TNP ENTERPRISES, INC.
and
THE BANK OF NEW YORK
Rights Agent
Amended and Restated Rights Agreement
Dated as of August 11, 1998
TABLE OF CONTENTS
SECTION PAGE
Section 1. Certain Definitions........................................1
Section 2. Appointment of Rights Agent................................6
Section 3. Issuance of Rights Certificates............................6
(a) Distribution Date; Rights Certificates.....................6
(b) Common Stock Certificates; Summary of Rights...............7
(c) Legend.....................................................7
Section 4. Form of Rights Certificates................................8
(a) Form; Date.................................................8
(b) Acquiring Person Legend....................................8
Section 5. Countersignature and Registration..........................9
(a) Signatures.................................................9
(b) Registration and Transfer..................................9
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates..............................................10
(a) Procedure.................................................10
(b) Issuance of New Rights Certificates.......................10
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights....................................................10
(a) Exercise..................................................10
(b) Purchase Price ...........................................11
(c) Rights Agent Actions......................................11
(d) Partial Exercise..........................................12
(e) Termination of Acquiring Person's Rights..................12
(f) Surrender of Rights Certificates; Identity of Beneficial
Owner.....................................................12
Section 8. Cancellation and Disposition of Rights Certificates.......12
Section 9. Reservation and Availability of Capital Stock.............13
(a) Reservation of Capital Stock. ...........................13
(b) Listing. ................................................13
(c) Registration under the Act. .............................13
(d) Covenant Regarding Capital Stock. .......................14
(e) Transfer Taxes and Charges. .............................14
Section 10. Common Stock Record Date..................................14
Section 11. Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights.......................................14
(a) Certain Adjustments.......................................15
(b) Purchase Price Adjustment-- Capital Stock.................18
(c) Purchase Price Adjustment-- Cash, Assets, etc.............19
(d) Current Market Price......................................19
(e) Purchase Price Adjustment Threshold.......................20
(f) Equivalent Adjustments....................................20
(g) Post-Adjustment Rights Issuances..........................20
(h) Common Stock Anti-Dilution................................21
(i) Adjustment of Number of Rights. .........................21
(j) Rights Certificates. .....................................21
(k) Adjustment Below Par Value................................22
(l) Adjustment Effective as of Future Date; Exercise. .......22
(m) Tax Adjustments...........................................22
(n) Restriction on Certain Transactions.......................22
(o) Restriction Against Diminishing Benefits of the Rights....23
(p) Common Stock Adjustments..................................23
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares....................................................23
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power..........................................23
(a) Flip-over Event...........................................23
(b) Principal Party...........................................25
(c) Supplemental Agreement....................................25
(d) Exceptions................................................26
Section 14. Fractional Rights and Fractional Shares...................26
(a) Fractional Rights.........................................26
(b) Fractional Shares of Common Stock.........................27
(c) Waiver of Fractional Rights and Shares....................27
Section 15. Rights of Action..........................................27
Section 16. Agreement of Rights Holders...............................27
Section 17. Rights Certificate Holder Not Deemed a Shareholder........28
Section 18. Concerning the Rights Agent...............................29
(a) Compensation. ...........................................29
(b) Reliance. ...............................................29
Section 19. Merger or Consolidation or Change of Name of Rights Agent.29
(a) Successor.................................................29
(b) Prior Countersignatures...................................30
Section 20. Duties of Rights Agent....................................30
(a) Legal Counsel.............................................30
(b) Certification by the Company..............................30
(c) Liability for Negligence, etc.............................30
(d) Statements of Fact or Recitals............................30
(e) Agreement; Adjustments....................................30
(f) Further Assurances........................................31
(g) Instructions..............................................31
(h) Dealing in Rights.........................................31
(i) Agents; Reasonable Care...................................31
(j) Expenses; Repayment Assurances............................32
(k) Exercise of Rights; Consultation with Company ............32
Section 21. Change of Rights Agent....................................32
Section 22. Issuance of New Rights Certificates.......................33
Section 23. Redemption and Termination................................33
(a) Redemption. .............................................33
(b) Effect of Redemption; Procedure...........................34
Section 24. Exchange..................................................34
(a) Right to Exchange.........................................34
(b) Effect of Exchange; Procedure.............................34
(c) Common Stock Equivalents..................................35
(d) Insufficient Common Stock.................................35
(e) Fractional Shares.........................................35
Section 25. Notice of Certain Events..................................35
(a) Common Stock Transactions, etc. ..........................35
(b) Other Transactions........................................36
Section 26. Notices...................................................36
Section 27. Supplements and Amendments................................37
Section 28. Successors................................................38
Section 29. Determinations and Actions by the Board of Directors, etc.38
Section 30. Benefits of this Agreement................................38
Section 31. Severability..............................................38
Section 32. Governing Law.............................................39
Section 33. Counterparts..............................................39
Section 34. Descriptive Headings......................................39
Exhibit 1 Form of Rights Certificate................................41
Exhibit 2 Letter to Shareholders....................................49
Exhibit 3 Press Release - "TNP ENTERPRISES, INC. Adopts Shareholder
Rights Plan," dated August 11, 1998.......................54
AMENDED AND RESTATED RIGHTS AGREEMENT
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of August 11, 1998 (the
"Effective Date"), between TNP Enterprises, Inc., a Texas corporation (the
"Company"), and The Bank of New York (the "Rights Agent").
RECITALS
On October 24, 1988 (the "Rights Dividend Declaration Date"), the Board
of Directors of the Company 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 November 4, 1988 (the
"Record Date"), and has authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of Section 11(p) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Common Stock
Adjustments)) for each share of Common Stock of the Company issued between the
Record Date (whether originally issued or delivered from the Company's treasury)
and the Distribution Date, each Right initially representing the right to
purchase one share of Common Stock, upon the terms and subject to the conditions
set forth in that certain Rights Agreement, dated as of October 24, 1988 and as
amended November 13, 1990 (the "Rights Agreement), by and between the Company
and Team Bank.
Pursuant to the terms of the Rights Agreement, the Rights may not be
exercised on or after the Close of Business on November 4, 1998. As a result,
the protections afforded to the Company and the shareholders of the Company
under the Rights Agreement will no longer be available after such date.
Accordingly, on August 11, 1998, the Board of Directors determined it to be in
the best interests of the Company and its shareholders to amend the Rights
Agreement to extend its term for a period of ten years from the date of this
Agreement and to make certain other changes to the terms of the Rights Agreement
as set forth below.
AGREEMENT
In consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 10% or more of the
shares of Common Stock then outstanding, but shall not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan or (iv) any Person who becomes an Acquiring Person solely as a result of a
reduction in the number of shares of Common Stock outstanding due to the
repurchase of shares of Common Stock by the Company, unless and until such
Person shall purchase or otherwise become (as a result of actions taken by such
Person or its Affiliates or Associates) the Beneficial Owner of additional
shares of Common Stock constituting 1% or more of the then outstanding shares of
Common Stock; provided, however, that if a Person shall become the Beneficial
Owner of 10% or more of the Common Stock of the Company then outstanding by
reason of share repurchases by the Company and shall, after such share
repurchases by the Company, become the Beneficial Owner of any additional Common
Stock of the Company, then such Person shall be deemed to be an "Acquiring
Person," unless upon the consummation of the acquisition of such additional
shares of Common Stock such Person does not beneficially own 10% or more of the
shares of Common Stock then outstanding. Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that a Person who
would otherwise be an Acquiring Person, as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially owned a
percentage of Common Stock that would otherwise cause such Person to be an
Acquiring Person, or (ii) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the consequences of
such Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an Acquiring Person as defined pursuant to the
foregoing provisions of this paragraph, then such Person shall not be deemed to
be or to have become an Acquiring Person for any purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended and in
effect from time to time.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments)
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(e) "Agreement" shall mean this Amended and Restated Rights
Agreement as originally executed or as it may from time to time be supplemented
or amended pursuant to the applicable provisions hereof.
(f) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights, warrants or options,
or otherwise; provided, however, that a Person shall not, for purposes of this
paragraph (i), be deemed the "Beneficial Owner" of or to "beneficially own," (A)
securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person's Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, or (B) securities issuable upon exercise
of Rights at any time prior to the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) (Issuance Of Rights Certificates -- Distribution Date; Rights
Certificates) or Section 22 (Issuance Of New Rights Certificates) (the "Original
Rights") or pursuant to Section 11(i) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Adjustment of Number of Rights) in
connection with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of or
has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant to any
agreement, arrangement or understanding, whether or not in writing; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a result of an
agreement, arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on a
Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are "beneficially owned," directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
the proviso to subparagraph (ii) of this paragraph (f)) or disposing of any
voting securities of the Company;
PROVIDED, HOWEVER, that nothing in this paragraph (f) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty (40) calendar days after the date of such acquisition.
(g) "Board" means the Board of Directors of the Company.
(h) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of Texas or New York are
authorized or obligated by law or executive order to close.
(i) "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.
(j) "Common Stock" shall mean the common stock, no par value per
share, of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(k) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(l) "Company" shall mean the Person named as the "Company" in the
first paragraph of this Agreement until a successor corporation shall have
become such, or until a Principal Party shall assume, and thereafter be liable
for, all obligations and duties of the Company hereunder, pursuant to the
applicable provisions of this Agreement, and thereafter "Company" shall mean
such successor corporation or Principal Party.
(m) "Current Market Price" shall have the meaning set forth in Section
11(d) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Current Market Price).
(n) "Current Value" shall have the meaning set forth in Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments).
(o) "Disinterested Director" shall mean (i) any member of the Board,
while such Person is a member of the Board, who is not an Acquiring Person,
or an Affiliate or Associate of an Acquiring Person, or a representative or
nominee of an Acquiring Person or of any such Affiliate or Associate, and was a
member of the Board prior to the date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an Acquiring Person or of
any such Affiliate or Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a majority of the
Disinterested Directors.
(p) "Distribution Date" shall have the meaning set forth in Section
3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates).
(q) "Effective Date" shall have the meaning set forth in the first
paragraph of this Agreement.
(r) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended and in effect on the date of this Agreement.
(s) "Exchange Number" shall mean one-half of the number of shares of
Common Stock or shares or other units of other property for which a Right is
exercisable immediately prior to the time of the action of the Board to exchange
the Rights.
(t) "Expiration Date" shall have the meaning set forth in Section
7(a) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Exercise).
(u) "Final Expiration Date" shall mean the Close of Business on August
11, 2008.
(v) "Flip-in Event" shall mean any event described in Section
11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments).
(w) "Flip-in Trigger Date" shall have the meaning set forth in Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments).
(x) "Flip-over Event" shall mean any event described in clauses (x),
(y) or (z) of Section 13(a) (Consolidation, Merger or Sale or Transfer of Assets
or Earning Power -- Flip-over Event).
(y) "Original Rights" shall have the meaning set forth in Section
1(f)(i) (Certain Definitions).
(z) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(aa) "Principal Party" shall have the meaning set forth in Section
13(b) (Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Principal Party).
(bb) "Purchase Price" shall have the meaning set forth in Section 4(a)
(Form of Rights Certificates -- Form; Date).
(cc) "Qualified Offer" shall have the meaning set forth in Section
11(a)(ii)(A).
(dd) "Record Date" shall have the meaning set forth in the Recitals at
the beginning of the Agreement.
(ee) "Redemption Date" shall have the meaning set forth in Section
23(a) (Redemption and Termination -- Redemption).
(ff) "Redemption Price" shall have the meaning set forth in Section
23(a) (Redemption and Termination -- Redemption).
(ff) "Rights" shall have the meaning set forth in the Recitals at the
beginning of the Agreement.
(hh) "Rights Agent" shall mean the Person named as the "Rights Agent"
in the first paragraph of this Agreement until a successor Rights Agent shall
have become such pursuant to the applicable provisions hereof and thereafter
"Rights Agent" shall mean such successor Rights Agent. If at any time there is
more than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, "Rights Agent" shall mean and include
each such Person.
(ii) "Rights Certificates" shall have the meaning set forth in Section
3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates).
(jj) "Rights Dividend Declaration Date" shall have the meaning set
forth in the Recitals at the beginning of the Agreement.
(kk) "Spread" shall have the meaning set forth in Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments).
(ll) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed or amended pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such other than pursuant to a Qualified Offer.
(mm) "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which an amount of voting securities sufficient
to elect at least a majority of the directors of such corporation or entity is
beneficially owned, directly or indirectly, by such Person, or otherwise
controlled by such Person.
(nn) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments).
(oo) "Trading Day" shall have the meaning set forth in Section
11(d)(i) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Current Market Price).
(pp) "Triggering Event" shall mean any Flip-in Event or any Flip-over
Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issuance of Rights Certificates.
(a) Distribution Date; Rights Certificates. Until the earlier of (i)
the Close of Business on the tenth Business Day after the Stock Acquisition Date
or (ii) the Close of Business on the tenth Business Day (or such later date as
the Board shall determine prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon consummation
thereof such Person would be the Beneficial Owner of 10% or more of the shares
of Common Stock then outstanding (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock (including a transfer to the Company, except pursuant to
the provisions of Section 23 (Redemption and Termination)). As soon as
practicable after the Distribution Date, the Rights Agent will, at the expense
of the Company, send by first-class, postage prepaid mail, to each record holder
of the Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit 1 hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Common Stock Adjustments) at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) (Fractional Rights and Fractional
Shares -- Fractional Rights)) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) Common Stock Certificates; Summary of Rights. Prior to the
Distribution Date, the Rights as provided herein will be evidenced by such
certificates for the Common Stock and the registered holders of the Common Stock
shall also be the registered holders of such associated Rights. Until the
earlier of the Distribution Date or the Expiration Date, the transfer of any
certificates representing shares of Common Stock in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with
such shares of Common Stock. On the Effective Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights to Purchase
Common Stock, in substantially the form of Exhibit 2 hereto (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of shares
of Common Stock, at the address of such holder shown on the records of the
Company.
(c) Legend. Rights shall be issued in respect of all certificates for
shares of Common Stock which are issued (whether originally issued or from the
Company's treasury) after the Record Date but prior to the earliest of the (i)
Distribution Date, (ii) the Expiration Date, or (iii) the Effective Date, or, in
certain circumstances provided in Section 22 (Issuance of New Rights
Certificates) after the Distribution Date. Certificates representing such shares
of Common Stock shall also be deemed to be certificates for Rights, and shall
bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Amended and Restated Rights Agreement dated as
of August 11, 1998, by and between TNP Enterprises, Inc. (the "Company")
and The Bank of New York, as Rights Agent (the "Amended and Restated Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of the Company.
Under certain circumstances, as set forth in the Amended and Restated
Rights Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Amended and Restated Rights
Agreement, as in effect on the date of mailing, without charge promptly
after receipt of a written request therefor. Under certain circumstances
set forth in the Amended and Restated Rights Agreement, Rights issued to,
or held by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the Amended
and Restated Rights Agreement), whether currently held by or on behalf of
such Person or by any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of (i) the Distribution Date, (ii) the Expiration Date, and (iii) the
Redemption Date, (x) the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, (y) the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights, and (z) the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with such shares of Common
Stock. In the event that the Company purchases, or acquires any shares of Common
Stock after the Record Date but prior to the Distribution 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 Rights Certificates.
(a) Form; Date. The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit 1 hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed or any securities association on whose interdealer quotation
system the Rights may be from time to time authorized for quotation, or to
conform to usage. Subject to the provisions of Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) and Section 22
(Issuance of New Rights Certificates), the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face shall
entitle the holders thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the price set forth therein (such exercise price
per share is referred to herein as the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Acquiring Person Legend. Any Rights Certificate issued pursuant to
Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates) or Section 22 (Issuance of New Rights Certificates) that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) and any Rights Certificate issued pursuant to Section 6
(Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates), Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) or Section 22
(Issuance of New Rights Certificates) upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Amended
and Restated Rights Agreement dated as of August 11, 1998, by and between
TNP Enterprises, Inc. and The Bank of New York, as Rights Agent).
Accordingly, this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section 7(e)
(Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights) of such Agreement.
Section 5. Countersignature and Registration.
(a) Signatures. The Rights Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested to by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
(b) Registration and Transfer. Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the date of each of
the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Procedure. Subject to the provisions of Section 4(b) (Form of
Rights Certificates -- Acquiring Person Legend), Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) and Section 14 (Fractional Rights and Fractional Shares), at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of shares of Common Stock (or, following a Triggering Event,
Common Stock, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitle such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the principal office or offices of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon, the Rights Agent shall, subject to Section 4(b), Section 7(e) and
Section 14, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination or exchange of Rights Certificates.
(b) Issuance of New Rights Certificates. Upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Exercise. Subject to Section 7(e) (Exercise of Rights; Purchase
Price; Expiration Date of Rights -- Termination of Acquiring Person's Rights),
at any time after the Distribution Date, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9(c) (Reservation and Availability of
Capital Stock -- Registration under the Act), Section 11(a)(iii) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Certain
Adjustments), Section 23(a) (Redemption and Termination -- Redemption), and
Section 24(b) (Exchange -- Effect of Exchange; Procedure)), in whole or in part,
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of shares of Common Stock (or other securities, cash or other
assets, as the case may be) as to which such surrendered Rights are then
exercisable and an amount equal to any applicable transfer tax, at or prior to
the earliest of (i) the Final Expiration Date, (ii) the Redemption Date, or
(iii) the expiration of the Rights pursuant to Section 13(d) (Consolidation,
Merger or Sale or Transfer of Assets or Earning Power -- Exceptions) (the
earliest of (i), (ii) and (iii) being herein referred to as the "Expiration
Date"). The payment of the Purchase Price and the applicable transfer tax, if
any (as such amount may be reduced pursuant to Section 11(a)(iii) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Certain
Adjustments)), may be made (x) in cash, (y) by certified bank check or bank
draft payable to the order of the Company or (z) by delivery of a certificate or
certificates (with appropriate stock powers executed in blank attached thereto)
evidencing a number of shares of Common Stock equal to the then Purchase Price
divided by the closing price (as determined pursuant to Section 11(d)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Current Market Price)) per share of Common Stock on the Trading Day immediately
preceding the date of such exercise. In the event that the Company is obligated
to issue other securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a), the Company will
make all arrangements necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if and when
appropriate. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Common Stock would be issued.
(b) Purchase Price. The Purchase Price for each share of Common Stock
pursuant to the exercise of a Right shall initially be $100.00, and shall be
subject to adjustment from time to time as provided in Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) and Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event) and shall be payable in accordance with paragraph (a) of this
Section 7.
(c) Rights Agent Actions. Upon receipt of a Rights Certificate
representing exercisable Rights and the compliance by the holder of such Rights
Certificate with paragraph (a) of this Section 7, the Rights Agent shall,
subject to Section 20(k) (Duties of Rights Agent -- Exercise of Rights;
Consultation with Company), thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Common Stock (or make available, if the Rights
Agent is the transfer agent for such shares) certificates for the total number
of shares of Common Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Common Stock
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of shares of Common Stock as are to be purchased (in which case
certificates for the shares of Common Stock represented by such receipts shall
be deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request, (ii) requisition
from the Company the amount of cash, if any, to be paid in lieu of fractional
shares in accordance with Section 14 (Fractional Rights and Fractional Shares),
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, and (iv) after receipt thereof, deliver such cash, if any, to, or upon
the order of, the registered holder of such Rights Certificate.
(d) Partial Exercise. In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14 (Fractional Rights and Fractional Shares).
(e) Termination of Acquiring Person's Rights. Notwithstanding anything
in this Agreement to the contrary, from and after the first occurrence of a
Flip-in Event, any Rights beneficially owned by (i) an Acquiring Person, or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such 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 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. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) (Form of Rights Certificates -- Acquiring Person Legend) are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or any of its respective Affiliates, Associates
or transferees hereunder.
(f) Surrender of Rights Certificates; Identity of Beneficial Owner.
Notwithstanding anything in this Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to undertake any action with respect to
a registered holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i) completed and
signed the certificate contained in the form of election to purchase set forth
on the reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Disposition of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall dispose of all
canceled Rights Certificates in accordance with its regulations and shall
deliver a certificate of such disposition thereof to the Company.
Section 9. Reservation and Availability of Capital Stock .
(a) Reservation of Capital Stock. The Company will use its
best efforts to reserve and keep available out of its authorized and unissued
shares of Common Stock the number of shares of Common Stock and/or other
securities that, as provided in this Agreement, including the rights of the
Company under Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind
of Shares or Number of Rights -- Certain Adjustments) to otherwise fulfill its
obligations, will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) Listing. So long as the shares of Common Stock issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange or authorized for quotation on any interdealer quotation
system of any securities association, the Company shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange or quoted on such
system upon official notice of issuance upon such exercise.
(c) Registration under the Act. The Company shall use its best
efforts to (i) file, as soon as practicable following the earliest date after
the first occurrence of a Flip-in Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Certain Adjustments), or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement on an appropriate form under the Act with respect to the
securities purchasable upon exercise of the Rights, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) calendar days after the date set forth in clause (i) of the first sentence
of this Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.
(d) Covenant Regarding Capital Stock. The Company will take
all such action as may be necessary to ensure that all shares of Common Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.
(e) Transfer Taxes and Charges. The Company will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of shares of Common Stock (or other securities,
as the case may be) upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of shares of Common Stock (or other securities, as the case
may be) in respect of a name other than, that of the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to issue or
deliver any certificates for shares of Common Stock (or other securities, as the
case may be) in a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been paid (any such tax being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such tax is
due.
Section 10. Common Stock Record Date. Each Person in whose name any
certificate for a number of shares of Common Stock (or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of such shares of Common Stock (or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated as of, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Stock (or
other securities, as the case may be) transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Common Stock (or other securities, as the
case may be) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a shareholder of the Company with respect to shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) Certain Adjustments.
(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Common Stock payable in shares of
Common Stock, (B) subdivide or split the outstanding Common Stock, (C)
combine the outstanding Common Stock into a smaller number of shares, or
(D) issue any shares of its capital stock in a reclassification of the
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) (Exercise of Rights; Purchase Price; Expiration Date of Rights
-- Termination of Acquiring Person's Rights), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date
of such subdivision, split, combination or reclassification, and the number
and kind of shares of Common Stock or capital stock, as the case may be,
issuable on such date, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive, upon
payment of the aggregate adjusted Purchase Price then in effect necessary
to exercise a Right in full, the aggregate number and kind of shares of
Common Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date and at a time when the Common
Stock (or other capital stock, as the case may be) transfer books of the
Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, split,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) In the event:
(A) (1) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, shall merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination and the Common
Stock of the Company shall remain outstanding and unchanged, or (2)
subject to Section 23 (Redemption and Termination), any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan), alone or together with its
Affiliates and Associates, shall, at any time after the Rights
Dividend Declaration Date, become an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a Flip-over
Event, or is an acquisition of shares of Common Stock pursuant to a
tender offer or an exchange offer for all outstanding shares of Common
Stock at a price and on terms determined by a majority of the
Disinterested Directors after receiving advice from one or more
investment banking firms selected by the Disinterested Directors, to
be (a) at a price which is fair to the shareholders of the Company
(taking into account all factors which the Disinterested Directors
deem relevant including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise in
the best interests of the Company and its shareholders, other than
such Acquiring Person, its Affiliates and its Associates (a "Qualified
Offer"); or
(B) during such time as there is an Acquiring Person, there shall
be 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 involving the Company or any of
its Subsidiaries, other than a transaction or transactions to which
the provisions of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) apply (whether
or not with or into or otherwise involving an Acquiring Person) which
has the effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class of
equity securities of the Company or any of its subsidiaries which is
directly or indirectly beneficially owned by any Acquiring Person or
any Associate or Affiliate of any Acquiring Person, then, promptly
following the occurrence of any such Flip-in Event (whether described
in Section 11(a)(ii)(A) or (B)), proper provision shall be made so
that each holder of a Right (except as provided below and in Section
7(e) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination of Acquiring Person's Rights)) shall thereafter have the
right to receive, upon exercise thereof at the then current Purchase
Price in accordance with the terms of this Agreement, in lieu of the
number of shares of Common Stock for which a Right was before that
time exercisable, such number of shares of Common Stock of the Company
as shall equal the result obtained by (x) multiplying the then current
Purchase Price by the then number of shares of Common Stock for which
a Right was exercisable immediately prior to the first occurrence of a
Flip-in Event, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50%
of the Current Market Price per share of Common Stock on the date of
such first occurrence (such number of shares being referred to as the
"Adjustment Shares").
(iii) In the event that the number of shares of Common Stock that are
authorized by the Company's Articles of Incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the
Rights is not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall: (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the Purchase Price (such excess, the "Spread"), and (B) with respect to
each Right, subject to Section 7(e)(Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights),
make adequate provision to substitute for the Adjustment Shares, upon the
exercise of such Right and payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) other equity securities of
the Company (including, without limitation, shares, or units of shares, of
preferred stock which the Board has deemed to have essentially the same
value or economic rights as shares of Common Stock (such securities being
referred to as "Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been
determined by the Board based upon the advice of a nationally recognized
investment banking firm selected by the Board; provided, however, that if
the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) calendar days following the
later of (x) the first occurrence of a Flip-in Event and (y) the date on
which the Company's right of redemption pursuant to Section 23(a)
(Redemption and Termination -- Redemption) expires (the later of (x) and
(y) being referred to herein as the "Flip-in Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread. If the Board shall
determine in good faith that it is likely that sufficient additional shares
of Common Stock or other equity securities could be authorized for issuance
upon exercise in full of the Rights, the thirty (30) calendar day period
set forth above may be extended to the extent necessary, but not more than
ninety (90) calendar days after the Flip-in Trigger Date, in order that the
Company may seek shareholder approval for the authorization of such
additional shares (such period, as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action need
be taken pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e), that
such action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
of Common Stock or other equity securities and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability
of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of each Adjustment Share
shall be the Current Market Price per share of the Common Stock on the
Flip-in Trigger Date and the per share or per unit value of any Common
Stock Equivalent shall be deemed to equal the Current Market Price per
share of the Common Stock on such date.
(iv) If the rules of the national securities exchange, registered as
such pursuant to Section 6 of the Exchange Act, or of the national
securities association, registered as such pursuant to Section 15A of the
Exchange Act, on which the Common Stock is principally traded or quoted
would prohibit such exchange or association from listing or continuing to
list, or from authorizing for or continuing quotation and/or transaction
reporting through an inter-dealer quotation system, the Common Stock or
other equity securities of the Company if the Rights were to be exercised
for shares of Common Stock in accordance with subparagraph (ii) of this
Section 11(a) because such issuance would nullify, restrict or disparately
reduce the per share voting rights of holders of Common Stock, the Company
shall: (A) determine the Spread, and (B) with respect to each Right, make
adequate provision to substitute for the Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) equity securities of the Company, including, without limitation,
Common Stock Equivalents, other than securities which would have the effect
of nullifying, restricting or disparately reducing the per share voting
rights of holders of Common Stock, (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing, having an aggregate
value equal to the Current Value, where such aggregate value has been
determined by the Board based upon the advice of a recognized investment
banking firm selected by the Board; provided, however, if the Company shall
not have made adequate provision to deliver value pursuant to clause (B)
above within thirty (30) calendar days following the Flip-in Trigger Date,
then the Company shall be obligated to deliver, upon the surrender for
exercise of a Right and without requiring payment of the Purchase Price,
cash having an aggregate value equal to the Spread. To the extent that the
Company determines that some action need be taken pursuant to the first
sentence of this Section 11(a)(iv), the Company (x) shall provide, subject
to Section 7(e) (Exercise of Rights; Purchase Price; Expiration Date of
Rights -- Termination of Acquiring Person's Rights), that such action shall
apply uniformly to all outstanding Rights and (y) may suspend the
exercisability of the Rights, but not longer than ninety (90) calendar days
after the Flip-in Trigger Date, in order to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this Section
11(a)(iv), the value of the Common Stock shall be the Current Market Price
per share of the Common Stock on the Flip-in Trigger Date and the value of
any Common Stock Equivalent shall be deemed to have the same value as the
Common Stock on such date.
(b) Purchase Price Adjustment -- Capital Stock. In case the Company
shall fix a record date for the issuance of rights, options or warrants to all
holders of Common Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record date)
Common Stock, Common Stock Equivalents or securities convertible into Common
Stock or Common Stock Equivalents at a price per share of Common Stock (or
having a conversion price per share, if a security convertible into Common Stock
or Common Stock Equivalents) less than the Current Market Price per share of
Common 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 Common Stock outstanding on such record date,
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock and/or Common Stock Equivalents so to
be offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Current Market Price, and
the denominator of which shall be the number of shares of Common Stock
outstanding on such record date, plus the number of additional shares of Common
Stock and/or Common Stock Equivalents to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by delivery of
consideration part or all of which may be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Shares of
Common Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
(c) Purchase Price Adjustment -- Cash, Assets, etc. In case the
Company shall fix a record date for a distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Common Stock, but including any dividend payable in stock other than
Common Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights Purchase Price Adjustment -- Capital Stock)), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of Common Stock
on such record date, less the fair market value (as determined in good faith by
the Board, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
share of Common Stock and the denominator of which shall be such Current Market
Price per share of Common Stock. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed.
(d) Current Market Price. For the purpose of any computation
hereunder, other than computations made pursuant to Section 11(a)(iii)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments) the Current Market Price per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the thirty (30) consecutive Trading Days immediately prior
to such date, and for purposes of computations made pursuant to Section
11(a)(iii) the Current Market Price per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices per share of such Common
Stock for the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per share of
the Common Stock is determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on such Common
Stock payable in shares of such Common Stock or securities convertible into
shares of such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock and the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination or reclassification shall not have occurred prior to the
commencement of the requisite thirty (30) Trading Day or ten (10) Trading Day
period, as set forth above, then, and in each such case, the Current Market
Price shall be properly adjusted to take into account ex-dividend trading. The
closing price for each Trading Day shall be the last sale price, regular way,
or, in case no such sale takes place on such Trading Day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the shares
of Common Stock are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") or such other system then in use, or, if on any such date the shares
of Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Common Stock selected by the Board. If on any such date no
market maker is making a market in the Common Stock, the fair value of such
shares on such date as determined in good faith by the Board shall be used. The
term "Trading Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
is open for the transaction of business or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so listed or
traded, Current Market Price per share shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Purchase Price Adjustment Threshold. Anything herein to the
contrary notwithstanding, no adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least one
percent (1%) in the Purchase Price; provided however, that any adjustments which
by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights) shall be made to the nearest cent or to the nearest share
of Common Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) Equivalent Adjustments. If as a result of an adjustment made
pursuant to Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments) or Section 13(a)
(Consolidation Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event) the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 with respect to the Common Stock shall apply on like terms to any
such other shares.
(g) Post-Adjustment Rights Issuances. 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 shares of Common Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Common Stock Anti-Dilution. Unless the Company shall have
exercised its election as provided in Section 11(i) (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights -- Adjustment of Number of
Rights), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Purchase Price Adjustment -- Capital
Stock) and Section 11(c) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Purchase Price Adjustment -- Cash, Assets, etc.),
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 shares of Common Stock (calculated to the nearest whole share)
obtained by (i) multiplying (x) the number of shares 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) Adjustment of Number of Rights. The Company may elect on or after
the date of any adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of shares of Common Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of shares
of Common 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 (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) calendar days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 (Fractional Rights and Fractional Shares) the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Rights Certificates. Irrespective of any adjustment or change in
the Purchase Price or the number of shares of Common Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number of
shares which were expressed in the initial Rights Certificates issued hereunder.
(k) Adjustment Below Par Value. Before taking any action that would
cause an adjustment reducing the Purchase Price below the then par or stated
value, if any, of the number of shares of Common Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which is or may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of shares of Common Stock
at such adjusted Purchase Price.
(l) Adjustment Effective as of Future Date; Exercise. In any case in
which this Section 11 (Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights) shall require that an adjustment in the Purchase Price be
made effective as of a record date for a specified event, the Company may elect
to defer until the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of shares of Common Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of shares of Common Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Tax Adjustments. Anything in this Section 11 (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights) to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith judgment the Board shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Common Stock, (ii) issuance wholly for cash of any shares of Common Stock at
less than the Current Market Price, (iii) issuance wholly for cash of shares of
Common Stock or securities which by their terms are convertible into or
exchangeable for shares of Common Stock, (iv) stock dividends or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Common Stock shall not be taxable to such
shareholders.
(n) Restriction on Certain Transactions. The Company shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Restriction Against Diminishing Benefits of the Rights)), (ii) merge
with or into any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), (iii) enter into a statutory
share exchange or similar transaction with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
or (iv) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at the time of
or immediately after such consolidation, merger, statutory share exchange or
similar transaction, or sale there are any rights, warrants or other instruments
or securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger, statutory share exchange or similar transaction, or sale,
the shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) (Consolidation, Merger or Sale
or Transfer of Assets or Earning Power -- Flip-over Event) shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) Restriction Against Diminishing Benefits of the Rights. The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23 (Redemption and Termination) or Section 27
(Supplements and Amendments) take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits intended
to be afforded by the Rights.
(p) Common Stock Adjustments. Anything in this Agreement to the
contrary notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide or split the outstanding shares of Common Stock,
or (iii) combine the outstanding shares of Common Stock into a smaller number of
shares, the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights associated with each
share of Common Stock immediately prior to such event by a fraction, the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event. The adjustments provided for
in this Section 11(p) shall be made successively whenever such a dividend is
declared or paid or such subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares .
Whenever an adjustment is made as provided in Section 11 (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights) and Section 13
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power) the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Common Stock, a
copy of such certificate, and (c) mail or cause the Rights Agent to mail a brief
summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of Common
Stock) in accordance with Section 26 (Notices). The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained, and shall not be responsible for calculating any adjustment, nor
shall it be deemed to have knowledge of such an adjustment unless and until it
shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) Flip-over Event. In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, or enter into a statutory stock exchange or
similar transaction with, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)(Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
Against Diminishing Benefits of the Rights)), and the Company shall not be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction, (y) any Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)) shall
consolidate with, or merge with or into, or enter into a statutory stock
exchange or similar transaction with, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction and, in connection with such
consolidation, merger or statutory share exchange or similar transaction, all or
part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o)), then, and in each such case (except as may be
contemplated by Section 13(d) (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power -- Exceptions)), proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of shares of Common Stock for which a
Right is exercisable immediately prior to the first occurrence of a Flip-over
Event (or, if a Flip-in Event has occurred prior to the first occurrence of a
Flip-over Event, multiplying the number of such shares for which a Right was
exercisable immediately prior to the first occurrence of a Flip-in Event by the
Purchase Price in effect immediately prior to such first occurrence), and (B)
dividing that product (which, following the first occurrence of a Flip-over
Event, shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price per share of the
Common Stock of such Principal Party on the date of consummation of such
Flip-over Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Flip-over Event, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 (Adjustment of Purchase Price; Number
and Kind of Shares or Number of Rights) shall apply only to such Principal Party
following the first occurrence of a Flip-over Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation of a
sufficient number of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) (Adjustment
of Purchase Price; Number and Kind of Shares or Number of Rights -- Certain
Adjustments) hereof shall be of no effect following the first occurrence of any
Flip-over Event.
(b) Principal Party. "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power --Flip-over Event), the Person that is
the issuer of any securities into which shares of Common Stock of the
Company are converted in such consolidation, merger or statutory share
exchange or similar transaction, and if no securities are so issued, the
Person that is the other party to such consolidation, merger or statutory
share exchange or similar transaction, and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event), the Person that is
the party receiving the greatest portion of the assets, cash flow or
earning power transferred pursuant to such transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the total outstanding Common Stock having the greatest aggregate
market value.
(c) Supplemental Agreement. The Company shall not consummate a
Flip-over Event unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power) and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of such Flip-over Event,
the Principal Party will
(i) prepare and file a registration statement under the Act, with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date;
(ii) take such all such other action as may be necessary to
enable the Principal Party to issue the securities purchasable upon
exercise of the Rights, including but not limited to the registration or
qualification of such securities under all requisite securities laws of
jurisdictions of the various stated and the listing of such securities on
such exchanges and trading markets as may be necessary or appropriate; and
(iii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power) shall similarly apply to successive consolidation,
mergers or statutory share exchanges or similar transactions or sales or other
transfers. In the event that a Flip-over Event shall occur at any time after the
occurrence of a Flip-in Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in Section
13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning Power
--Flip-over Event).
(d) Exceptions. Notwithstanding anything in this Agreement to the
contrary, Section 13 (Consolidation, Merger or Sale or Transfer of Assets or
Earning Power) shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) if (i) such transaction
is consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock that is a Qualified Offer (or a wholly-owned subsidiary of any such
Person or Persons), (ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of Common Stock paid to all
holders of shares of Common Stock whose shares were purchased pursuant to such
tender or exchange offer and (iii) the form of consideration being offered in
such transaction is the same as the form of consideration paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender offer
or exchange offer. Upon consummation of any such transaction contemplated by
this Section 13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) Fractional Rights. The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Common Stock Adjustments), or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any Trading Day shall be the last sale price,
regular way, or, in case no such sale takes place on such Trading Day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market as reported by Nasdaq or such other system
then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board.
If on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
shall be used.
(b) Fractional Shares of Common Stock. Following the occurrence of a
Triggering Event, the Company shall not be required to issue fractions of shares
of Common Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one (1) share
of Common Stock. For purposes of this Section 14(c), the current market value of
one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Current Market Price)) for the
Trading Day immediately prior to the date of such exercise.
(c) Waiver of Fractional Rights and Shares. The holder of a Right by
the acceptance of the Right expressly waives his or her right to receive any
fractional Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14 (Fractional Rights and Fractional Shares).
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her 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 or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) (Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates -- Procedure) and Section 7(f) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Surrender of Rights Certificates; Identity of
Beneficial Owner), the Company and the Rights Agent may deem and treat the
person in whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights), shall be
required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 (Notice of
Certain Events)), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) Compensation. The Company shall 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
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 to be
done 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 indemnity provided for herein shall survive
the expiration of the Rights, the termination of this Agreement, and the
resignation or removal of the Rights Agent. The costs and expenses of enforcing
this right of indemnification shall also be paid by the Company.
(b) Reliance. The Rights Agent may conclusively rely upon and shall be
protected and shall incur no liability for or in respect of any action taken,
suffered or omitted to be taken by it in connection with its administration of
this Agreement in reliance upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons.
(c) Notwithstanding anything in this Agreement to the contrary, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Successor. 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, stock transfer or other shareholder services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 (Change of Rights
Agent). In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) Prior Countersignatures. In case at any time the name of the
Rights Agent shall be changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed name; and in all such
cases such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:
(a) Legal Counsel. Before the Rights Agent acts or refrains from
acting, 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 to be taken by it in good faith and in accordance with such opinion.
(b) Certification by the Company. Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of Current Market Price) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company and 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) Liability for Negligence, etc. The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or willful misconduct.
(d) Statements of Fact or Recitals. The Rights Agent shall not be
liable for or by reason of any of the statements of fact or recitals contained
in this Agreement or in the Rights Certificates or be required to verify the
same (except as to its countersignature on such Rights Certificates), but all
such statements and recitals are and shall be deemed to have been made by the
Company only.
(e) Agreement; Adjustments. The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature); nor shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) or Section 13 (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power) or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) Further Assurances. The Company 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) Instructions. The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company and to apply to such persons for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with the instructions of
any such officer.
Any application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing any action
proposed to be taken or omitted by the Rights Agent under this Agreement and the
date on or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than ten Business Days after the date any officer of the Company
actually receives such application, unless any such officer shall have consented
in writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.
(h) Dealing in Rights. 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) Agents; Reasonable Care. The Rights Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct; provided, however,
reasonable care was exercised in the selection and continued employment thereof.
(j) Expenses; Repayment Assurances. No provision of this Agreement
shall require the Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
(k) Exercise of Rights; Consultation with Company. If, with respect to
any Rights Certificate surrendered to the Rights Agent for exercise or transfer,
the certificate attached to the form of assignment or form of election to
purchase, as the case may be, has 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.
(l) The Rights Agent shall not be required to take notice or be deemed
to have notice of any fact, event or determination (including, without
limitation, any dates or events defined in this Agreement or the designation of
any Person as an Acquiring Person, Affiliate or Associate) under this Agreement
unless and until the Rights Agent shall be specifically notified in writing by
the Company of such fact, event or determination.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) calendar days' notice in writing mailed to the Company, and to
the transfer agent of the Common Stock, by registered or certified mail, and, at
the expense of the Company, to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) calendar days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to the transfer
agent of the Common Stock, by registered or certified mail, and to the holders
of the Rights Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) calendar days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of any State of the United
States, in good standing, which is authorized under such laws to exercise stock
transfer or corporate trust powers, is subject to supervision or examination by
federal or state authority and either has or is an Affiliate of an entity that
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (b) an Affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21 (Change of Rights Agent), or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereafter issued by the Company, in either
case outstanding as of the Distribution Date, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material, adverse tax consequences
to the Company or the Person to whom such Rights Certificate would be issued,
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination.
(a) Redemption. The Company may, at its option, at any time prior to
the earlier of (i) the Close of Business on the tenth Business Day following the
Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred
prior to the Record Date, the Close of Business on the tenth Business Day
following the Record Date), or (ii) the Final Expiration Date, redeem (the date
of such redemption being referred to herein as the "Redemption Date") all but
not less than all of the then outstanding Rights at a redemption price of $0.05
per Right, as such amount may be appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price");
provided, however, that if, following the occurrence of a Stock Acquisition Date
and following the expiration of the right of redemption hereunder but prior to
any Triggering Event, (i) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common Stock in one
transaction or series of transactions, not directly or indirectly involving the
Company or any of its Subsidiaries, which did not result in the occurrence of a
Triggering Event such that such Person is thereafter a Beneficial Owner of 10%
or less of the outstanding shares of Common Stock, and (ii) there are not other
Persons, immediately following the occurrence of the event described in clause
(i), who are Acquiring Persons, then the right of redemption shall be reinstated
and thereafter be subject to the provisions of this Section 23. Notwithstanding
anything contained in this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Flip-in Event until such time as the
Company's right of redemption hereunder has expired. The redemption of the
Rights by the Company may be made effective at such time, on such basis and with
such conditions as the Board in its sole discretion may establish. The Company
may, at its option, pay the Redemption Price in cash, shares of Common Stock
(based on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board.
(b) Effect of Redemption; Procedure. Immediately upon the action of
the Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock. Any notice that is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made.
Amounts payable shall be rounded down to the nearest $0.01. Any notice
that is mailed in the manner provided in this Agreement will be deemed to be
given whether or not the holder receives the notice. In any case, the failure to
give such notice by mail, or any defect in the notice, to any particular holder
shall not affect the sufficiency of the notice to the other holders of the
Rights and the validity of the proceedings.
Section 24. Exchange.
(a) Right to Exchange. The Company may, at its option, at any time and
from time to time after the first occurrence of a Flip-in Event, exchange all or
part of the then outstanding and exercisable Rights (other than Rights which
have become void as provided in Section 7(e) (Exercise of Rights; Purchase
Price; Expiration Date of Rights -- Termination of Acquiring Person's Rights))
for the Exchange Number of shares of Common Stock or shares or units of other
equity securities (if authorized to be issued by the Articles of Incorporation)
which the Board has determined to be a Common Stock Equivalent, units of other
property or any combination thereof as determined by the Board. Notwithstanding
the foregoing, the Company shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary or any entity
holding shares of Common Stock for or pursuant to any such plan), together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner of
50% or more of the shares of Common Stock then outstanding. The exchange of the
Rights by the Company may be made effective at such time, on such basis and with
such conditions as the Board in its sole discretion may establish.
(b) Effect of Exchange; Procedure. Immediately upon the action of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24, evidence of which shall have been filed with the Rights Agent and
without any further action and without any notice, the right to exercise such
Rights will terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock, Common Stock
Equivalents or units of other property equal to the number of such Rights held
by such holder multiplied by the Exchange Number. Promptly after the action of
the Company ordering the exchange of the Rights, the Company shall (i) file
evidence of such action with the Rights Agent, (ii) give public notice of such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange, and (iii) mail notice of
such exchange to the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice that is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
as provided in Section 7(e) (Exercise of Rights; Purchase Price; Expiration Date
of Rights -- Termination of Acquiring Person's Rights)) held by each holder of
Rights.
(c) Common Stock Equivalents. In any exchange pursuant to this Section
24, the Company, at its option, may substitute Common Stock Equivalents for
Common Stock exchangeable for Rights, at the initial rate of one share of Common
Stock Equivalent for each share of Common Stock, as appropriately adjusted to
reflect adjustments in the voting rights of the Common Stock pursuant to the
Company's Articles of Incorporation, so that the share of Common Stock
Equivalent delivered in lieu of each share of Common Stock shall have the same
voting rights as one share of Common Stock.
(d) Insufficient Common Stock. In the event that the number of shares
of Common Stock which are authorized by the Company's Articles of Incorporation
but not outstanding or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit any exchange of Rights in
accordance with this Section 24, or other equity securities are not authorized
by the Articles of Incorporation the Company may, at its option, take all such
action as may be necessary to authorize additional shares of Common Stock or
other equity securities for issuance upon such exchange.
(e) Fractional Shares. Upon the action of the Company ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24, the Company
shall not be required to issue fractions of shares or to distribute certificates
which evidence fractional shares. In lieu of such fractional shares, the Company
may pay to the registered holders of the Rights Certificates with regard to
which such fractional shares would otherwise be issuable an amount in cash equal
to the same fraction of the current market value of one share of Common Stock.
For purposes of this Section 24, the current market value of one share of Common
Stock shall be the closing price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Current Market Price)) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24, and the
value of any Common Stock Equivalent shall be deemed to have the same current
market value as the Common Stock on such date.
Section 25. Notice of Certain Events.
(a) Common Stock Transactions, etc. In case the Company shall propose,
at any time after the Distribution Date, (i) to declare or pay any dividend
payable in stock of any class to the holders of Common Stock or to make any
other distribution to the holders of Common Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company);
(ii) to offer to the holders of Common Stock rights or warrants to subscribe for
or to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights or options; (iii) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock); (iv) to effect any
consolidation with, merger into or with, or statutory share exchange or similar
transaction with, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Restriction against Diminishing
Benefits of the Rights)), or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of more than 50% of the assets,
cash flow or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o)); (v) to effect the liquidation, dissolution or winding up of the Company,
or (vi) to effect a subdivision, combination or consolidation of the shares of
Common Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to each holder of
a Rights Certificate, to the extent feasible and in accordance with Section 26
(Notices), a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, statutory share
exchange or similar transaction, sale, transfer, liquidation, dissolution, or
winding up is to take place and the date of participation therein by the holders
of the shares of Common Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least twenty (20) calendar days prior to the record date for determining
holders of the shares of Common Stock for purposes of such action, and in the
case of any such other action, at least twenty (20) calendar days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Common Stock, whichever shall be the earlier.
(b) Other Transactions. In case any of the events set forth in Section
11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments) shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 (Notices),
a notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii), and (ii)
all references in the preceding paragraph to Common Stock shall be deemed
thereafter to refer to, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by telecopier
(with receipt confirmed) or by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as follows:
TNP Enterprises, Inc.
0000 Xxxxxxxxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: General Counsel
Subject to the provisions of Section 21 (Change of Rights Agent), any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sent by
registered or certified mail and shall be deemed given upon receipt, addressed
(until another address is filed in writing with the Company) as follows:
The Bank of New York
000 Xxxxxxx Xx.
00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Stock Transfer
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person); provided, however, this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price, or the number of shares of Common Stock for which a right is
exercisable; provided, however, that at any time prior to (i) a Stock
Acquisition Date or (ii) the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 10% or more
of the shares of Common Stock then outstanding, the Board may amend this
Agreement to increase the Purchase Price or extend the Final Expiration Date.
Notwithstanding anything in this Agreement to the contrary, no supplement or
amendment that changes the rights and duties of the Rights Agent under this
Agreement will be effective against the Rights Agent without the execution of
such supplement or amendment by the Rights Agent.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board (with, where specifically provided for herein,
the concurrence or approval of the Disinterested Directors) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board (with, where specifically
provided for herein, the concurrence or approval of the Disinterested Directors)
or to the Company, or as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend the
Agreement). All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board (with, where specifically
provided for herein, the concurrence or approval of the Disinterested Directors)
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (y) not
subject the Board or the Disinterested Directors to any liability to the holders
of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 (Redemption and Termination) shall
be reinstated and shall not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board. Without
limiting the foregoing, if any provision requiring a majority of the Board to be
Disinterested Directors to act is held by any court of competent jurisdiction or
other authority to be invalid, void or unenforceable, such determination shall
then be made by the Board in accordance with applicable law and the Company's
Articles of Incorporation and By-Laws.
Section 32. Governing Law Section. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Texas and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State; provided, however, that all
other duties, obligations and responsibilities of the Rights Agent shall be
construed in accordance with the laws of the State of New York.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Attest: TNP ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------- ----------------------------
Xxxxxxx X. Xxxxxxxxx Xxxxxx X. Xxxxx
Vice President and General President and Chief Executive
Counsel Officer
THE BANK OF NEW YORK,
as Rights Agent
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx
Assistant Vice President
Exhibit 1
[Form of Rights Certificate]
Certificate No. R____ ______ Rights
NOT EXERCISABLE AFTER AUGUST 11, 2008 OR EARLIER IF REDEEMED BY THE TNP
ENTERPRISES, INC. ("THE CORPORATION"). THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, AT
$0.05 PER RIGHT ON THE TERMS SET FORTH IN THE AMENDED AND RESTATED RIGHTS
AGREEMENT DATED AS OF AUGUST 11, 1998, BY AND BETWEEN THE CORPORATION AND THE
BANK OF NEW YORK, AS RIGHTS AGENT (THE "AMENDED AND RESTATED RIGHTS AGREEMENT").
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON
(AS SUCH TERM IS DEFINED IN THE AMENDED AND RESTATED RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE AMENDED AND RESTATED RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
(EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS -- TERMINATION OF
ACQUIRING PERSON'S RIGHTS) OF SUCH AGREEMENT.] 1
Rights Certificate
TNP ENTERPRISES, INC.
This certifies that -----------------------------------------------------,
or its, his or her 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 Amended and Restated Rights Agreement,
dated as of August 11, 1998 (the "Amended and Restated Rights Agreement"),
between TNP Enterprises, Inc., a Texas corporation (the "Corporation"), and The
Bank of New York (the "Rights Agent"), to purchase from the Corporation at any
time prior to 5:00 P.M. (Fort Worth, Texas time) on August 11, 2008 at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one fully paid, nonassessable share of Common Stock
(the "Common Stock") of the Corporation, at a purchase price of $100.00 per
share (the "Purchase Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The Purchase Price shall be paid, at the election of the holder, in
cash or shares of Common Stock of the Company having an equivalent value. The
number of Rights evidenced by this Rights Certificate (and the number of shares
which may be purchased upon exercise thereof) set forth above, and the Purchase
Price per share set forth above, are the number and Purchase Price as of
---------------, -----, based on the Common Stock as constituted at such date.
The Corporation reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Amended and Restated Rights
Agreement) that upon any exercise of Rights, a number of Rights be exercised so
that only whole shares of Common Stock would be issued.
Upon the occurrence of a Flip-in Event (as such term is defined in the
Amended and Restated Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate or any such Person (as such terms are defined in the Amended and
Restated Rights Agreement), (ii) a transferee of an Acquiring Person or its
Associate or Affiliate who becomes a transferee after such Acquiring Person or
its Associate or Affiliate becomes such, or (iii) under certain circumstances
specified in the Amended and Restated Rights Agreement, a transferee of an
Acquiring Person or its Associate or Affiliate who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such, such Rights shall
become null and void and no holder hereof shall have any right with respect to
such Rights from and after the occurrence of such Flip-in Event.
As provided in the Amended and Restated Rights Agreement, the Purchase
Price and the number and kind of shares of Common Stock or other securities,
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as such term is defined in the
Amended and Restated Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Amended and Restated Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Amended and Restated Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Corporation and the
holders of the Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Amended and Restated Rights Agreement. Copies of
the Amended and Restated Rights Agreement are on file at the above-mentioned
office of the Rights Agent and are also available upon written request to the
Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Rights Certificate or Rights Certificates for the number of whole Rights
for which this Rights Certificate is not exercised.
Subject to the provisions of the Amended and Restated Rights Agreement,
the Rights evidenced by this Certificate (i) may be redeemed by the Corporation
at its option at a redemption price of $0.05 per Right at any time prior to the
earlier of (a) the Close of Business (as such term is defined in the Amended and
Restated Rights Agreement) on the tenth (10th) Business Day (as such term is
defined in the Amended and Restated Rights Agreement) following the Stock
Acquisition Date (as such term is defined in the Amended and Restated Rights
Agreement) (as such time period may be extended pursuant to the Amended and
Restated Rights Agreement) or (b) the Final Expiration Date (as such term is
defined in the Amended and Restated Rights Agreement) and (ii) may be exchanged
in whole or in part for shares of Common Stock, other property or any
combination thereof.
In addition, the Rights may be exchanged, in whole or in part, for
shares of the Common Stock, or shares of common stock equivalents of the
Corporation having essentially the same value or economic rights as such shares.
Immediately upon the action of the Board of Directors of the Corporation
authorizing any such exchange, and without any further action or any notice, the
Rights (other than Rights which are not subject to such exchange) will terminate
and the Rights will only enable holders to receive the shares issuable upon such
exchange.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but a cash payment may be made in lieu
thereof, as provided in the Amended and Restated Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Corporation which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Amended and
Restated Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a shareholder of the Corporation or any
right to vote for the election of directors or upon any matter submitted to
shareholders of the Corporation 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 of the Corporation (except as provided in the
Amended and Restated Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Amended and Restated
Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.
Dated as of ---------------------
ATTEST: TNP ENTERPRISES, INC.
---------------------------------
Secretary By:
-----------------------------
Title:
-----------------------------
Countersigned:
RIGHTS AGENT
By:
------------------------
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED,----------------------------------------------
hereby sells, assigns and transfers unto---------------------------------------
-------------------------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
------------------------ Attorney, to transfer the within Rights Certificate on
the books of the within-named Corporation, with full power of substitution.
Dated: ------------------- ------------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate / / is / / is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Amended and Restated 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 Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:---------------------- -----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: TNP ENTERPRISES, INC.
The undersigned hereby irrevocably elects to exercise ---------------
Rights represented by this Rights Certificate to purchase the shares of Common
Stock issuable upon the exercise of the Rights (or such other securities of the
Corporation or of any other person which may be issuable upon the exercise of
the Rights) and requests that certificates for such shares be issued in the name
of and delivered to:
Please insert social security or
other identifying number
-------------------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or
other identifying number
-------------------------------------------------------------------------------
(Please print name and address)
-------------------------------------------------------------------------------
Dated: ------------------ ---------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate / / are / /
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Amended and Restated 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 Rights
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ------------------- ---------------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
Exhibit 2
[Letter to Shareholders]
September ---, 1998
Dear TNP Shareholder:
The Board of Directors of the Company has voted to amend the Company's
Shareholder Rights Plan to (i) extend its term to August 11, 2008, (ii) increase
the Purchase Price from $45 per share to $100 per share, and (iii) provide for
certain other changes. This Plan was originally adopted in 1988 and was due to
expire this November. Along with this letter, we are sending you a summary
describing the amended Plan. The amendment of the Plan requires no action on
your part.
The purpose of the Plan is to assure that shareholders are treated
fairly by anyone who might seek to obtain control of the Company. Although our
business environment has changed in many ways over the ten years since the Plan
was originally adopted, the corporate takeover environment remains very active
and hostile bidders still have available a variety of coercive takeover tactics.
The Board believes that a Shareholder Rights Plan continues to be an important
tool to enable the Board to represent effectively the interests of all
shareholders in the event of an unsolicited takeover attempt.
The amended Plan is very similar to the original plan. The Plan is not
unique; over 2,000 corporations throughout the country, including the majority
of the companies in the Standard & Poor's 500 Index, have adopted similar plans.
The Plan does not in any way alter the financial strength of the
company or interfere with its business plans. The amendment of the Plan is not
dilutive, does not affect reported earnings per share, and is not taxable to you
or the Company.
The board and management are enthusiastic about the potential of the
Company to build long-term shareholder value and are committed to serving the
best interest of its shareholders, its employees, and the communities it serves.
We believe that the amended Plan will help protect the value of your investment
in TNP Enterprises, Inc.
Yours very truly,
Xxxxxx X. Xxxxx
Chairman of the Board and President
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On August 11, 1998, the Board of Directors of TNP Enterprises, Inc.
(the "Company") extended and amended the Company's shareholder rights plan (the
"Rights Plan") originally adopted in 1988, which was due to expire on November
4, 1998.
The purpose of the Rights Plan is to deter certain coercive takeover
tactics and to represent effectively the interests of shareholders in the event
of a takeover attempt. The Rights Plan would not deter negotiated mergers or
business combinations that the Board of Directors may determine to be in the
best interests of the Company and its shareholders.
When it implemented the Rights Plan in 1988, the Board of Directors
declared a dividend of one common stock purchase right (a "Right") for each
outstanding share of the Company's common stock. The dividend was paid in
November 1988 to each shareholder of record on November 4, 1988. The Company has
also issued one Right with each new share of common stock issued subsequently.
Each Right entitles the registered holder to purchase from the Company one share
of common stock.
The description and terms of the Rights are set forth in the Amended
and Restated Rights Agreement (the "Amended and Restated Rights Agreement")
between the Company and The Bank of New York, as Rights Agent (the "Rights
Agent"). This summary does not purport to be complete and is qualified in its
entirety by reference to the Amended and Restated Rights Agreement, which is
incorporated by reference. A copy of the Amended and Restated Rights Agreement
is available free of charge from the Rights Agent or from the Company's
corporate secretary.
NEW AMENDMENT
The primary effects of the August 11 amendments to the Rights Plan are:
To increase the purchase price upon exercise of a Right (the
"Purchase Price") from $45 per share to $100 per share; and
To extend the term of the Rights and the Rights Plan from
November 4, 1998 until August 11, 2008.
RIGHTS ATTACHED TO COMMON SHARES INITIALLY
The Rights are currently evidenced by the common stock certificates. A
notation on the certificates incorporates the Rights Plan and advises the
certificate holder of the existence of the Rights. The Rights are transferred
with the common stock certificates. New common stock certificates issued after
August 11, 1998 will contain a notation incorporating the Amended and Restated
Rights Agreement by reference. The surrender for transfer of outstanding common
stock certificates will also constitute the transfer of the Rights associated
with the common stock.
DISTRIBUTION OF RIGHTS
The Company will mail separate certificates evidencing the Rights to
holders of record of the common stock on the "Distribution Date." The
Distribution Date will be the date the Rights separate from the common stock,
and will be the earlier to occur of the following two events:
Ten (10) business days after a public announcement that a person or group
of affiliated or associated persons (an "Acquiring Person") has
acquired, or obtained the right to acquire, beneficial ownership of
ten percent (10%) or more of the outstanding shares of common stock
(the "Stock Acquisition Date"); or
Ten (10) business days (or such later date that the Board of Directors may
determine) after the commencement of a tender or exchange offer that
would result in a person or group beneficially owning ten percent
(10%) or more of the outstanding shares of common stock.
After the Distribution Date, the separate Rights certificates will
represent the Rights. Only shares of common stock issued before the Distribution
Date will be issued with Rights, except for (i) shares issued or sold upon the
exercise of stock option under any employee plan or arrangements, (ii) upon the
exercise, conversion or exchange of securities that the Company may hereafter
issue, or (iii) as the Board of Directors may otherwise determine.
RIGHT TO PURCHASE COMPANY STOCK
The Rights become exercisable on the Distribution Date and will expire
August 11, 2008, unless earlier redeemed, as described below, or extended by the
Board of Directors. Generally, from the Distribution Date and until the
occurrence of a Triggering Event, a Rights holder may acquire one share of
common stock for each Right held. The Company may require that only whole
shares, and no fractional shares, of common stock be issued upon exercise.
When a Rights holder (other than an Acquiring Person and certain
related parties) exercises the Rights after certain "Triggering Events" occur,
that holder will acquire the number of shares of common stock with a value equal
to the result of dividing the Purchase Price of the Right by one-half of the
common stock's market price at the time of the Triggering Event, provided that
the Rights are no longer redeemable (as described below). Rights that an
Acquiring Person beneficially owns (or, under certain circumstances, formerly
owned) at the time of the Triggering Event will be null and void.
For example, at a Purchase Price of $100 per Right, each Right not owed
by an Acquiring Person (or by certain related parties or transferees) following
one of the Triggering Events listed below would entitle its holder to purchase
$200 worth of common stock (or other consideration, as noted above) for $100.
Assuming the Common Stock had a market price of $25 per share at such time, the
holder of each valid Right would be entitled to purchase eight shares for $100.
The certain Triggering Events giving rise to these rights are as
follows:
The Company is the surviving corporation in a merger or other business
combination with an Acquiring Person (or any associate or affiliate
thereof) and the common stock remains outstanding and unchanged;
A person acquires beneficial ownership of more than 10% of the
outstanding shares of Company common stock (except pursuant to (A)
certain consolidations or mergers involving the Company or sales or
transfers of the combined assets, cash flow or earning power of the
Company and its subsidiaries, or (B) an offer for all outstanding
shares of common stock of the Company at a price and upon terms and
conditions which a majority of the Disinterested Directors (as defined
below) determines to be in the best interest of the company and its
shareholders (a "Qualified Offer"); or
There is a reclassification of securities, a recapitalization of the
Company or other transactions (other than sales or transfers of the
combined assets, cash flow or earning power of the Company and its
subsidiaries) involving the Company or any of its subsidiaries that
has the effect of increasing by more than one percent (1%) the
proportionate share of any class of outstanding equity securities of
the Company or any of its subsidiaries beneficially owned by an
Acquiring Person (or an associate or affiliate thereof).
RIGHT TO PURCHASE ACQUIRING PERSON'S STOCK
Certain Triggering Events will give rise to a right to acquire common
stock of the acquiring company upon exercise of a Right. If these Triggering
Events occur, each holder of a Right (except Rights held by, or certain Rights
formerly held by, an Acquiring Person), 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 Purchase Price of the Right.
The Triggering Events giving rise to the right to acquire the
acquiring company's common stock are:
The Company enters into a merger or other business combination transaction
in which the Company is not the surviving corporation;
The Company is the surviving corporation in a consolidation, merger or
similar transaction in which all or part of the outstanding shares of
the Company's common stock are changed into or exchanged for stock or
other securities of any other person or cash or any other property; or
More than 50% of the combined assets, cash flow or earning power of the
Company and its subsidiaries is sold or transferred (in each case
other than certain consolidations with, mergers into, or sales of
assets, cash flow or earning power by or to subsidiaries of the
Company as specified in the Amended and Restated Rights Agreement).
EXCHANGE OF RIGHTS FOR COMMON STOCK
The Company may elect to exchange Rights for common stock of the
Company. After a person or group becomes an Acquiring Person and before such
person or group acquires 50% or more of the Company's outstanding common stock,
the Board of Directors may, without payment of the Purchase Price by the Rights
holder, exchange all or a portion of Rights (other than the Rights held by the
Acquiring Person, which will become void), for shares of Company common stock at
an exchange ration of one-half (1/2) the number of shares of Common Stock for
which a Right is exercisable immediately prior to the time of the Company's
decision to exchange the Rights.
REDEMPTION
The Company may redeem the Rights in whole, but not in part, at a price
of $.05 per Right at any time until ten (10) business days following the Stock
Acquisition Date. Immediately upon redemption, the Rights will terminate and the
only right of holders will be to receive the redemption price.
EXPIRATION OF RIGHTS
The Rights will expire on August 11, 2008 unless the expiration date is
extended by amendment or unless the Rights are earlier redeemed or exchanged by
the Company as described above.
AMENDMENT OF AGREEMENT
Other than those provisions relating to the principal economic terms of
the Rights, the Board of Directors may amend any provision of the Amended and
Restated Rights Agreement prior to the Distribution Date. After the Distribution
Date, the Amended and Restated Rights Agreement may be amended to cure any
ambiguity, inconsistency or defect, to shorten or lengthen any time period, or
to make changes that do not adversely affect the interests of the Rights holders
(excluding the interest of any Acquiring Person"). No amendment to adjust the
time period governing the redemption, however, shall be made when the Rights are
not redeemable.
MISCELLANEOUS
"Disinterested Director" means any member of the Board of Directors of
the Company who was a member of the Board prior to August 11, 1998, the date of
the Amended and Restated Rights Agreement, and anyone subsequently elected to
the Board if such person is recommended or approved by the majority of the
Disinterested Directors, but shall not include an Acquiring Person, or an
affiliate or associate of an Acquiring Person, or a representative of any of the
foregoing entities.
The number of outstanding Rights and the number of shares of common
stock issuable upon exercise or exchange of each Right are subject to adjustment
under certain circumstances.
Exhibit 3
FORM OF PRESS RELEASE
Contact:
TNP ENTERPRISES, INC. AMENDS AND RESTATES ITS SHAREHOLDER RIGHTS PLAN
FORT WORTH, Texas, August ---, 1998--TNP Enterprises, Inc. [NYSE: TNP] (the
"Company") today announced that its Board of Directors at its regular meeting
held on August 11, 1998 has amended and restated its Shareholder Rights Plan
(the "Plan"). The Board of Directors amended and restated the Plan to (1) extend
the term of the Plan to August 11, 2008, (2) increase the Purchase Price from
$45.00 per share to $100.00 per share and (3) provide for certain other changes.
The Plan is designed to protect the Company from unfair or coercive takeover
attempts and to prevent a potential acquiror from gaining control of the Company
without fairly compensating all of the Company's shareholders.
The original Plan, dated as of October 24, 1988, created a dividend of one right
for each outstanding share of the Company's Common Stock. The rights are
represented by and initially traded with the Company's Common Stock.
There are no separate certificates or market for the rights.
The rights do not become exercisable or trade separately from the Common Stock
unless one or both of the following conditions are met: a public announcement
that a person has acquired 10% or more of the Common Stock of the Company, or a
tender or exchange offer is made for 10% or more of the Common Stock of the
Company.
Under certain circumstances the rights entitle the holders to buy the Company's
stock at a 50% discount. In the event that (1) the Company is the surviving
corporation in a merger or other business combination with an entity that owns
10% or more of the Company's outstanding stock; (2) there is any type of
recapitalization of the Company that results in an increase by more than 1% the
proportionate share of equity securities of the Company owned by a person who
owns 10% or more of the Company's outstanding stock; or (3) any person shall
acquire beneficial ownership of 10% of the Company's outstanding stock (unless
such acquisition is made pursuant to a tender or exchange offer for all
outstanding shares of the Company, upon terms and conditions determined by a
majority of the Disinterested Directors of the Company to be in the best
interest of the Company and its shareholders (a "Qualified Offer")), each right
holder will have the option to buy $200.00 in value of the Common Stock of the
Company for the $100.00 purchase price of the right. Following the occurrence of
the events set forth above, all rights that are or, under certain circumstances,
were, beneficially owned by the acquiror will be null and void.
Under certain circumstances the rights entitle the holders to buy shares of the
acquiror's Common Stock at a 50% discount. In the event that, at any time after
a person has acquired 10% or more of the Company's Common Stock, (1) the Company
is acquired in a merger or business combination transaction in which the Company
is not the surviving corporation (other than a merger or business combination
with a person that acquired its shares pursuant to a Qualified Offer); (2) the
Company is the surviving corporation in a transaction in which all or part of
the Common Stock is exchanged for cash, property or securities of any other
person (other than a transaction with a person that acquired its shares pursuant
to a Qualified Offer); or (3) more than 50% of the assets, cash flow or earning
power of the Company is sold, each right holder will have the option to purchase
$200.00 in value of the stock of the acquiring company for the $100.00 purchase
price of the right.
The rights may be redeemed by the Company for $0.05 per right at any time until
10 business days following the first public announcement of the acquisition of
beneficial ownership of 10% of the Company's Common Stock.
Shareholders will be mailed a description of the amended and restated Plan.
TNP Enterprises, Inc. is a holding company based in Fort Worth, Texas and has
subsidiaries including Texas-New Mexico Power Company. The power company
provides community-based electric service to 85 cities and more than 222,000
customers in Texas and New Mexico.
1 The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
