connection with a consolidation or merger in which the Company
is the continuing or surviving corporation), except as
otherwise provided in Sections 11(a) and 7(e), 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 that,
if such Right had been exercised immediately prior to such
date and at a time when the Preference Shares (or other
capital stock, as the case may be) transfer books of the
Company were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an
event occurs that would require an adjustment under both this
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 prior to, any adjustment
required pursuant to Section 11(a)(ii).
(ii) In the event any Person (other than an
Exempt Person), at any time after the date of this Agreement,
is or becomes an Acquiring Person, unless the event causing
such Person to become an Acquiring Person is a Section 13
Event, then, promptly following the occurrence of such Section
11(a)(ii) Event, proper provision shall be made so that each
holder of a Right, except as provided in Section 7(e), shall
thereafter have the right to receive, upon exercise thereof
following the Distribution Date at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu
of the number of one one-thousandths of a Preference Share for
which a Right was theretofore exercisable, such number of
Common Shares as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of
one one-thousandths of a Preference Share for which a Right
was exercisable immediately prior to the first occurrence of
the Section 11(a)(ii) Event, whether or not such Right was
then exercisable, and (y) dividing that product (which,
following such first occurrence, shall thereafter be referred
to as the "Purchase Price" for each Right and for all purposes
of this Agreement) by 50% of the current per share market
price of the Common Shares (determined pursuant to Section
11(d)) on the date of the occurrence of the Section 11(a)(ii)
Event (such number of shares is herein called the "Adjustment
Shares"); provided, however, that the Purchase Price and
number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any event occurring
after the date of such first occurrence. The Company shall
notify the Rights Agent as to any Persons who are deemed by
the Company to be Acquiring Persons or Associates, Affiliates
or transferees (as described in subparagraphs (ii) and (iii)
of Section 7(e)) of such Persons and shall identify any Rights
pertaining thereto.
(iii) In the event that after the Distribution
Date or, in the case of a Section 11(a)(ii) Event after the
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date of the occurrence of such Section 11(a)(ii) Event, the
number of Common Shares which is authorized by the Company's
certificate of incorporation but not outstanding or reserved
for issuance for purposes other than upon exercise of the
Rights is not sufficient to permit the exercise in full of the
Rights, the Company shall: (A) determine the excess of (1) the
value of the Common Shares, or Adjustment Shares in accordance
with Section 11(a)(ii), as the case may be, issuable upon the
exercise of a Right (the "Current Value") over (2) the
Purchase Price (such excess is herein called the "Spread"),
and (B) with respect to each Right, make adequate provision
to substitute for the Common Shares, or Adjustment Shares, as
the case may be, upon exercise of the Rights, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Shares of the same
or different class or other equity securities of the Company
(including, without limitation, shares, or units of shares, of
preference stock which the Board of Directors of the
Company (with the concurrence of a majority of the Continuing
Directors) has deemed to have substantially the same economic
value as Common Shares (such shares or units of shares of
preference stock are referred to herein as "common share
equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing having an
aggregate value equal to the Current Value, where such
aggregate value has been determined by the Board of Directors
of the Company (with the concurrence of a majority of the
Continuing Directors) based upon the advice of a nationally
recognized investment banking firm selected by the Board of
Directors of the Company (with the concurrence of a majority
of the Continuing Directors); provided, however, if the
Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within thirty (30) days
following the Distribution Date, or in the case of a Section
11(a)(ii) Event the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Section 23(a)
expires (the later of (x), and (y) being referred to herein as
the "Section 11(a)(ii) Trigger Date"), then the Company shall
be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price,
Common Shares (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board of Directors of the
Company (with the concurrence of a majority of the Continuing
Directors) shall determine in good faith that it is likely
that sufficient additional Common Shares could be authorized
for issuance upon exercise in full of the Rights, the thirty
(30) day period set forth above may be extended to the extent
necessary, but not more than one hundred twenty (120) days
after the Distribution Date or the Section 11(a)(ii) Trigger
Date, as the case may be, in order that the Company may seek
shareholder approval for the authorization of such additional
shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some
action should be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e), that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional securities and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this
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Section 11(a)(iii), the value of the Common Shares shall be
the current per share market price per Common Share (as
defined in Section 11(d)) on the Distribution Date or the
Section 11(a)(ii) Trigger Date, as the case may be, and the
value of any "common share equivalent" shall be deemed to have
the same value as the Common Shares on such date.
(b) In case the Company shall fix a record date for
the issuance of rights (other than the Rights), options or warrants
to all holders of Preference Shares entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe
for or purchase Preference Shares, or shares having the same rights,
privileges and preferences as Preference Shares ("equivalent
preference shares"), or securities convertible into Preference Shares
or equivalent preference shares at a price per Preference Share or
per equivalent preference share, or having a conversion price per
share, if a security convertible into Preference Shares or equivalent
preference shares, less than the current per share market price of
the Preference Shares (as determined pursuant to Section 11(d)) on
such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preference Shares
outstanding on such record date plus the number of Preference Shares
which the aggregate offering price of the total number of Preference
Shares and/or equivalent common shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the
denominator of which shall be the number of Preference Shares
outstanding on such record date plus the number of additional
Preference Shares and/or equivalent preference shares to be offered
for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in consideration part or all of which
shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board of Directors of the
Company (with the concurrence of a majority of the Continuing
Directors), whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of Rights. Preference Shares owned by or held for
the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date) is fixed, and in the event
that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price that would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of Preference Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, cash or assets (other than
a regular quarterly cash dividend out of the earnings or retained
earnings of the Company or a dividend payable in Preference Shares
but including a dividend payable in stock other than Preference
Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in
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effect immediately prior to such record date by a fraction, the
numerator of which shall be the current per share market price of the
Preference Shares (as determined pursuant to Section 11(d)) on such
record date less the fair market value (as determined in good faith
by the Board of Directors of the Company (with the concurrence of a
majority of the Continuing Directors), whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights) of the
portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to
one Preference Share and the denominator of which shall be such
current per share market price of the Preference Shares. 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 that
would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation
hereunder (other than computations made pursuant to Section
11(a)(iii)), the "current per share market price" of the
Common Shares on any date shall be deemed to be the average of
the daily closing prices per share of such Common Shares for
the twenty (20) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii),
the "current per share market price" of Common Shares on any
date shall be deemed to be the average of the daily closing
prices per share of such Common Shares for the ten (10)
consecutive Trading Days immediately following such date;
provided, however, that in the event that the current per
share market price of the Common Shares is determined during a
period following the announcement by the issuer of such Common
Shares of (1) a dividend or distribution on such Common Shares
payable in such Common Shares or securities convertible into
such Common Shares (other than the Rights), or (2) any
subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of twenty (20) Trading
Days, or ten (10) Trading Days, as set forth above, after the
ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to take
into account ex-dividend trading. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Common Shares are not
listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction
reporting system with respect to securities listed on the
principal United States national securities exchange on which
the Common Shares are listed or admitted to trading or, if the
Common Shares are not listed or admitted to trading on any
United States national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices in the United States over-the-counter market,
as reported by the National Association of Securities Dealers,
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<PAGE>
Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the Common Shares
are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a United States
professional market maker making a market in the Common Shares
selected by the Board of Directors of the Company (with the
concurrence of a majority of the Continuing Directors). If on
any such date no such market maker is making a market in the
Common Shares, the fair value of the Common Shares on such
date as determined in good faith by the Board of Directors of
the Company (with the concurrence of a majority of the
Continuing Directors) shall be used. The term "Trading Day"
shall mean a day on which the principal United States national
securities exchange on which the Common Shares are listed or
admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to trading
on any United States national securities exchange, a Business
Day. If the Common Shares are not publicly held or not 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 Company (with the concurrence of a
majority of the Continuing Directors), whose determination
shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes.
(ii) For the purpose of any computation
hereunder, the "current per share market price" of the
Preference Shares shall be determined in the same manner as
set forth above for Common Shares in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the
"current per share market price" of Preference Shares cannot
be determined in the manner provided above or if the
Preference Shares are not publicly held or listed or traded in
a manner described in Section 11(d)(i) hereof, the "current
per share market price" of Preference Shares shall be
conclusively deemed to be an amount equal to 1,000 (as such
number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to
the Common Shares occurring after the date of this Agreement)
multiplied by the "current per share market price" of the
Common Shares. If neither the Common Shares nor the
Preference Shares are publicly held or so listed or traded,
the "current per share market price" of Preference Shares
shall mean the fair value per share as determined in good
faith by the Company, acting by resolution of its Board of
Directors (which resolution shall be effective only with
the concurrence of a majority of the Continuing Directors),
whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the "current
per share market price" of one one-thousandth of a share of
Preference Stock shall be equal to the "current per share
market price" of one share of Preference Stock divided by
1,000.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments that
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.
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<PAGE>
All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one ten-thousandth of a Common Share or
other share or one-millionth of a Preference Share, 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), the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock of the Company other than Preference Shares, thereafter
the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner
and on terms as nearly equivalent as practicable to the provisions
with respect to the shares contained in Section 11(a), (b), (c), (e),
(g), (h), (i), (j), (k) and (m) and the provisions of Sections 7, 9,
10, 13 and 14 with respect to the Preference Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-thousandths of a Preference Share purchasable
from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11(b)
and (c), each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of one one-thousandth of a
Preference Share (calculated by the nearest one one-millionth of a
Preference Share) obtained by (i) multiplying (x) the number of one
one-thousandth of a share covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-thousandths
of a Preference 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-thousandths of
a Preference Share for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
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<PAGE>
time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be
at least 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 Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights on such record date Right
Certificates evidencing, subject to Section 14, the additional Rights
to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Preference Shares issuable upon the
exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of shares that 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 Preference Shares issuable upon exercise of the Rights,
the Company shall take any corporate action that may, in the opinion
of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Preference Shares at
such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made effective as
of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuing to the holder of
any Right exercised after such record date the Preference Shares and
other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preference Shares and other
capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to
such adjustment; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that in
their good faith judgment the Board of Directors of the Company (with
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the concurrence of a majority of the Continuing Directors) shall
determine to be advisable in order that any (i) consolidation or
subdivision of the Preference Shares, (ii) issuance wholly for cash
of any Preference Shares at less than the current market price, (iii)
issuance wholly for cash of Preference Shares or other securities
that by their terms are convertible into or exchangeable for
Preference Shares, (iv) dividends on Preference Shares payable in
Preference Shares or (v) issuance of rights, options or warrants
referred to hereinabove in this Section 11, hereafter made by the
Company to holders of its Preference Shares shall not be taxable to
such shareholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate with
any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), (ii) merge with or
into or engage in a share exchange with any other Person (other than
a Subsidiary of the Company in a transaction which complies with
Section 11(o)), or (iii) sell or transfer (or permit any Subsidiary
to sell or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at
the time of or immediately after such consolidation, merger, share
exchange or sale there are any rights, warrants, or other instruments
or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger, share exchange or sale,
the shareholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) shall have
received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it shall not, except as permitted by Section 23,
Section 24 or Section 27, take (or permit any Subsidiary to take) any
action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the date of this Agreement and prior to the Distribution Date
consolidate with, or merge with or into, any other Person for the
primary purpose of a change of domicile of the Company, and, in
connection with such consolidation or merger, all of the outstanding
Common Shares shall be changed into or exchanged for Common Shares of
the surviving corporation of such consolidation or merger (the
"Surviving Corporation"), then proper provision shall be made so that
Rights shall be associated with each Common Share of the Surviving
Corporation, except as provided in Section 7(e), such that the number
of Rights associated with each Common Share of the Surviving
Corporation following any such event shall equal the result obtained
by multiplying the number of Rights associated with each Common Share
immediately prior to such event by a fraction the numerator of which
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<PAGE>
shall be the total number of Common Shares outstanding immediately
prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares of the Surviving
Corporation which the Common Shares were changed into or exchanged
for pursuant to the consolidation or merger. Following such a
consolidation or merger, this Agreement shall remain in effect and
all references to the Company shall be deemed to be references to the
Surviving Corporation.
(q) Anything in this Agreement to the contrary
notwithstanding, in the event the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare
or pay any dividend on the Common Shares payable in Common Shares or
(ii) subdivide the outstanding Common Shares into a greater number
of shares (by reclassification or otherwise than by payment of
dividends in Common Shares) or (iii) combine or consolidate the
outstanding Common Shares of the Company into a smaller number of
shares, then in any such case, (x) the number of one one-thousandths
of a Preference Share purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number
of one one-thousandth of a Preference Share so purchasable
immediately prior to such event by a fraction, the numerator of which
is the number of Common Shares outstanding immediately before such
event and the denominator of which is the number of Common Shares
outstanding immediately after such event and (y) action shall be
taken such that each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to such event
had issued with respect to it. The adjustments provided for in this
Section 11(q) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation
is effected. If an event occurs which would require an adjustment
under Section 11(a)(ii) and this Section 11(q), the adjustments
provided for in this Section 11(q) shall be in addition and prior to
any adjustment required pursuant to Section 11(a)(ii).
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 or 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief statement of
the facts accounting for such adjustment, (b) promptly file with the
Rights Agent and with each transfer agent for the Common Shares and
Preference Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of record of a Right Certificate (or,
if prior to the Distribution Date, to each holder of record of a
certificate representing Common Shares) in accordance with Section
25. The Rights Agent shall be fully protected in relying on such
certificate and on any adjustment contained therein and shall not be
deemed to have knowledge of any 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, following the Shares
Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other
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<PAGE>
than a Subsidiary of the Company in a transaction which complies with
Section 11(o)), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger, (y) any Person
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o)) shall engage in a share exchange with or
shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such
share exchange, consolidation or merger and, in connection with such
share exchange, consolidation or merger, all or part of the
outstanding Common Shares shall be changed into or exchanged for
stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning
power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o)),
then, and in each such case proper provision shall be made so that
(i) each holder of a Right, except as provided
in Section 7(e), shall thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of
validly authorized and issued, fully paid, nonassessable and
freely tradeable Common Shares of the Principal Party (as such
term is hereinafter defined), not subject to any liens,
encumbrances, rights of call, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by
(1) multiplying the then current Purchase Price by the number
of one one-thousandths of a Preference Share for which a Right
was exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13
Event, multiplying the Purchase Price in effect immediately
prior to the first occurrence of a Section 11(a)(ii) Event by
the number of one one-thousandths of a Preference Share for
which a Right was exercisable immediately prior to such first
occurrence of a Section 11(a)(ii) Event) and (2) dividing that
product (such product following the first occurrence of a
Section 13 Event shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by 50%
of the current per share market price of the Common Shares of
such Principal Party (determined pursuant to Section 11(d)) on
the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant
to this Agreement;
(iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of
a Section 13 Event;
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<PAGE>
(iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a
sufficient number of Common Shares) in connection with the
consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its
Common Shares thereafter deliverable upon the exercise of the
Rights; and
(v) the provisions of Section 11(a)(ii) shall
be of no effect following the first occurrence of any Section
13 Event.
If, in the case of a transaction of the kind described
in clause (z) of the first sentence of this Section 13(a), the
Person or Persons to whom assets or earning power are sold or
otherwise transferred are individuals, then the preceding
sentences of this Section 13(a) shall be inapplicable, and the
Company shall require as a condition to such sale of transfer
that such Person or Persons pay to each holder of a Right
Certificate, upon its surrender to the Rights Agent and in
exchange therefor (without requiring payment by such holder),
cash in the amount determined by multiplying the then current
Purchase Price by the number of Common Shares for which a
Right is then exercisable.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the
Person that is the issuer of any securities for or into which
Common Shares of the Company are converted in such share
exchange, merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation; and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a), the Person
that is the party receiving the greatest portion of the assets
or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (1) if the Common 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; and
(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 having
the greatest aggregate market value.
(c) The Company shall not consummate any Section 13
Event unless the Principal Party shall have a sufficient number of
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<PAGE>
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 Company and such
Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that,
as soon as practicable after the date of any such Section 13 Event,
the Principal Party will:
(i) prepare and file a registration statement
under the Securities Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the
Rights under the securities or blue sky laws of such
jurisdictions as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 shall similarly apply to successive
share exchanges, mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall occur at any
time after the first occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a).
(d) The Company covenants and agrees that it will
not, after the Shares Acquisition Date, engage in any Section 13
Event if at the time of or after such event there are any charter or
by-law provisions or any rights, warrants or other instruments
outstanding or any other action taken which would diminish or
otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as
provided in Section 11(p), or to distribute Right Certificates
that 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 prior
to the date on which such fractional Rights would have been otherwise
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<PAGE>
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 United States 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 United States securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked
prices in the United States 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 United States
professional market maker making a market in the Rights selected by
the Board of Directors of the Company (with the concurrence of a
majority of the Continuing Directors). If on any such date no such
market maker is making a market in the Rights the fair value
of the Rights on such date as determined in good faith by the Board
of Directors of the Company (with the concurrence of a majority of
the Continuing Directors) shall be used.
(b) The Company shall not be required to issue
fractions of Preference Shares (other than fractions that are
integral multiples of one-thousandth of a Preference Share) upon
exercise of the Rights or to issue certificates which evidence
fractions of Preference Shares (other than fractions that are
integral multiples of one one-thousandth of a Preference Share).
Fractions of Preference Shares in integral multiples of one one-
thousandth of a Preference Share may, at the election of the Company,
be evidenced by depositary receipts pursuant to an appropriate
agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the
Preference Shares represented by such depositary receipts. In lieu
of fractional Preference Shares that are not integral multiples of
one one-thousandth of a Preference Share, the Company may pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one preference Share. For
purposes of this Section 14(b), the current market value of a
Preference Share shall be the closing price of a Preference Share (as
determined pursuant to the second sentence of Section 11(d)) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of an event described in
Section 11(a)(ii) here, the Company shall not be required to issue
fractions of Common Shares upon exercise of the Rights or to issue
certificates that evidence fractions of Common Shares. In lieu of
fractional interests in Common Shares, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Common Share. For
purposes of this Section 14(b), the current market value of a Common
Share shall be the closing price of a Common Share (as determined
pursuant to Section 11(d)) for the Trading Day immediately prior to
the date of such exercise.
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<PAGE>
(d) The holder of a Right by the acceptance of the
Rights expressly waives his right to receive any fractional Rights or
any fractional shares (except as provided by this Section 14) upon
exercise of a Right.
Section 15. Rights of Action. All rights of action in
respect of this Agreement, excepting the rights of action given to
the Rights Agent under Section 18, are vested in the respective
registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and
any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the Common Shares), may, in his
own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and will
be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder
of a Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the office of the Rights Agent
designated for such purpose, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and
certificates fully completed and duly executed;
(c) subject to Section 6 and Section 7(f), the
Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding
any notations of ownership or writing on the Right Certificates or
the associated Common Shares certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to Section
7(e), shall be affected by any notice to the contrary; and
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<PAGE>
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the
Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. 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 Preference Shares or any other securities of the
Company that may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in
any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon
any matter submitted to shareholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as
provided in Section 25), or to receive dividends 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. (a) The
Company agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution
of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct
on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending against
any claim of liability arising therefrom.
(b) The Rights Agent shall be protected and shall
incur no liability for, or in respect of any action taken, suffered
or omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate for
Preference Shares, Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to
be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper Person or Persons.
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<PAGE>
Section 19. Merger or Consolidation or Change of Name
of Rights Agent. (a) Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the stock transfer
or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights Agent
and deliver such Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certificates shall
have been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior
name or in its changed name, and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon
the following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to
the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the identity
or existence of any Acquiring Person and the determination of
"current per share market price") be proved or established by the
Company prior to taking or suffering any action hereunder, such fact
or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the chairman of the
board, the president, any vice president, the secretary, an assistant
secretary or the treasurer of the Company and delivered to the Rights
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<PAGE>
Agent; and such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad faith
or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements
and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the
provisions of Section 11 or Section 13 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 change or adjustment
(except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any Preference Shares or Common Shares to be issued pursuant to this
Agreement or any Right Certificate or as to whether any Preference
Shares or Common Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent
of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of
its duties hereunder from any one of the chairman of the board, the
president, any vice president, the secretary or the treasurer of
the Company, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may
be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other
Person.
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<PAGE>
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents, and
the Rights Agent shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company resulting from any such act, default, neglect
or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof.
(j) If, with respect to any Right Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of election
to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof, the
Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the
Company.
Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 60 days' notice in writing mailed to
the Company and to each transfer agent of the Common Shares and
Preference Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common
Shares and Preference Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the
holder of record of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business
under the laws of the United States or any state of the United States
so long as such corporation is authorized to do business as a banking
institution, is in good standing, is authorized under such laws to
exercise corporate trust powers, and i subject to supervision or
examination by federal or state authority, and has at the time of its
appointment /as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company
shall file notice with the predecessor Rights Agent and each transfer
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<PAGE>
agent of the Common Shares, and mail a notice thereof in writing
to the holders of record of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation
or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be approved
by its Board of Directors to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made
in accordance with the provisions of this Agreement. In addition,
in connection with the issuance or sale of Common Shares following
the Distribution Date and prior to the redemption or expiration of
the Rights, the Company (a) shall, with respect to Common Shares so
issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company (with the concurrence of a majority
of the Continuing Directors), issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or
sale; provided, however, that (i) no such Right Certificate shall be
issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or to the Person to
whom such Right Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that,
appropriate adjustments shall otherwise have been made in lieu of the
issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (i) the Close of Business
on the tenth calendar day following the Shares Acquisition Date (or,
if the Shares Acquisition Date occurred prior to the Record Date, the
Close of Business on the tenth calendar day following such Record
Date) or (ii) the Close of Business on the Final Expiration Date,
redeem all, but not less than all, of the then outstanding Rights at
a redemption price of $.001 per Right, 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"); provided,
however, that if such authorization occurs on or after the date of a
change (resulting from a proxy or consent solicitation) in a majority
of the directors in office at the commencement of such solicitation,
and any Person who is or was a participant in such solicitation has
stated (or if upon the commencement of such solicitation, a majority
of the Board of Directors of the Company has determined in good
faith) that such Person (or any of its Affiliates or Associates) has
taken or intends to take, or may consider taking, any action that
would result in such Person becoming an Acquiring Person or that
would cause the occurrence of a Triggering Event (the existence of
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<PAGE>
the circumstances described in this proviso being referred to herein
as an "Adverse Change of Control"), then the Rights may be so
redeemed only if there are Continuing Directors (as hereinafter
defined) in office and such redemption is authorized by a majority of
such Continuing Directors. Notwithstanding the foregoing, in the
event payment of the Redemption Price to a holder of Rights would
result in the payment of an amount not equal to $.01 or an integral
multiple of $.01, the amount to be paid shall be rounded upward to
the next $.01. Notwithstanding anything contained in this Agreement
to the contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption set forth in the first sentence of this
Section 23(a) has expired. The Company, may, at its option, pay
the Redemption Price in cash (whether in United States dollars or in
such other currency or currencies as the Board of Directors may
determine), Common Shares (based on the current market price per
share at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors (with the concurrence of
a majority of the Continuing Directors).
(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights, 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.
Within ten (10) days after action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such
redemption to the holders of the then outstanding Rights by mailing
such notice to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for
the Common Shares. Any notice that 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
Company 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 Section 24 and
other than in connection with the purchase of Common Shares prior to
the Distribution Date.
Section 24. Exchange.
(a) The Board of Directors of the Company 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 void pursuant to
the provisions of Section 7(e)) for Common Shares, each Right being
exchangeable for one Common Share, appropriately adjusted to reflect
any transaction specified in Section 11(a)(i) occurring after the
date hereof (such number of Common Shares issuable in exchange for
one Right being referred to herein as the "Exchange Shares").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other
than any Exempt Person), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
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<PAGE>
(b) Immediately upon the action of the Board of
Directors of the Company 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 the Exchange Shares. The Company shall promptly
give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights
Agent. Any notice that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each
such notice of exchange will state the method by which the exchange
of the 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 void pursuant to the
provisions of Section 7(e)) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preference Shares (or any
other series of preference stock of the Company containing terms
substantially similar to the terms of the Preference Shares) for some
or all of the Common Shares exchangeable for Rights, at the initial
rate of one one-thousandth of a Preference Share (or of such other
series of preference stock of the Company) for each Common Share, as
appropriately adjusted to reflect adjustments in the voting rights of
the Preference Shares pursuant to the terms thereof, so that the
fraction of a Preference Share (or of such other series of preference
stock of the Company) 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 or Preference Shares issued but not outstanding, or
authorized but unissued, to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional
Common Shares or Preference Shares for issuance upon exchange of the
Rights or shall take such other action specified in Section
11(a)(iii).
(e) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of
the current market value of a whole Common Share. For the purposes
of this subsection (e), the current market value of a whole Common
Share shall be the closing price of a Common Share (as determined
pursuant to the second and third sentences of Section 11(d) hereof)
for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
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<PAGE>
Section 25. Notice of Certain Events. (a) In case the
Company shall propose, at any time after the Distribution Date, (i)
to pay any dividend payable in stock of any class to the holders of
its Preference Shares or to make any other distribution to the
holders of its Preference Shares (other than a regular quarterly cash
dividend) or (ii) to offer to the holders of its Preference Shares
rights or warrants to subscribe for or to purchase any additional
Preference Shares or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any
reclassification of its Preference Shares (other than a
reclassification involving only the subdivision of outstanding
Preference Shares), or (iv) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company
in a transaction that complies with Section 11(o)), 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 Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions, each of which complies with Section 11(o)), or (v) to
effect the liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26, a notice of such
proposed action that 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
Common Shares and/or Preference Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the
record date for determining holders of the Common Shares and/or
Preference Shares for purposes of such action, and in the case of any
such other action, at least 20 days prior to the date of the taking
of such proposed action or the date of participation therein by the
holders of the Common Shares and/or Preference Shares, whichever
shall be the earlier.
(b) In case a Triggering Event shall occur, then, in
any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, in accordance
with Section 26, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders
of Rights under Section 11(a)(ii) or Section 13 and (ii) all
references in the preceding paragraph to Preference Shares shall be
deemed thereafter to refer to Common Shares and/or other securities,
if appropriate.
The failure to give notice required by this Section 25
or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote on any such action.
- 36 -
<PAGE>
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
South Jersey Industries, Inc.
Number 1 South Jersey Plaza
Route 54
Folsom, NJ 08037
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall
be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with
the Company) as follows:
The Farmers & Merchants National Bank of
Bridgeton
53 S. Laurel Street
Box 40
Bridgeton, NJ 08302
Attention: Senior Trust Officer
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Right
Certificate (or, if prior to the Distribution Date, to the holder of
certificates representing Common Shares) shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to
such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the
earliest of (i) the Distribution Date, (ii) the occurrence of a
Triggering Event or (iii) an Adverse Change of Control, the Company
may and the Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement in any respect whatsoever
(including supplements or amendments that may be deemed to affect the
interests of the holders of Right Certificates adversely) without the
approval of any holders of certificates representing Common Shares
and associated Rights. From and after the earliest of (i) the
Distribution Date, (ii) the occurrence of a Triggering Event or (iii)
an Adverse Change of Control, the Company may and the Rights Agent
shall, if the Company so directs (upon approval of a majority of the
Continuing Directors then in office), supplement or amend this
Agreement without the approval of any holders of Right Certificates
(x) in any manner that will not adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person), or (y) in order
to cure any ambiguity or to correct or supplement any provision
- 37 -
<PAGE>
contained herein which, in the good faith determination of a majority
of the Continuing Directors then in office, may be defective or
inconsistent with the other provisions contained herein, or (z) to
shorten or lengthen any time period hereunder; provided, however,
that, from and after the earliest of (i) the Distribution Date, (ii)
the occurrence of a Triggering Event, or (iii) an Adverse Change of
Control, this Agreement shall not be supplemented or amended to
lengthen (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 (other than an Acquiring Person or
any Affiliate or Associate of an Acquiring Person). Upon the
delivery of a certificate from an officer of the Company or, so long
as any Person is an Acquiring Person hereunder, the Continuing
Directors, that 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. Notwithstanding anything
contained in this Agreement to the contrary, but subject to the next
succeeding paragraph, no supplement or amendment shall be made that
changes the Redemption Price, accelerates the Final Expiration Date,
changes the Purchase Price, or changes the number of Common Shares
for which a Right is exercisable without the approval of a majority
of the Continuing Directors then in office. Prior to the
Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Shares.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company or
the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors. For all purposes of this Agreement, any calculation of
the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of
such outstanding Common Shares of which any person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing
Directors) shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein,
the Continuing Directors) or to the Company, or as may be necessary
or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause
(y) below, all omissions with respect to the foregoing) which are
done or made by the Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing
Directors) in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all
other parties and (y) not subject the Board or the Continuing
Directors to any liability to the holders of the Rights.
- 38 -
<PAGE>
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the registered holders of the Common Shares).
Section 31. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to
the contrary, if any such term, provision, covenant or restriction is
held by such court or authority to be invalid, void or unenforceable
and the Board of Directors of the Company (with the concurrence of a
majority of the Continuing Directors) determines in its good faith
judgment that severing the invalid language of this Agreement would
adversely affect the purpose or effect of this Agreement, the right
of redemption set forth in Section 23 shall be reinstated and shall
not expire until the close of business on the tenth day following the
date of such determination by the Board of Directors. Without
limiting the foregoing, if any provision of this Agreement requiring
that a determination be made by the Board of Directors (with the
concurrence of a majority of the Continuing Directors) is held by a
court of competent jurisdiction or other authority to be invalid,
void, or unenforceable, such determination shall then be made by the
Board of Directors in accordance with applicable law and the
Company's certificate of incorporation and by-laws.
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 New Jersey and for all
purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed
entirely within such State.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
Section 34. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
- 39 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first
above written.
SOUTH JERSEY INDUSTRIES, INC.
By: /s/ Gerald S. Levitt
Name: Gerald S. Levitt
Title: Vice President
THE FARMERS & MERCHANTS NATIONAL
BANK OF BRIDGETON
By: /s/ John P. Ritter
Name: John P. Ritter
Title: Vice President
- 40 -
<PAGE>
Exhibit A
SOUTH JERSEY INDUSTRIES, INC.
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
Pursuant to the provisions of Section 14A:7-2(2) of the
New Jersey Business Corporation Act, the undersigned Corporation
executes the following Certificate of Amendment to its Certificate of
Incorporation.
1. The name of the Corporation is SOUTH JERSEY
INDUSTRIES, INC.
2. The following resolution, establishing and
designating a series of shares and fixing and determining the
relative rights and preferences thereof was duly adopted by the Board
of Directors of the Corporation on the 20th day of September, 1996,
pursuant to authority vested in it by the Certificate of
Incorporation:
RESOLVED, that pursuant to the authority vested
in the Board of Directors of the Corporation by the
Certificate of Incorporation the Board of Directors does
hereby provide for the issue of a series of Preference Stock,
without par value, of the Corporation, to be designated
"Series A Junior Participating Preference Stock" (hereinafter
referred to as the "Series A Preference Stock"), initially
consisting of 15,000 shares, and to the extent that the
designations, relative rights, preferences and limitations of
the Series A Preference Stock are not stated and expressed in
the Certificate of Incorporation, does hereby fix and herein
state and express such designations, relative rights,
preferences and limitations thereof, as follows (all terms
used herein which are defined in the Certificate of
Incorporation shall be deemed to have the meanings provided
therein):
Section 1. Designation and Amount. The shares
of such series shall be designated as "Series A Junior
Participating Preference Stock" and the number of shares
constituting such series shall be 15,000. Such number of
shares may be increased or decreased by resolution of the
Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Junior Participating
Preference Stock to a number less than the number of shares
reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible
into Series A Junior Participating Preference Stock.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of
the holders of any shares of any series of Preference Stock
ranking prior and superior to the shares of Series A Junior
Participating Preference Stock with respect to dividends, the
<PAGE>
holders of shares of Series A Junior Participating Preference
Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on March 31,
June 30, September 30 and December 31 in each year (each such
date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction
of a share of Series A Junior Participating Preference Stock,
in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $10 or (b) subject to the provision for
adjustment hereinafter set forth, 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $1.25 per
share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share
of Series A Junior Participating Preference Stock. In the
event the Corporation shall at any time after September 20,
1996 (the "Rights Declaration Date") (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares
of Series A Junior Participating Preference stock were
entitled immediately prior to such event under clause (b) of
the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number
of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preference
Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall
have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10
per share on the Series A Junior Participating Preference
Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior
Participating Preference Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preference Stock, unless the
date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the
A-2
<PAGE>
date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Junior Participating Preference Stock entitled to receive
a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior
Participating Preference 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 A Junior Participating
Preference Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no
more than 30 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights. The holders of shares
of Series A Junior Participating Preference Stock shall have
the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior
Participating Preference Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of
the shareholders of the Corporation. In the event the
Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Junior
Participating Preference Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of common
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by
law, the holders of shares of Series A Junior Participating
Preference Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a
vote of shareholders of the Corporation.
(C) (i) If at any time dividends on any
Series A Junior Participating Preference Stock shall be
in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency
shall mark the beginning of a period (herein called a
"default period") which shall extend until such time
when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly
dividend period on all shares of Series A Junior
Participating Preference Stock then outstanding shall
A-3
<PAGE>
have been declared and paid or set apart for payment.
During each default period, all holders of Preference
Stock (including holders of the Series A Junior
Participating Preference Stock) with dividends in
arrears in an amount equal to six (6) quarterly
dividends thereon, voting as a class, irrespective of
series, shall have the right to elect two (2) Directors.
(ii) During any default period, such
voting right of the holders of Series A Junior
Participating Preference Stock may be exercised
initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual
meeting of shareholders, and thereafter at annual
meetings of shareholders, provided that neither such
voting right nor the right of the holders of any other
series of Preference Stock, if any, to increase, in
certain cases, the authorized number of Directors shall
be exercised unless the holders of ten percent (10%) in
number of shares of Preference Stock outstanding shall
be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect
the exercise by the holders of Preference Stock of such
voting right. At any meeting at which the holders of
Preference Stock shall exercise such voting right
initially during an existing default period, they shall
have the right, voting as a class, to elect Directors to
fill such vacancies, if any, in the Board of Directors
as may then exist up to two (2) Directors or, if such
right is exercised at an annual meeting, to elect two
(2) Directors. If the number which may be so elected at
any special meeting does not amount to the required
number, the holders of the Preference Stock shall have
the right to make such increase in the number of
Directors as shall be necessary to permit the election
by them of the required number. After the holders of
the Preference Stock shall have exercised their right to
elect Directors in any default period and during the
continuance of such period, the number of Directors
shall not be increased or decreased except by vote of
the holders of Preference Stock as herein provided or
pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior
Participating Preference Stock.
(iii) Unless the holders of Preference
Stock shall, during an existing default period, have
previously exercised their right to elect Directors,
the Board of Directors may order, or any shareholder or
shareholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of
Preference Stock outstanding, irrespective of series,
may request, the calling of special meeting of the
holders of Preference Stock, which meeting shall
thereupon be called by the President, a Vice-President
or the Secretary of the Corporation. Notice of such
meeting and of any annual meeting at which holders of
Preference Stock are entitled to vote pursuant to this
paragraph (C)(iii) shall be given to each holder of
record of Preference Stock by mailing a copy of such
A-4
<PAGE>
notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be
called for a time not earlier than 20 days and not later
than 60 days after such order or request or in default
of the calling of such meeting within 60 days after such
order or request, such meeting may be called on similar
notice by any shareholder or shareholders owning in the
aggregate not less than ten percent (10%) of the
total number of shares of Preference Stock outstanding.
Notwithstanding the provisions of this paragraph
(C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the
shareholders.
(iv) In any default period, the holders
of Common Stock, and other classes of stock of the
Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until
the holders of Preference Stock shall have exercised
their right to elect two (2) Directors voting as a
class, after the exercise of which right (x) the
Directors so elected by the holders of Preference Stock
shall continue in office until their successors shall
have been elected by such holders or until the
expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in
paragraph (C)(ii) of this Section 3) be filled by vote
of a majority of the remaining Directors theretofore
elected by the holders of the class of stock
which elected the Director whose office shall have
become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class
of stock shall include Directors elected by such
Directors to fill vacancies as provided in clause (y) of
the foregoing sentence.
(v) Immediately upon the expiration of a
default period, (x) the right of the holders of
Preference Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the
holders of Preference Stock as a class shall terminate,
and (z) the number of Directors shall be such
number as may be provided for in the articles of
incorporation or by-laws irrespective of any increase
made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by
law or in the articles of incorporation
or by-laws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the
remaining Directors.
(D) Except as set forth herein, holders of
Series A Junior Participating Preference Stock shall have no special
voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
A-5
<PAGE>
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Junior
Participating Preference Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Junior
Participating Preference Stock outstanding shall have been paid in
full, the Corporation shall not
(i) declare or pay dividends on, make
any other distributions on, or redeem or purchase or
otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A
Junior Participating Preference Stock;
(ii) declare or pay dividends on or make
any other distributions on any shares of stock ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preference Stock, except dividends paid
ratably on the Series A Junior Participating Preference
Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on
a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior
Participating Preference Stock, provided that the
corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A
Junior Participating Preference Stock; or
(iv) purchase or otherwise acquire for
consideration any shares of Series A Junior
Participating Preference Stock, or any shares of
stock ranking on a parity with the Series A Junior
Participating Preference Stock, except in accordance
with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board
of Directors, after consideration of the
respective annual dividend rates and other relative
rights and preferences of the respective series and
classes, shall determine in good faith will result in
fair and equitable treatment among the respective series
or classes.
A-6
<PAGE>
(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 A Junior Participating Preference Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares
of Preference Stock and may be reissued as part of a new series of
Preference Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on
issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding
Up.
(A) Upon any liquidation (voluntary or
otherwise), dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preference Stock
unless, prior thereto, the holders of shares of Series A Junior
Participating Preference Stock shall have received $10 per share,
plus an amount equal to accrued and unpaid dividends and distribution
thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the
full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A
Junior Participating Preference Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as
appropriately adjusted as set forth in subparagraph C below to
reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of the
full amount of the Series A Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series A Junior
Participating Preference Stock and Common Stock, respectively,
holders of Series A Junior Participating Preference Stock and holder
of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preference
Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all other
series of preference stock, if any, which rank on a parity with the
Series A Junior Participating Preference Stock, then such remaining
assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to
permit payment in full of the Common Adjustment, then such remaining
assets shall be distributed ratably to the holders of Common Stock.
A-7
<PAGE>
(C) In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
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
A Junior Participating Preference Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 1,000 times
the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for
which each share of Common Stock is changed or exchanged. In the
event the Corporation shall at any time after the Rights Declaration
Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Series A Junior
Participating Preference Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series
A Junior Participating Preference Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior
Participating Preference Stock shall rank junior to all other series
of the Corporation's Preference Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series
shall provide otherwise.
A-8
<PAGE>
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 A Junior Participating Preference
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
A Junior Participating Preference Stock, voting separately as a
class.
Section 11. Fractional Shares. Series A Junior
Participating Preference Stock may be issued in fractions of a share
which shall entitle the holder, in proportion to such holders
fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other
rights of holders of Series A Junior Participating Preference Stock.
3. The resolution was adopted by the Board of
Directors at a meeting duly called and held on September 20, 1996, at
which a quorum was present throughout.
4. The Certificate of Incorporation of the
Corporation is amended so that the designation and number of shares
of the class and series acted upon in the resolution, and the
relative rights, preferences and limitations of such class and series
are as stated in the resolution.
IN WITNESS WHEREOF, this Certificate of Amendment is
executed on behalf of the Corporation by its President and attested
by its Secretary this ____ day of October, 1996.
SOUTH JERSEY INDUSTRIES, INC.
By: /s/ William F. Ryan
ATTEST:
By: /s/ G. L. Baulig
A-9
<PAGE>
Exhibit B
[Form of Right Certificate]
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 20, 2006 OR EARLIER IF
NOTICE OF REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT
TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. THE RIGHTS SHALL NOT
BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A
HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE
EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH
JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE. [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 AN ASSOCIATE OF AN ACQUIRING PERSON. THIS
RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]
Right Certificate
SOUTH JERSEY INDUSTRIES, INC.
This certifies that____________________, or registered
assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of
September 20, 1996 (the "Rights Agreement"), between South Jersey
Industries, Inc., a New Jersey corporation (the "Company"), and The
Farmers & Merchants National Bank of Bridgeton (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date
(as such term is defined in the Rights Agreement) and prior to 5:00
P.M. ( Eastern time) on September 20, 2006 at the office of the
<PAGE>
Rights Agent designated for such purpose, or at the office of its
successors as Rights Agent, one one-thousandth of a fully paid
and non-assessable share of Series A Junior Participating Preference
Stock, without par value and liquidation preference $10 per share
(the "Preference Shares") (or in certain circumstances, cash,
property or other securities of the Company), at a purchase price of
$90.00 per one one-thousandth of a Preference 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 Preference Shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price set forth
above, are the number and Purchase Price as of September 20, 1996
based on the Preference Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price
and the number of Preference Shares or other securities that 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 Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned
offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office of the Rights Agent
designated for such purpose, may be exchanged for another
Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate
number of Preference Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled
such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Right Certificates for the number
of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may, but are not required to, be
redeemed by the Company at a redemption price of $.001 per Right,
payable in cash, Common Shares or any other form of consideration
deemed appropriate by the Company's Board of Directors.
B-2
<PAGE>
No fractional Preference Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
fractional shares that are integral multiples of one one-thousandth
of a Preference Share, which may, at the Company's election, be
evidenced by depositary receipts), but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose
the holder of the Preference Shares or of any other securities of the
Company that may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this 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 Company and its corporate seal. Dated as of ______________,
_____.
SOUTH JERSEY INDUSTRIES, INC.
By:____________________________
Countersigned:
THE FARMERS & MERCHANTS
NATIONAL BANK OF BRIDGETON
By: _________________________________
B-3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates)
FOR VALUE RECEIVED____________________________________
hereby sells, assigns and transfers unto ____________________________
_____________________________________________________________________
___________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
__________________ Attorney, to transfer the within Right Certificate
on the books of the within-named Company, with full power of
substitution.
Dated:_______________, ____
_______________________________
Signature
Signature Guaranteed: __________________________
Signatures must be guaranteed by a member firm of a
registered United States national securities exchange, a member of
the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United
States.
B-4
<PAGE>
_____________________________________________________________________
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being
sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement),
and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person.
Dated: ________________________, ____
_______________________________
Signature
Signature Guaranteed: ____________________________________________
Signatures must be guaranteed by a member firm of a
registered United States national securities exchange, a member of
the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United
States.
_____________________________________________________________________
NOTICE
The signatures to the foregoing Assignment and
Certificate must correspond to the name as written upon the face of
this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
B-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To: South Jersey Industries, Inc.
The undersigned hereby irrevocably elects to exercise
_________________________ Rights represented by this Right
Certificate to purchase the Preference Shares issuable upon the
exercise of such Rights (or such other securities of the Company or
of any other person which may be issuable upon exercise of the
Rights) and requests that certificates for such securities be issued
in the name of and delivered to:
_____________________________________________________________________
(Please print name and address)
_____________________________________________________________________
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the name of
and delivered to:
_____________________________________________________________________
(Please print name and address)
_____________________________________________________________________
(Please insert social security or other identifying number)
Dated: ______________________, ____
________________________
Signature
Signature Guaranteed: ___________________________
Signatures must be guaranteed by a member firm of a registered
United States national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
B-6
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) Rights evidenced by this Rights Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement),
and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person.
Dated:_____________________, ____
_______________________
Signature
Signature Guaranteed: __________________________
Signatures must be guaranteed by a member firm of a
registered United States national securities exchange, a member of
the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United
States.
_____________________________________________________________________
NOTICE
The signatures in the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of
this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
WARNING
In the event the Certificate set forth above in the
Assignment and Election to Purchase is not completed, the Company
will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate
of such Acquiring Person (as defined in the Rights Agreement), and
such Assignment or Election to Purchase will not be honored.
B-7
<PAGE>
Exhibit C
SOUTH JERSEY INDUSTRIES, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERENCE STOCK
On September 20, 1996, the Board of Directors of South
Jersey Industries, Inc., a New Jersey corporation (the "Company"),
declared a dividend distribution of one Right for each outstanding
share of Company Common Stock (the "Common Stock") to shareholders of
record at the close of business on October 11, 1996. Each Right
entitles the registered holder to purchase from the Company one one-
thousandth of a share of a newly-created series of preference stock,
without par value (the "Preference Stock"), at a price of $90.00 per
one one-thousandth share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in
the Rights Agreement between the Company and First Union National
Bank, as Rights Agent (the "Rights Agent").
Initially, the Rights will be evidenced by the Common
Stock certificates representing shares then outstanding, and no
separate Right Certificates will be distributed. The Rights will
become exercisable and will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) ten calendar
days after a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") has acquired, or
obtained the right to acquire, beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the "Shares
Acquisition Date") or (ii) ten business days (or such later date as
the Board of Directors determines, or if an Adverse Change of
Control, as a majority of the Continuing Directors determines (as
such terms are defined herein)) after the public announcement of a
tender offer or exchange offer that, if successful, would result in a
person or group beneficially owning 10% or more of such outstanding
shares of Common Stock.
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred
with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after October 11, 1996 will contain a
notation incorporating the Rights Agreements by reference and (iii)
the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on September 20, 2006,
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
<PAGE>
thereafter, the separate Right Certificates alone will represent the
Rights. Except as otherwise determined by the Board of Directors,
only shares of Common Stock issued prior to the Distribution Date
will be issued with Rights.
The new series of Preference Stock issuable upon
exercise of the Rights will be non-redeemable and will rank junior to
all other series of the Company's preference stock. Each whole share
of Preference Stock will be entitled to receive a quarterly
preferential dividend of $10 per share and will be entitled to
receive, in the aggregate, a dividend of 1,000 times the dividend
declared on the Common Stock. In the event of liquidation, the
holders of the Preference Stock will be entitled to receive a
preferential liquidation payment of $10 per share and will be
entitled to receive, in the aggregate, a liquidation payment equal to
1,000 times the payment made per share of Common Stock. Each share
of Preference Stock will have 1,000 votes, voting together with the
Common Stock. Finally, in the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged for
or converted into other stock or securities, cash and/or
other property, each share of Preference Stock will be entitled to
receive 1,000 times the amount received per share of Common Stock.
The foregoing rights will be protected against dilution in the event
additional shares of Common Stock or Preference Stock are issued.
The dividends, liquidation and voting rights, and the non-redemption
feature of the Preference Stock are designed so that the value of the
one one-thousandth interest in a share of Preference Stock
purchasable with each Right will approximate the value of one
share of Common Stock.
In the event that, at any time following the Shares
Acquisition Date, the Company is acquired in a merger or other
business combination transaction (except certain transactions with a
person who became an Acquiring Person as a result of a tender offer
described in the next succeeding paragraph) or 50% or more of its
assets, cash flow or earning power is sold, proper provision shall be
made so that each holder of a Right shall thereafter have the right
to receive, upon the exercise thereof at the then current exercise
price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction would have a
market value (as defined in the Rights Agreement) of two times the
Purchase Price of the Right. In the event that, after the Shares
Acquisition time, the Company were the surviving corporation of a
merger and the Common Stock was changed or exchanged, proper
provision shall be made so that each holder of a Right will
thereafter have the right to receive upon exercise that number of
shares of Common Stock having a market value of two times the
exercise price of the Right.
In the event that a person or group becomes an Acquiring
Person, proper provision shall be made so that each holder of a Right
(other than the Acquiring Person) will thereafter have the right to
receive upon exercise that number of shares of Common Stock (or, in
certain circumstances, cash, a reduction in the Purchase Price,
Common Stock, or other equity securities of the Company, debt
securities of the Company, other property or a combination thereof)
having a market value (as defined in the Rights Agreement) of
two times the Purchase Price of the Right. Notwithstanding any of
the foregoing, following the occurrence of any of the events set
forth in this paragraph, all Rights that are, or (under certain
C-2
<PAGE>
circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person (or an affiliate, associate or
transferee thereof) will be null and void. A person will not be an
Acquiring Person if the Board of Directors of the Company determines
that such person or group became an Acquiring Person inadvertently
and such person or group promptly divests itself of a sufficient
number of shares of Common Stock so that such person or group is no
longer an Acquiring Person.
The Purchase Price payable, and the number of shares of
Preference Stock or other securities or property issuable, upon
exercise of the Rights are subject to customary adjustments from time
to time to prevent dilution in the event of certain changes in the
Preference Stock or Common Stock or distributions on such stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the
Purchase Price. The Company will not be required to issue fractional
shares of Preference Stock (other than fractions that are integral
multiples of one one-thousandth of a share, which may, at the
election of the Company, be evidenced by depositary receipts) and in
lieu thereof, a payment in cash will be made based on the then
current market value of the Preference Stock.
In general, the Company may redeem the Rights in whole,
but not in part, at a price of $.001 per Right, at any time until ten
days following the Shares Acquisition Date, upon the affirmative vote
of a majority of the Board of Directors; provided, however, that
if the authorization to redeem the Rights occurs on or after the date
of a change in a majority of the Board of Directors of the company as
a result of a proxy or consent solicitation and a person who was a
participant in such solicitation has stated that such person (or any
of its affiliates or associates) has taken or intends to take or may
consider taking actions that would result in such person becoming an
Acquiring Person or cause the Company to be acquired in a merger or
other similar business combination (the existence of these
circumstances being an "Adverse Change of Control"), then the
redemption of the Rights will require the approval of a majority of
the Continuing Directors. Immediately upon the action of the Board
of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to
receive the $.001 redemption price.
The term "Continuing Director" means a director of the
Company who is not an Acquiring Person or an affiliate or associate
of an Acquiring Person (or a representative of an Acquiring Person or
an affiliate or associate of an Acquiring Person), and who either
was a member of the Board of Directors prior to September 20, 1996 or
who subsequently became a director of the Company and whose initial
election or initial nomination for election by the Company's
shareholders subsequent to such date was approved by a vote of a
majority of the Continuing Directors then on the Board of Directors.
C-3
<PAGE>
At any time after any person becomes an Acquiring Person
and prior to the acquisition by any person of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may
exchange the then outstanding and exercisable Rights (other than
Rights owned by an Acquiring Person, which will have become null and
void), in whole or in part, for Common Shares, each Right being
exchangeable for one Common Share, subject to adjustment. The
Company, at its option, may substitute one one-thousandth of a share
of preference stock (or other series substantially similar preferred
stock of the Company) for each share of Common Stock to be exchanged.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
Any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the
earliest of the Distribution Date or an Adverse Change of Control.
After the first to occur of such events, the provisions of the Rights
Agreement may be amended with the approval of a majority of the
Continuing Directors in order (x) to make change that do not
adversely affect the interests of holders of the Rights (other than
the interests of any Acquiring Person), (y) to cure any ambiguity or
correct or supplement any provision which may be defective or
inconsistent with other provisions contained in the Rights Agreement,
or (z) to shorten or lengthen any time period under the
Rights Agreement, but after the Distribution Date or an Adverse
Change of Control, no time period relating to redemption of the
Rights may be lengthened so as to make the Rights redeemable at a
time at which the Rights had not been redeemable and no other
time period may be lengthened unless for the purpose of protecting,
enhancing or clarifying the rights or benefits of holders of the
Rights.
The Rights have certain anti-takeover effects. The
Rights will cause substantial dilution to a person or group that
attempts to acquire the Company without conditioning the offer on a
substantial number of Rights being acquired. Accordingly, the
existence of the Rights may deter certain acquirors from making
takeover proposals or tender offers. However, the rights plan helps
ensure that the Company's shareholders receive fair and equal
treatment in the event of any proposed takeover of the Company.
The adoption of the plan is not in response to any specific takeover
threat or proposal, but is a precaution taken to protect the rights
of the Company's shareholders.
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 October , 1996 and is available to
registered holders of the Rights free of charge from the
Rights Agent. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference
to the Rights Agreement, which is incorporated herein by reference.
C-4
<PAGE>
