TEXAS UTILITIES COMPANY
and
THE BANK OF NEW YORK,
Rights Agent
Rights Agreement
Dated as of February 19, 1999
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 19, 1999, between
TEXAS UTILITIES COMPANY, a Texas corporation (the "Company"), and
THE BANK OF NEW YORK (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has
authorized and declared a dividend distribution of one right (a
"Right") for each share of Common Stock (as hereinafter defined)
of the Company outstanding at the close of business on March 1,
1999 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a share of Preference Stock (as
such term is hereinafter defined), upon the terms and subject to
the conditions herein set forth, and has further authorized and
directed the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section
11(i) hereof) with respect to each share of Common Stock that
shall become outstanding between the Record Date and the earliest
of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
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Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Voting Shares (as such
term is hereinafter defined) then outstanding but shall not
include (i) the Company, any Subsidiary (as such term is
hereinafter defined) of the Company or any employee benefit plan
of the Company or of any Subsidiary of the Company, or any Person
who would otherwise be an Acquiring Person solely because of such
Person's holding shares of Common Stock for or pursuant to the
terms of any such plan or any trustee, administrator or fiduciary
of any such plan; (ii) any Person who or which, together with all
Affiliates and Associates of such Person, becomes the Beneficial
Owner of 15% or more of the Voting Shares solely as a result of a
change in the aggregate number of Voting Shares outstanding since
the last date on which such Person acquired Beneficial Ownership
of any of the Voting Shares constituting all or a portion of such
15% or more of the Voting Shares, provided, however, that if a
Person would, but for the provisions of this clause (ii), become
an Acquiring Person by reason of share purchases by the Company
and shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Voting Shares at any time that
the Person is or thereby becomes the Beneficial Owner of 15% or
more of the Voting Shares then outstanding (not as a result of
any action or transaction contemplated in this clause (ii) or in
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clause (iii) below), then such Person shall be deemed to be an
"Acquiring Person"; (iii) any Person who or which shall become an
"Acquiring Person" solely as a result of an action or transaction
or series of related actions or transactions approved by the
Board of Directors of the Company before such Person would
otherwise have become an "Acquiring Person"; provided, however,
that if any Person which, but for the foregoing provisions of
this clause (iii), would have become an "Acquiring Person" shall
thereafter acquire additional Voting Shares (not as a result of
any action or transaction contemplated in clause (ii) or in this
clause (iii)), then such person shall be deemed to be an
"Acquiring Person"; and (iv) any Person who or which, together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 15% or more of the Voting Shares in the good
faith belief that such acquisition would not (x) cause such
Person and its Affiliates and Associates to become the Beneficial
Owner of 15% or more of the Voting Shares and such Person relied
in good faith in computing the percentage of its voting power on
publicly filed reports or documents of the Company which are
inaccurate or out-of-date or (y) otherwise cause a Distribution
Date or the adjustment provided for in Section 11(a) to occur.
Notwithstanding clause (iv) of the immediately preceding
sentence, if any Person is excluded from the definition of
"Acquiring Person" solely due to such clause (iv) and such person
does not cease to be the Beneficial Owner of 15% or more of the
Voting Shares by the close of business on the fifth Business Day
after notice from the Company (the date of notice being the first
day) that such Person is the Beneficial Owner of 15% or more of
the Voting Shares, such Person shall, at the end of such five
Business Day period, become an Acquiring Person (and such clause
(iv) shall no longer apply to exclude such Person from the
definition of "Acquiring Person" hereunder). For purposes of
this definition of "Acquiring Person", the determination of
whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as in effect on the date of this
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement
or understanding (whether or not in writing) (other
than customary agreements with and between underwriters
and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise;
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provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a
revocable proxy given to such Person in response to a
public proxy 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
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such
Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or
understanding (whether or not in writing) (other
than customary agreements with and between
underwriters and selling group members with
respect to a bona fide public offering of
securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the
provision to Section 1(c)(ii)(B)) or disposing of
any securities of the Company.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday, or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
(e) "close of business" on any given date shall mean 5:00
P.M., New York time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M. New York
time, on the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company
shall mean the common stock, without par value, of the Company.
"Common Stock" when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest)
with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person other than an
individual, the Person or Persons other than an individual which
ultimately control such first-mentioned Person.
(g) "Company" shall have the meaning set forth in the
preamble hereto.
(h) "Current Per Share Market Price" shall have the meaning
set forth in Section 11(d)(i) hereof.
(i) "Depositary Agent" shall have the meaning set forth in
Section 14(b) hereof.
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(j) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(k) "Exercise Price" shall mean the aggregate amount
payable by a Rights holder at any given time to exercise in full
one Right in accordance with the terms of this Agreement.
(l) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(m) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(n) "Preference Stock" shall mean the Company's Series A
Preference Stock, $25 par value, having the rights and
preferences set forth in the Form of the Company's Statement of
Resolution Establishing the Series A Preference Stock attached to
this Agreement as Exhibit A.
(o) "Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.
(p) "Record Date" shall have the meaning set forth in the
recital hereto.
(q) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(r) "Redemption Price" shall have the meaning set forth in
Section 23(b) hereof.
(s) "Right" shall have the meaning set forth in the recital
hereto.
(t) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof, and shall be substantially in the form
attached to this Agreement as Exhibit B.
(u) "Rights Agent" shall have the meaning set forth in the
preamble hereto.
(v) "Shares Acquisition Date" shall mean the first date of
public announcement 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 interest is owned, directly or
indirectly, by such Person.
(x) "Voting Shares" shall mean (i) the Common Stock and
(ii) any other shares of capital stock of the Company entitled to
vote generally in the election of directors or entitled to vote
together with the Common Stock in respect of any merger,
consolidation, sale of all or substantially all of the Company's
assets, liquidation, dissolution or winding up.
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Section 2. Appointment of Rights Agent. The Company
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hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of shares of the Common Stock of the Company) in accordance with
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time act
as Co-Rights Agent or appoint such Co-Rights Agents as it may
deem necessary or desirable. Any actions which may be taken by
and any deliveries which are to be made to the Rights Agent
pursuant to the terms of this Agreement may be taken by and may
be delivered to any such Co-Rights Agents. To the extent that
any Co-Rights Agent takes any action pursuant to this Agreement,
such Co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and
obligations imposed upon, the Rights Agent pursuant to the terms
of this Agreement.
Section 3. Issue of Right Certificates. (a) Until the
---------------------------
earlier of (i) the close of business on the tenth Business Day
after the Shares Acquisition Date (or, if the Shares Acquisition
Date shall have occurred prior to the Record Date, the close of
business on the tenth Business Day after the Record Date) or (ii)
the close of business on the tenth Business Day after the date of
the commencement of a tender or exchange offer the consummation
of which would result in any Person becoming an Acquiring Person
(or such later date as the Board of Directors may determine by
resolution adopted prior to the Shares Acquisition Date) (such
date being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced by the certificates for shares of
Common Stock of the Company and not by separate Right
Certificates, and (y) the Rights will be transferable only in
connection with, and will automatically be transferred by, a
transfer of the associated shares of Common Stock of the Company.
As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and
the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of shares of Common
Stock of the Company as of the close of business on the
Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate in the form described
in Section 4 hereof (a "Right Certificate"), evidencing one Right
for each share of Common Stock so held. On and after the
Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) On or prior to the Record Date or as soon as
practicable thereafter, the Company will send a copy of a Summary
of Rights, substantially in the form of Exhibit C hereto, by
first-class mail, to each record holder of shares of Common Stock
of the Company as of the close of business on the Record Date or,
if such mailing is made prior to the Record Date, to each holder
of record as of the date of such mailing, at the address of such
holder shown on the records of the Company.
(c) Certificates for shares of Common Stock of the Company
authenticated after the Record Date but prior to the earliest of
the Distribution Date, the Redemption Date or the Final
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Expiration Date shall have impressed on, printed on, written on
or otherwise affixed to them the following legend:
"This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between Texas Utilities Company and
The Bank of New York dated as of February 19, 1999 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is
on file at the principal executive offices of Texas
Utilities 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. Texas Utilities
Company will mail to the holder of this certificate a
copy of the Rights Agreement without charge after
receipt of a written request therefor. As described in
the Rights Agreement, Rights beneficially owned by an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the
Rights Agreement) and any Transferee shall become null
and void."
In the event that the Company shall purchase or acquire any
shares of Common Stock of the Company after the Record Date but
prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date any Rights associated with such
shares of Common Stock shall be deemed canceled and retired so
that the Company shall not be entitled to exercise any Rights
associated with shares of Common Stock which are no longer
outstanding.
Section 4. Form of Right Certificates. The Right
--------------------------
Certificates (and the forms of election to purchase shares of
Preference Stock and of assignment to be printed on the reverse
thereof) may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the provisions of this
Agreement, the Right Certificates shall entitle the holders
thereof to purchase such number of one one-hundredths of a share
of Preference Stock as shall be set forth therein on the terms
and conditions set forth herein.
Section 5. Countersignature and Registration. The Right
---------------------------------
Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Chief Executive, its Vice Chairman,
its President, or any of its Vice Presidents, either manually or
by facsimile signature, shall have affixed thereto the Company's
seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer, of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually or
by facsimile signature countersigned by the Rights Agent and
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shall not be valid for any purpose unless 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 Certificate 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.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its shareholder services office, books
for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
--------------------------------------------
of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
----------------------------------------------------------------
Certificates.
------------
Subject to the provisions of Sections 7(e) and 14 hereof, at any
time after the close of business on the Distribution Date, and at
or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like
number of one one-hundredths of a share of Preference Stock 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
or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the shareholder services office of the
Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any such 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 Affiliate or
Associate thereof as the Company shall reasonably request.
Thereupon, the Rights Agent shall, subject to Sections 7(e) and
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 be imposed in
connection with any transfer, split up, combination or exchange
of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
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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 delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
-----------------------------------
Expiration Date of Rights. (a) Subject to Section 7(e) hereof, at
-------------------------
any time after the Distribution Date, and at or prior to the
earlier of (i) the close of business on February 28, 2009 (the
"Final Expiration Date"), or (ii) the time at which the Rights
are redeemed or exchanged as provided in Section 23 hereof (the
"Redemption Date"), the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including without limitation any
restriction on exercisability set forth in or resulting from
Xxxxxxx 0, Xxxxxxx 00(x)(xxx), Section 14 and Section 20(j)
hereof) in whole or in part upon surrender of the Right
Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the
Purchase Price for each one one-hundredths of a share of
Preference Stock as to which the Rights are exercised.
(b) The purchase price for each one one-hundredths of a
share of Preference Stock pursuant to the exercise of a Right
(the "Purchase Price") shall initially be $150, shall be subject
to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in accordance with paragraph (c)
below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment of the Purchase
Price for the shares of Preference Stock (including fractions
thereof) 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 hereof, the Rights Agent
shall, subject to Sections 7(e), 7(f) and 20(j) hereof, thereupon
promptly (i) (A) requisition from any transfer agent for the
shares of Preference Stock certificates for the number of shares
of Preference Stock to be purchased and the Company hereby
irrevocably authorizes such transfer agent to comply with all
such requests, or (B) requisition from the Depositary Agent
depositary receipts representing such number of one
one-hundredths of a share of Preference Stock as are to be
purchased (in which case certificates for the shares of
Preference Stock 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 shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be
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delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be
designated by such holder and (iv) 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 shall be made in cash or by certified bank check or bank
draft payable to the order of the Company or Rights Agent.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the date upon which any person shall
become an Acquiring Person, any Rights beneficially owned by (i)
an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void
without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. No Right
Certificate shall be issued pursuant to Section 3 that represents
any such Right and no Right Certificate shall be issued at any
time upon the transfer of any Rights to or from an Acquiring
Person or any Associate or Affiliate thereof or to or from any
nominee of such Acquiring Person, Associate or Affiliate. Any
Right Certificate delivered to the Rights Agent for such a
transfer shall be canceled. The Company shall use all reasonable
efforts to ensure that the provisions of this Section 7(e) are
complied with.
(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 the exercise of
any Rights unless the registered holder thereof shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Rights Agent or the Company shall reasonably request.
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Section 8. Cancellation and Destruction of Right
-------------------------------------
Certificates. All Right Certificates surrendered for the purpose
------------
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the
Company, or shall, at the written request of the Company, destroy
such canceled Right Certificates in accordance with Rule 17Ad-7
under the Exchange Act, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preference
------------------------------------------
Stock. The Company covenants and agrees that it will cause to be
-----
reserved and kept available out of its authorized and unissued
shares of Preference Stock or any shares of Preference Stock held
in its treasury the number of shares of Preference Stock that
will be sufficient to permit the exercise in full of all
outstanding Rights.
The Company shall use its best efforts, as soon as
practicable following the Shares Acquisition Date, to obtain such
regulatory approvals and take such other action as may be
required for it to issue and/or sell securities purchasable upon
the exercise of the Right.
Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable pursuant to Section
7 or pursuant to the provisions contemplated by Section 11(a)(ii)
hereof (a) unless and until any regulatory approvals required for
the issuance and/or sale of securities upon such exercise have
been obtained, (b) in any jurisdiction if any requisite filings
under any applicable securities law shall not have been made or
become effective in such jurisdiction or (c) if the exercise
thereof, or the issuance and/or sale of the securities to be
purchased upon such exercise shall not be permitted under any
applicable law or administrative or judicial regulation or order.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all securities
delivered upon exercise of Rights shall be duly and validly
authorized and issued and, if equity securities, fully paid and
nonassessable.
The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes
and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any securities upon the
exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other
than, or the issuance or delivery of certificates or depositary
receipts for securities in a name other than that of, the
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registered holder of the Right Certificate evidencing Rights
surrendered for transfer or exercise or to issue or to deliver
any certificates or depositary receipts for securities upon the
exercise of any Rights until any such tax shall have been paid by
the holder of such Right Certificate or until it has been
established to the Company's satisfaction that no such tax is
due.
Section 10. Preference Stock Issuance Date. Each person
------------------------------
in whose name any certificate for shares of Preference Stock is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of
Preference Stock 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 (or
if such day is not a Business Day, the next succeeding Business
Day).
Section 11. Adjustment of Purchase Price, Amount and Type
---------------------------------------------
of Securities or Number of Rights. The Purchase Price, the
---------------------------------
amount and type 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 and prior to the Shares Acquisition Date
(A) declare a dividend on the Preference Stock payable in shares
of Preference Stock, (B) subdivide the outstanding Preference
Stock, (C) combine the outstanding shares of Preference Stock
into a smaller number of shares of Preference Stock or (D) issue
any shares of its capital stock in a reclassification of the
Preference Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preference Stock
transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be
paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company issuable
upon exercise of one Right.
(ii) Subject to the provisions of Section 7(e), Section 9,
Section 14 and Section 20(j) hereof, in the event any Person
shall become an Acquiring Person, proper provision shall be made
so that each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof at a
price equal to the Exercise Price, (A) that number of shares of
Common Stock of the Company having an aggregate Current Per Share
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Market Price on the Shares Acquisition Date equal to twice the
Exercise Price or (B), at the election of the Company, that
number of one one-hundredths of a share of Preference Stock equal
to the number of shares of Common Stock determined in accordance
with clause (A).
(iii) In the event that (x) there shall not be sufficient
shares of Common Stock of the Company and/or Preference Stock or
a combination thereof, issued but not outstanding or authorized
but unissued, or there shall not have been received any
regulatory approval required, to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph (ii), or
(y) the issuance of Common Stock of the Company and/or Preference
Stock upon such exercise shall not then be permitted under the
Company's Restated Articles of Incorporation or any applicable
law or administrative or judicial regulation or order, the
Company may, at its option, with respect to some of or all of the
Rights (as hereinafter provided), make adequate provision to
substitute, upon exercise of each such Right but subject to
Section 9 hereof, (1) cash, (2) a reduction in the Purchase
Price, (3) equity securities of the Company and/or its
Subsidiaries, (4) debt securities of the Company and/or its
Subsidiaries, (5) other assets or securities, or (6) any
combination of the foregoing, having an aggregate value equal to
the aggregate Current Per Share Market Price on the Shares
Acquisition Date of the securities for which each such Right
would otherwise be exercisable pursuant to Section 11(a)(ii)
hereof (such aggregate value to be determined by the Board of
Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of
Directors of the Company, which determination shall be described
in a statement filed with the Rights Agent). To the extent that
the Board of Directors of the Company determines that some action
need be taken pursuant to the first sentence of this Section
11(a)(iii), the Company (x) shall provide, subject to Section
7(e) hereof, that such action shall apply uniformly to all
outstanding Rights (or to Rights pro-rata or such other
reasonable method of allocation as shall be determined by the
Board of Directors of the Company, to the extent that such action
applies to less than all the Rights), and (y) may suspend the
exercisability of the Rights in order to seek any authorization
of additional shares, to take any action to obtain any required
regulatory approval, to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof and/or to take any other action
deemed by the Company to be legally required in order to effect
such distribution. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is
no longer in effect.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of shares
of Preference Stock prior to the Shares Acquisition Date
entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase shares of
Preference Stock (or shares having the same rights, privileges
and preferences as the shares of Preference Stock ("equivalent
preference shares")) or securities convertible into shares of
Preference Stock or equivalent preference shares at a price per
-13-
share of Preference Stock or equivalent preference share (or
having a conversion price per share, if a security convertible
into shares of Preference Stock or equivalent preference shares)
less than the then Current Per Share Market Price of the
Preference Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of
shares of Preference Stock outstanding on such record date plus
the number of shares of Preference Stock which the aggregate
offering price of the total number of shares of Preference Stock
and/or equivalent preference shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such Current Per Share Market
Price and the denominator of which shall be the number of shares
of Preference Stock outstanding on such record date plus the
number of additional shares of Preference Stock 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). Shares of Preference Stock owned by or
held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined
in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of shares of the
Preference Stock prior to the Shares Acquisition Date (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in shares
of Preference Stock) 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 effect immediately prior to
such record date by a fraction, the numerator of which shall be
the then Current Per Share Market Price of the Preference Stock
on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to one share of Preference Stock and the
denominator of which shall be such Current Per Share Market Price
of a share of Preference Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
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(d) (i) For the purpose of any computation hereunder, the
"Current Per Share Market Price" of any security (a "Security"
for the purpose of this Section 11(d)(i)) on any date shall be
deemed to be the average of the daily closing prices per share of
such Security for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date; provided,
however, that in the event that the Current Per Share Market
Price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration
of 30 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
Current Per Share Market Price shall be appropriately adjusted to
reflect the current market price per share equivalent of such
Security. 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
Security is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Security
is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of
Directors of the Company. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the
Current Per Share Market Price of shares of the Preference Stock
on any date shall be determined in accordance with the method set
forth in Section 11(d)(i). If shares of the Preference Stock are
not publicly traded, the Current Per Share Market Price of shares
of the Preference Stock shall be conclusively deemed to be the
Current Per Share Market Price of the shares of Common Stock of
the Company as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock
dividend, reclassification or similar transaction occurring after
the Distribution Date), multiplied by one hundred. If neither
the Common Stock nor the Preference Stock are publicly held or so
listed or traded, Current Per Share Market Price shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent.
-15-
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of
at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one-millionth of a share of Preference Stock or one
ten-thousandth of any other share or security, as the case may
be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of
the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13, the holder of any Right thereafter
exercised shall become entitled to receive any securities or
assets other than share of Preference Stock, the provisions of
this Agreement with respect to the Preference Stock shall apply
as appropriate to any such other securities or assets in order to
fully realize the benefits intended to be conferred by Section
11(a) and/or Section 13 hereof.
(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-hundredths of a share of Preference Stock
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have 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-hundredths
of a share of Preference Stock (calculated to the nearest one
one-millionth of a share of Preference Stock) obtained by (i)
multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment by (y)
the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment
of the Purchase Price.
(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-hundredths of a share of Preference Stock purchasable upon
the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for
the number of one one-hundredths of a share of Preference Stock
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
-16-
(calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed, subject to the provisions
of Section 7(e) hereof, to holders of record of Right
Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the 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 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 one one-hundredths of a share of
Preference Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of one
one-hundredths of a share of Preference Stock which were
expressed in the initial Right Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of
any Right exercised after such record date of the Preference
Stock and other securities, if any, issuable upon such exercise
over and above the Preference Stock and other securities, 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 xxxx or other
appropriate instrument evidencing such holder's right to receive
such securities upon the occurrence of the event requiring such
adjustment.
(l) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the
Preference Stock, issuance wholly for cash of any shares of
Preference Stock at less than the current market price, issuance
-17-
wholly for cash of shares of Preference Stock or securities which
by their terms are convertible into or exchangeable for shares of
Preference Stock, dividends on shares of Preference Stock payable
in Preference Stock or issuance of rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preference Stock shall not be taxable
to such shareholders.
(m) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on its shares of Common Stock
payable in Common Stock or (ii) effect a subdivision, combination
or consolidation of its Common Stock (by reclassification or
otherwise than by payment of dividends in its Common Stock) into
a greater or lesser number of shares of Common Stock of the
Company, then in any such case (i) the Purchase Price in effect
after such event upon proper exercise of each Right shall be
determined by multiplying the Purchase Price in effect
immediately prior to such event by a fraction, the numerator of
which is the number of such shares of Common Stock outstanding
immediately before such event and the denominator of which is the
number of such shares of Common Stock outstanding immediately
after such event, and (ii) each share of Common Stock of the
Company outstanding immediately after such event shall have
issued with respect to it that number of Rights which each share
of Common Stock outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this
Section 11(m) shall be made successively whenever such a dividend
is declared or paid or such a subdivision, combination or
consolidation is effected.
(n) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken, it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or
-----------------------------------------
Number of Shares. Whenever an adjustment is made as provided in
----------------
Sections 11 and 13 hereof, the Company shall promptly (a) prepare
a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common
Stock of the Company or the Preference Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of
--------------------------------------------
Assets or Earning Power or Certain Other Transactions. In the
-----------------------------------------------------
event that, following the Shares Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with
and into, any other Person, (other than a subsidiary of the
Company in a transaction which complies with Section 11(n)
hereof), (b) any Person (other than a subsidiary of the Company
in a transaction which complies with Section 11(n) hereof) shall
-18-
consolidate with the Company, or merge with and into the Company
and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part
of the shares of Common Stock of the Company shall be changed
into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, (c) the
Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more
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 other Person, or to two or more Persons
which are affiliated or otherwise acting in concert, other than
the Company or one or more of its wholly-owned Subsidiaries
(other than a subsidiary of the Company in a transaction which
complies with Section 11(n) hereof), (d) any Acquiring Person, or
an Affiliate or Associate thereof (other than the Company or its
Subsidiaries), shall (i) obtain from the Company or its
Subsidiaries, with or without consideration, over any period of
12 consecutive calendar months, any additional shares of any
class of capital stock of the Company or any of its Subsidiaries
equal in the aggregate to more than 1% of the outstanding shares
of such class, or securities exercisable or exchangeable for or
convertible into more than 1% of the outstanding shares of any
class of capital stock of the Company or any of its Subsidiaries
(in each case other than as part of a pro rata distribution to
all holders of such stock or pursuant to the exercise of rights
or warrants, or the conversion or exchange of securities, issued
pro rata in such a distribution), (ii) sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, to, from, or with, as the case may be, the Company or
any of its Subsidiaries, over any period of 12 consecutive
calendar months, assets (x) having an aggregate fair market value
of more than 10% of the assets, on a consolidated basis, of the
Company, or (y) on terms and conditions less favorable to the
Company than the Company would be able to obtain through
arm's-length negotiations with an unaffiliated third party, (iii)
receive any compensation for services from the Company or any of
its Subsidiaries, other than compensation for full-time
employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (iv) receive
the benefit, directly or indirectly (except proportionately as a
shareholder), over any period of 12 consecutive calendar months,
of any loans, advances, guarantees, pledges, insurance,
reinsurance or other financial assistance or any tax credits or
other tax advantage provided by the Company or any of its
Subsidiaries involving an aggregate principal amount in excess of
$15,000,000 or an aggregate cost or transfer of benefits from the
Company or any of its Subsidiaries in excess of $15,000,000 or,
in any case, on terms and conditions less favorable to the
Company than the Company would be able to obtain through
arm's-length negotiations with an unaffiliated third party, or
(e) as a result of any reclassification of securities (including
any reverse stock split), or recapitalization, of the Company, or
any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of transactions
(whether or not with or into or otherwise involving an Acquiring
Person), the proportionate share of the outstanding shares of any
class of equity or convertible securities of the Company or any
of its Subsidiaries which is directly or indirectly owned by any
Acquiring Person, or an Affiliate or Associate thereof, is
increased by more than 1%, then, and in each such case, proper
-19-
provision shall be made so that (i) each holder of a Right shall
thereafter have the right to receive, upon the exercise thereof
at a price equal to the Exercise Price, that number of shares of
Common Stock of such other Person (including the Company as
successor thereto or as the surviving corporation) having an
aggregate Current Per Share Market Price on the date of
consummation of such transaction equal to twice the Exercise
Price, (ii) the issuer of such shares of Common Stock shall
thereafter be liable for, and shall assume, by virtue of such
transaction, all the obligations and duties of the Company
pursuant to this Agreement, (iii) the term "Company" shall
thereafter be deemed to refer to such issuer, and (iv) such
issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common Stock
in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the shares of Common Stock thereafter
deliverable upon the exercise of the Rights. The Company shall
not enter into or permit to occur any such transaction unless
prior thereto (a) the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so
providing and (b) the issuance of shares of Common Stock of such
issuer upon exercise of Rights (as they shall have been modified
pursuant to the immediately preceding sentence) shall have been
approved, to the extent required, by all regulatory authorities
having jurisdiction over such issuance, and all other actions
necessary in order to permit in full, upon exercise of Rights the
issuance of such shares of Common Stock (including, without
limitation, the reservation of sufficient such shares of Common
Stock to enable all outstanding Rights to be exercised in full)
shall have been completed. The Company shall not enter into or
permit to occur any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which would eliminate or materially
diminish the benefits intended to be afforded by the Rights,
including the benefits intended to be conferred by this Section
13 upon consummation of such transaction. The provisions of this
Section 13 shall similarly apply to successive mergers,
consolidations, sales and other transactions referred to in this
Section 13.
Section 14. Fractional Rights and Fractional Shares. (a)
---------------------------------------
The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional
Rights. 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
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
-20-
Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights
are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined
in good faith by the Board of Directors of the Company shall be
used.
(b) The Company shall not be required to issue fractions of
a share of Preference Stock (other than fractions which are
integral multiples of one one-hundredths of a share of Preference
Stock) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preference Stock (other than
fractions which are integral multiples of one one-hundredths of a
share of Preference Stock). Fractions of a share of Preference
Stock in integral multiples of one one-hundredths of a share of
Preference Stock may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary agent selected by
it (the "Depositary Agent"), 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 Stock represented
by such depositary receipts. In lieu of fractional shares of
Preference Stock that are not integral multiples of
one-hundredths of a share of Preference Stock, 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
share of Preference Stock. For purposes of this Section 14(b),
the current market value of a share of Preference Stock shall be
the closing price of a share of Preference Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or
any fractional securities upon exercise of a Right (except as
provided above).
Section 15. Rights of Action. All rights of action in
----------------
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates; and any
registered holder of any Right Certificate, without the consent
of the Rights Agent or of the holder of any other Right
Certificate, 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
-21-
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 shares of
Common Stock of the Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied
by a proper instrument of transfer;
(c) subject to Sections 6 and 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the
associated Common Stock 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 Stock certificate
made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e), shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company shall 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 a share of Preference Stock or any other
securities which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained
-22-
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 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 expressly provided herein), 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. The Company
---------------------------
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in
the premises.
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 a share of Preference Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 19. Merger or Consolidation or Change of Name of
--------------------------------------------
Rights Agent. 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
corporate trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any
of the 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
-23-
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.
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 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 Chief Executive, the Vice Chairman,
the President, any Vice President, the Treasurer, the Secretary,
or any Assistant Treasurer or Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder 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
-24-
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 change in the
exercisability of the Rights or any adjustment in the terms of
the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11 or 13, 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 shares of Preference
Stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of Common Stock of the
Company or Preference Stock 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 Chief
Executive, the Vice Chairman, the President, any Vice President,
the Treasurer, the Secretary, or any Assistant Treasurer or
Assistant Secretary of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or
for any delay in acting while waiting for those instructions.
(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 legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
-25-
(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 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Stock of the Company or Preference Stock 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 Stock of the Company or
Preference Stock 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 registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States
or the State of New York or the State of Texas (or of any other
state of the United States so long as such corporation is
authorized to do business as a banking institution in the State
of Texas or the State of New York), in good standing, having an
office in the State of Texas or the State of New York, which is
authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at
least $50 million, or (b) an affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the
Common Stock of the Company or Preference Stock, and mail a
notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the
case may be.
-26-
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 shares of Common Stock of the Company following the
Distribution Date and prior to the Redemption Date or the Final
Expiration Date, the Company shall, with respect to shares of
Common Stock of the Company so issued or sold pursuant to the
exercise of stock options outstanding prior to the Distribution
Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and outstanding prior to the
Distribution Date, 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, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption or Exchange. (a) The Rights may
----------------------
be redeemed or exchanged by action of the Board of Directors
pursuant to this Section 23 and shall not be redeemed in any
other manner.
(b) The Board of Directors of the Company may, at its
option, at any time prior to the close of business on the tenth
Business Day after the Shares Acquisition Date (or, if the Shares
Acquisition Date shall have occurred prior to the Record Date,
the close of business on the tenth Business Day after the Record
Date), elect to redeem all but not less than all the then
outstanding Rights at a redemption price of $0.001 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"). In the event that the aggregate redemption price
payable to any holder of Rights for all Rights held by such
holder shall not be evenly divisible by $.01, the fraction of one
cent otherwise payable to such holder shall be increased to one
cent.
(c) The Board of Directors of the Company may, at its
option but subject to receipt of any required regulatory
approvals, at any time after the Shares Acquisition Date and
prior to such time an Acquiring Person becomes the Beneficial
Owner of more than 50% of the outstanding shares of Common Stock
of the Company, elect to exchange all but not less than all the
then outstanding Rights (other than Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for (i) shares
of Common Stock of the Company at an exchange ratio of one share
of Common Stock of the Company per Right, appropriately adjusted
in order to protect the interests of holders of Rights generally
in the event that after the Distribution Date any issuance or
distribution of securities, cash or assets in respect of, in lieu
of or in exchange for a share of Common Stock of the Company
and/or Preferred Stock (whether by dividend, in a
reclassification or recapitalization, or otherwise, including any
-27-
such transaction involving a merger or consolidation), shall have
occurred; provided, however, that in the event that insufficient
shares of Common Stock of the Company are authorized but
unissued, or otherwise available for issuance, to permit in full
the exchange provided hereby, then each Right shall be exchanged
for (x) that fraction of a share of Common Stock of the Company,
the numerator of which shall be the total number of shares of
Common Stock of the Company authorized but unissued or otherwise
available for issuance and the denominator of which shall be the
aggregate number of such shares of Common Stock of the Company
which would have been issued pursuant to this subparagraph (c)(i)
had such shares of Common Stock been available for issuance, plus
(y) that fraction of a share of Preference Stock, also
appropriately adjusted as provided herein, the numerator of which
shall be one minus the fraction of a share of Common Stock of the
Company to be so issued and the denominator of which shall be
100, or (ii) cash, debt or equity securities of the Company
and/or a Subsidiary thereof or other assets or any combination of
the foregoing having an aggregate value (when paid) equal to the
Current Per Share Market Price of one share of Common Stock of
the Company at the Shares Acquisition Date.
(d) Immediately upon the action of the Board of Directors
of the Company electing to redeem or exchange the Rights pursuant
to subsection (b) or (c) of this Section 23, and without any
further action and without any notice, the right to exercise the
Rights will terminate and each Right will thereafter represent
only the right to receive the Redemption Price or the securities
or assets referred to in subsection (c), as the case may be.
Within 10 days after such action of the Board of Directors
electing to redeem or exchange the Rights pursuant to subsection
(b) or (c), the Company shall give notice thereof to the Rights
Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at their 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 Stock of the Company. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
redemption or exchange will state the method by which the payment
of the Redemption Price or the exchange 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,
other than in connection with the acquisition or purchase of
shares of Common Stock of the Company prior to the Distribution
Date.
Section 24. Notice of Certain Events. (a) In case the
------------------------
Company shall propose (i) to pay any dividend payable in stock of
any class to the holders of shares of its Preference Stock or to
make any other distribution to the holders of shares of its
Preference Stock (other than a regular quarterly cash dividend),
(ii) to offer to the holders of shares of its Preference Stock
rights or warrants to subscribe for or to purchase any additional
shares of Preference Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any
reclassification of its Preference Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Preference Stock), (iv) to effect any transaction set
-28-
forth in Section 13 hereof, (v) to affect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or
pay any dividend on the Common Stock of the Company payable in
shares of Common Stock of the Company or to effect a subdivision,
combination or consolidation of the Common Stock of the Company
(by reclassification or otherwise than by payment of dividends in
shares of Common Stock of the Company), then, in each such case,
the Company shall give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of
such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger,
sale, transaction, transfer, liquidation, dissolution, or winding
up is to take place and the date of participation therein by the
holders of the Common Stock of the Company and/or Preference
Stock, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
above at least 20 days prior to the record date for determining
holders of shares of the Preference Stock 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 shares of the
Common Stock of the Company and/or Preference Stock, whichever
shall be the earlier.
(b) In case the Shares Acquisition Date shall occur, then,
in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, to the
extent feasible and in accordance with Section 25 hereof, a
notice of the occurrence of such event, which notice shall
describe the event and the consequences of the event to holders
of Rights under Section 11(a)(ii) hereof.
Section 25. 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:
TEXAS UTILITIES COMPANY
Energy Plaza
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
-00-
XXX XXXX XX XXX XXXX
000 Xxxxxxx Xxxxxx, 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: X. Xxxxxx
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 26. Supplements and Amendments. The Company, by
--------------------------
action of its Board of Directors, and the Rights Agent may from
time to time supplement or amend this Agreement without the
approval of any holders of Rights in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, (iii) to make all determinations deemed
necessary or advisable for the administration of this Agreement,
including, but not limited to, (A) a determination to redeem or
not to redeem the Rights and (B) a determination to shorten or
lengthen any time period hereunder (including, in particular, one
or more extensions of the Distribution Date), (iv) prior to the
Distribution Date, to amend the terms of the Preference Stock to
provide any additional voting rights authorized by the Company's
Restated Articles of Incorporation, and, to the extent
permissible, provide that the shares of Preference Stock shall
have 100 votes per share, subject to adjustment to appropriately
reflect the voting rights of such shares in relation to the
Common Stock, or (v) to make any other provisions in regard to
matters or questions arising hereunder which the Company and the
Rights Agent may deem necessary or desirable and which shall be
consistent with, and for the purpose of fulfilling, the
objectives of the Board of Directors in adopting this Agreement;
provided, however, that from and after such time as any Person
becomes an Acquiring Person, this Agreement shall not be amended
in any manner (including, but not limited to, any amendment
pursuant to clause (iii) of this sentence lengthening any time
period hereunder after the Distribution Date) which would
adversely affect the interests of the holders of exercisable
Rights. All amendments, supplements or other actions made or
taken pursuant to this Section 26 (including, for purposes of
clause (y) of this sentence, all omissions with respect to the
foregoing) that are done by the Board of Directors of the Company
in good faith (x) will be final, conclusive and binding upon the
Company, the Rights Agent and the holders of the Rights, and (y)
will not subject the Board of Directors of the Company to any
liability to holders of the Rights. Upon the delivery of a
certificate from an officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms
of this Section 26, the Rights Agent shall execute such
supplement or amendment. Prior to the Distribution Date, the
interests of the holders of the Rights shall be deemed to be
coincident with the interests of the holders of the Common Stock.
Section 27. 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
-30-
respective successors and assigns hereunder.
Section 28. 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 shares of Common Stock of the Company) 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 shares of
Common Stock of the Company).
Section 29. Severability. If any term, provision,
------------
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 30. Governing Law. This Agreement and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Texas 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 except for Sections 18, 19, 20 and 21
hereof which shall be governed by and construed in accordance
with the laws of the State of New York.
Section 31. 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 32. 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.
-31-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
TEXAS UTILITIES COMPANY
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Secretary and Asst. Treasurer
THE BANK OF NEW YORK
By: /s/Xxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx
Title: Assistant Vice President
EXHIBIT A
FORM OF STATEMENT OF RESOLUTION
ESTABLISHING
SERIES A PREFERENCE STOCK
OF
TEXAS UTILITIES COMPANY
To the Secretary of State
of the State of Texas
Pursuant to the provisions of Article 2.13 of the Texas
Business Corporation Act, the undersigned corporation submits the
following statement for the purpose of establishing and
designating the Series A Preference Stock, par value $25 per
share, and fixing and determining the relative rights and
preferences thereof:
1. The name of the corporation is Texas Utilities Company
(the "Company").
2. The following resolution, establishing and designating
the Series A Preference Stock, par value $25 per share, and
fixing and determining the relative rights and preferences
thereof, was duly adopted by the Board of Directors of the
Company on February 19, 1999, and was thereby duly adopted by all
necessary action on the part of the Company:
RESOLVED that 10,000,000 shares of the authorized stock
classified as Serial Preference Stock as provided in
Division A of Article VI of the Restated Articles of
Incorporation of the Company, shall constitute the first
series of Serial Preference Stock, par value $25 per share,
and is designated as Series A Preference Stock, which series
shall have, in addition to the general terms and
characteristics of all the authorized shares of Serial
Preference Stock of the Company, the following distinctive
terms and characteristics:
(a) The Series A Preference Stock shall have an annual
rate of dividends per share equal to the greater of (i) $1
or (ii) subject to the provision for adjustment hereinafter
set forth, 100 times the aggregate per share amount of all
dividends or other distributions, other than a dividend or
distribution payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the shares of
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
such share or fraction thereof. In the event the Company
shall at any time after the Distribution Date (as defined in
the Rights Agreement dated as of February 19, 1999, between
the Company and the Rights Agent named therein) declare or
pay any dividend on the shares of Common Stock payable in
shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a
A-2
greater or lesser number of shares of Common Stock, then, in
each such case, the amount to which holders of shares of the
Series A Preference Stock were entitled immediately prior to
such event under clause (ii) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding immediately after such event and the
denominator of which shall be the number of shares of Common
Stock that were outstanding immediately prior to such event.
Dividends shall be cumulative payable quarterly on the first
day of January, April, July and October in each year or
otherwise as the Board of Directors of the Company may
determine (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing with respect
to each share or fraction thereof on the first Quarterly
Dividend Payment Date after the original issuance thereof,
in the amount per share set forth above (rounded to the
nearest cent).
Dividends shall accrue on each outstanding share of the
Series A Preference Stock or fraction thereof from the date
of original issue of such share or fraction thereof, unless
such date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of
holders entitled to receive a quarterly dividend and before
the Quarterly Dividend Payment Date therefor, in either of
which events such dividends shall accrue from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of the
Series A Preference Stock or fraction thereof in an amount
less than the total amount of such dividends at the time
accrued and payable on such shares or fraction thereof shall
be allocated pro rata on a share-by-share basis among all
such shares or fraction thereof at the time outstanding.
The Board of Directors may fix a record date for the
determination of holders of shares of the Series A
Preference Stock entitled to receive payment of a dividend
or distribution declared thereon.
(c) The outstanding shares of Series A Preference
Stock may be redeemed, at the option of the Board of
Directors, in whole or in part, at any time, or from time to
time, at a cash price per share equal to (i) 100% of the
product of the Adjustment Number (as such term is
hereinafter defined) times the Average Market Value (as such
term is hereinafter defined) of the Common Stock, plus (ii)
all dividends which on the redemption date have accrued on
the shares to be redeemed and have not been paid or declared
and a sum sufficient for the payment thereof set apart,
without interest. The "Adjustment Number" is 100, provided,
however, that in the event the Company shall at any time
after the Distribution Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of 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
A-3
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. The
"Average Market Value" is the average of the closing sale
prices of a share of the Common Stock during the 30-day
period immediately preceding the date before the redemption
date on the Composite Tape for New York Stock Exchange
Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal
United States securities exchange registered under the
Securities Exchange Act of 1934, as amended, on which such
stock is listed, or, if such stock is not listed on any such
exchange, the average of the closing sale prices with
respect to a share of Common Stock during such 30-day
period, as quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System or any system then
in use, or if no such quotations are available, the fair
market value of a share of the Common Stock, as determined
by the Board of Directors in good faith.
(d) The amount payable upon shares of the Series A
Preference Stock, in the event of voluntary or involuntary
liquidation, dissolution or winding up of the Company shall
be the greater of (i) $100 per share or (ii) subject to the
provision for adjustment set forth in (2), above, 100 times
the aggregate amount to be distributed per share to the
holders of the shares of Common Stock, plus, in either case
an amount equal to accrued and unpaid dividends to the date
of payment. In the event the Company shall at any time
after the Distribution Date declare or pay any dividend on
the shares of Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then, in each such case,
the aggregate amount to which holders of shares of the
Series A Preference Stock were entitled immediately prior to
such event under clause (ii) of the preceding sentence,
shall be adjusted by multiplying such amount by a fraction
the numerator of which shall be the number of shares of
Common Stock outstanding immediately after such event and
the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such event.
(e) There is no sinking fund for the redemption or
purchase of shares of the Series A Preference Stock.
A-4
(f) Shares of the Series A Preference Stock are not,
by their terms, convertible or exchangeable.
TEXAS UTILITIES COMPANY
_____________________________
By:
Dated: Title:
EXHIBIT B
Form of Right Certificate
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER FEBRUARY 28, 2009, OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION OR EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY TRANSFEREE OF SUCH RIGHTS
SHALL BECOME NULL AND VOID.
Right Certificate
-----------------
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 February 19, 1999 (as amended from time to time, the
"Rights Agreement"), between Texas Utilities Company, a Texas
corporation (the "Company"), and The Bank of New York (the
"Rights Agent"), to purchase, subject to any required regulatory
approval, from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M., New York City time, on February 28, 2009 (subject
to earlier redemption or exchange of the Rights by the Company,
as set forth in the Rights Agreement), at the shareholders
services office of the Rights Agent, or at the office of its
successor as Rights Agent, one one-hundredth of a fully paid
nonassessable share of Series A Preference Stock, par value $25
per share, (the "Preference Stock"), of the Company, at a
purchase price of $150 per one one-hundredth of a share of
Preference Stock (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to
Purchase and related Certificate duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a share of Preference Stock which may be
purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of
[___________, ___], based on the shares of Preference Stock as
constituted at such date. As provided in the Rights Agreement,
the Purchase Price and the number or amount of securities or
other assets which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file
at the principal executive 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 either the office or offices of
the Rights Agent designated for such purpose, may be exchanged
for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a
like aggregate number of shares of Preference Stock as the Rights
evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed or exchanged
by the Company.
No fractional securities will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-hundredth of such security,
which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of shares of the Preference Stock or of any other securities of
the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such,
any of the rights of a shareholder of the Company or any right to
vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in
the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this
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 [______________, 19___].
ATTEST: TEXAS UTILITIES COMPANY
_______________________ By: ________________________
Countersigned:
By: ______________________
Authorized Signature
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered
holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________ hereby
sells, assigns and transfers unto __________________________ -
(Please print name and address of transferee) - this Right
Certificate, together with all right, title and interest
therein,and does hereby irrevocably constitute and appoint
________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full
power of substitution.
Dated:_____________________, 19___
--------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
Form of Reverse Side of Right Certificate -- continued
Certificate
-----------
The undersigned hereby certifies, for the benefit of the
Company and other holders of Rights, by checking the appropriate
boxes, that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________, 19___ _______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To:
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate
to purchase shares of the Preference Stock issuable upon the
exercise of such Rights and requests that certificates for such
shares of Preference Stock be issued in the name of:
Please insert social security or other identifying number
-------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security or other identifying number
-------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------
Dated: _____________, 19___
----------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
Form of Reverse Side of Right Certificate -- continued
Certificate
-----------
The undersigned hereby certifies, for the benefit of the
Company and other holders of Rights, by checking the appropriate
boxes, that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: ____________, 19___
----------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
Form of Reverse Side of Right Certificate -- continued
NOTICE
------
The signature in the foregoing Forms of Assignment and
Election to Purchase and Certificate must conform to the name as
written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
Exhibit C
---------
FORM OF SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERENCE STOCK
On February 19, 1999, the Board of Directors of Texas
Utilities Company (the "Company") authorized, and declared, a
dividend distribution of one Right for each outstanding share of
common stock, without par value, of the Company (the "Common
Stock") to shareholders of record at the close of business on
March 1, 1999. Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series
A Preference Stock, par value $25 per share, of the Company (the
"Series A Preference Stock"), at a Purchase Price of $150 per
one-hundredth of a share of Series A Preference Stock (the
"Exercise Price"), subject to adjustment. The description and
terms of the Rights are set forth in the Rights Agreement (the
"Rights Agreement"), dated as of February 19, 1999, between the
Company and The Bank of New York, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding and no separate
Rights Certificates will be distributed. The Rights will
separate from the Common Stock and a Distribution Date will occur
upon the earlier of (i) ten days following public announcement
that a person or group of affiliated or associated persons, with
such exceptions as are set forth in the Rights Agreement (an
"Acquiring Person"), has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding
shares of Common Stock (the "Shares Acquisition Date") or (ii)
ten Business Days (or such later date as the Board of Directors
may determine) following the commencement of, or first public
announcement of the intent of a person or group to commence, a
tender offer or exchange offer that would result in a person or
group (with such exceptions as are set forth in the Rights
Agreement) beneficially owning 15% 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
March 1, 1999 will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of
any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common
Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date
and, under the circumstances summarized in the second succeeding
paragraph, until the Rights are no longer redeemable. The Rights
will expire at the close of business on February 28, 2009, unless
earlier redeemed or exchanged by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent
the Rights. Except as otherwise determined by the Board of
Directors, only shares of Common Stock outstanding prior to the
C-2
Distribution Date will be issued with Rights.
In the event that an Acquiring Person becomes the beneficial
owner of 15% or more of the then outstanding shares of Common
Stock, each holder of a Right will thereafter have the right to
receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or Series A Preference Stock or
other securities of the Company), having a value equal to two
times the Exercise Price of the Right. The Exercise Price is the
Purchase Price times the number of shares of Common Stock
associated with each Right (initially, one). Notwithstanding any
of the foregoing, following the occurrence of an event set forth
in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
However, Rights are not exercisable following the occurrence of
an event set forth in this paragraph until such time as the
Rights are no longer redeemable by the Company as set forth
below.
In the event that, following the Shares Acquisition Date,
directly or indirectly, (i) the Company is acquired in a merger
or consolidation in which the Company is not the surviving
corporation, (ii) the Company engages in a merger or consolidation
in which the Company is the surviving corporation and the Common
Stock of the Company is changed or exchanged, or (iii) more than
50% of the Company's assets or earning power is sold or transferred,
each holder of a Right (except Rights which have previously been
voided as set forth above) shall thereafter have the right to
receive, upon exercise of the Right, Common Stock of the acquiring
company having a value equal to two times the Exercise Price of
the Right.
The Exercise Price payable, and the number of shares (or
fractions thereof) of Series A Preference Stock or other
securities or property issuable upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Series A Preference
Stock, (ii) if holders of the Series A Preference Stock are
granted certain rights or warrants to subscribe for Series A
Preference Stock or securities convertible into Series A
Preference Stock at less than the current market price of the
Series A Preference Stock, or (iii) upon the distribution to
holders of the Series A Preference Stock of evidences of
indebtedness or assets (excluding regular quarterly cash
dividends) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights and the Exercise Price are
also subject to adjustment if, prior to the Distribution Date,
there is a dividend on the Common Stock payable in shares of
Common Stock or a subdivision, combination or consolidation of
the Common Stock.
With certain exceptions, no adjustments in the Purchase
Price will be required until cumulative adjustments amount to a
least 1% of the Purchase Price. No fractional shares of Series A
C-3
Preference Stock will be issued other than in integral multiples
of one-one hundredth of a share and, in lieu thereof, an
adjustment in cash will be made based on the market price of the
Series A Preference Stock on the last trading date prior to the
date of exercise.
At any time until ten Business Days following the Shares
Acquisition Date, the Company may redeem the Rights in whole, but
not in part, at a price of $.001 per Right. 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.
At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the
outstanding Common Stock, the Board of Directors may exchange the
Rights (other than Rights owned by such person or its affiliates
and associates, which have become void), in whole or in part, at
an exchange ratio of one share of Common Stock, or one one-
hundredth of a share of Series A Preference Stock (or of a share
of a series of the Company's preference stock having equivalent
preferences, limitations and relative rights) per Right (subject
to adjustment).
Until a Right is exercised, the holder thereof, as such,
will have no rights as a shareholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights should not be taxable to
shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other
consideration) of the Company as set forth above or in the event
that the Rights are redeemed.
Any of the provisions of the Rights Agreement may be
amended, without the approval of the holders of any Rights, by
the Board of Directors and the Rights Agent prior to any Person
becoming an Acquiring Person. After a Person has become an
Acquiring Person, the provisions of the Rights Agreement may not
be amended in any manner which would adversely affect the
interests of holders of exercisable Rights. Prior to the
Distribution Date, the Company may, by action of its Board of
Directors, amend the terms of the Preference Stock to provide any
additional voting rights authorized by the Company's Restated
Articles of Incorporation and to the extent permissible shall
provide that the shares of Preference Stock shall have 100 votes
per share, subject to adjustment to appropriately reflect the
voting rights of such shares in relation to the Common Stock.
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. A copy of the Rights
Agreement is available free of charge from the Company. This
C-4
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.
