File Number 70-____
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM U-1
APPLICATION/DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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NEW CENTURY ENERGIES, INC.
1225 Seventeenth Street
Denver, Colorado 80202
(Name of company filing this statement and address of principal
executive office)
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New Century Energies, Inc.
(Name of top registered holding company parent)
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Richard C. Kelly Doyle R. Bunch II
President and Treasurer Chairman and Secretary
1225 Seventeenth Street Tyler at Sixth
Denver, Colorado 80202 Amarillo, Texas 79101
(Name and address of agents for service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application/Declaration to:
Gary W. Wolf, Esq. William M. Dudley, Esq.
Cahill Gordon & Reindel Public Service Company
80 Pine Street of Colorado
New York, New York 10005 1225 Seventeenth Street
Denver, Colorado 80202
W. Wayne Brown James D. Steinhilper
Public Service Company of Southwestern Public Service
Colorado Company
1225 Seventeenth Street Tyler at Sixth
Denver, Colorado 80202 Amarillo, Texas 79101
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Item 1. Description of Proposed Transaction
(a) Furnish a reasonably detailed and precise description of the proposed
transaction, including a statement of the reason why it is desired to consummate
the transaction and the anticipated effect thereof. If the transaction is part
of a general program, describe the program and its relation to the proposed
transaction.
I. INTRODUCTION
A. General
New Century Energies, Inc. ("NCE" or the "Company"), a Delaware
corporation, has previously filed an Application/Declaration on Form U-1 with
the Securities and Exchange Commission (the "Commission") requesting
authorization under Section 9(a)(2) of the Public Utility Holding Company Act of
1935, as amended (the "Act"), to acquire all of the outstanding voting
securities of Public Service Company of Colorado, a Colorado corporation and an
operating public utility company ("PSCo"), Southwestern Public Service Company,
a New Mexico corporation and an operating public utility company ("SPS"), and
Cheyenne Light, Fuel and Power Company, a Wyoming corporation and an operating
public utility company ("Cheyenne"), and for other related transactions (File
No. 70-8787) (the "Merger U-1"). Following the consummation of the transactions
described in the Merger U-1, NCE will register as a holding company under the
Act.
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In order to ensure that NCE and its subsidiaries are able to meet their
capital requirements upon registration and plan their future financing
accurately, NCE and its subsidiaries have also filed an Application/Declaration
on Form U-1 with the Commission requesting authorization for financing
transactions for the period beginning with the effective date of an order issued
in such proceeding through December 31, 2002, including the establishment of two
money pool arrangements (the "Financing U-1").
B. Description of the Parties to the Transaction
Following the consummation of the merger of PSCo and SPS (the "Merger"),
NCE will register as a holding company under the Act and will have three
operating utility subsidiaries (the "Utility Subsidiaries"): PSCo, an electric
and gas utility company providing service in an area having an estimated
population of 2.8 million in Colorado; SPS, an electric utility company
providing service to an area with a population of approximately one million in
the Panhandle and south plains of Texas, eastern and southeastern New Mexico,
the Oklahoma Panhandle and southwestern Kansas; and Cheyenne, an electric and
gas utility operating principally in Cheyenne, Wyoming. NCE will also have
several direct and indirect non-utility subsidiaries.
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Additional information about NCE and it subsidiaries and their businesses
is set forth in the Merger U-1 and the exhibits thereto.
II. BACKGROUND FOR PROPOSED RIGHTS DIVIDEND
Unsolicited attempts to acquire public companies have required boards of
directors and their stockholders to make difficult decisions affecting the
value, and on occasion the existence, of companies within extremely short time
periods. Such takeover attempts often occur when a company is particularly
vulnerable and when its board has determined that the company's inherent long
term values are inadequately recognized by the marketplace. Many of these
attempts have involved partial or two-tiered offers, the breakup of the
corporate structure and sale of assets, or have taken the form of creeping
acquisitions of stock that deprive stockholders of participation in a control
premium.
The changing regulatory environment (including the possible repeal or
amendment of the Act) suggests that public utility holding companies, such as
NCE, and their stockholders are losing to some degree the regulatory protection
against hostile acquisitions that they formerly had. Recent significant
developments in the utility industry have also resulted in increased takeover
activity, including hostile or other un-
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wanted takeover bids, further indicating that NCE's stockholders may be at risk
of losing the long-term value of NCE.
Shareholder rights plans have become widely accepted means to maximize
shareholder value by reducing the risk of nonrealization of shareholder value
due to opportunistic proposals. Adoption of such a plan by NCE would encourage
potential acquirors to negotiate with the Board of Directors of NCE ("Board")
and assist it in obtaining the highest value for NCE's shareholders, especially
in a hostile or unwanted takeover situation. The plan may in certain
circumstances permit the Board to thwart an inadequate offer. A shareholder
rights plan would also provide the Board with a role (supplemental to the role
of the Commission under the Act) in discouraging implicitly coercive takeover
tactics and would enable the Board to provide holders of NCE's common stock,
$1.00 par value per share (the "Common Stock") adequate time to properly assess
a takeover bid without undue pressure. Moreover, a shareholder rights plan may
enhance the probability that a competing bid will emerge. Over 1,700 American
public companies have adopted rights plans, including more than half the Fortune
500, more than two-thirds of the Fortune 200, and at least 28 public utility
companies. Indeed, the Commission has approved the adoption of rights plans.
See, e.g., Consolidated Natural Gas
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Company, HCAR No. 26434 (December 19, 1995) and National Fuel Gas Company, HCAR
No. 26532 (June 12, 1996).
A shareholder rights plan, however, would not make NCE acquisition-proof
nor preclude a proxy contest. The fiduciary duties of the Board under Delaware
law would still require the Board to consider an offer that gives maximum
long-term value to all holders of Common Stock and could, under appropriate
conditions, require the Board to redeem the rights and allow the transaction to
proceed.
III. DESCRIPTION OF RIGHTS TO PURCHASE PREFERRED STOCK
General
The Board proposes to declare a dividend distribution of one Right for each
outstanding share of Common Stock. The distribution will be payable on a record
date (the "Record Date") yet to be established, but which will be the record
date established for the distribution of NCE shares in the Merger described in
the Merger U-1. Each Right would entitle the registered holder to purchase from
the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock (the "Preferred Stock"), at a price per one one-hundredth share
to be determined by the Board (the "Purchase Price"), subject to adjustment. The
Purchase Price is expected to be set at an amount equal to approximately four to
five times the market
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price of the Common Stock, which premium is consistent with that used by other
companies in setting the purchase price for their rights. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and the Rights Agent to be named therein (the "Rights
Agent"), a draft of which is filed as Exhibit A-3.
Distribution Date; Transfer of Rights
Until the earlier to occur of (i) ten calendar days following the date (the
"Shares Acquisition Date") of public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") acquired, or obtained
the right to acquire, beneficial ownership of Common Stock or other voting
securities ("Voting Stock") that have 10% or more of the voting power of the
outstanding shares of Voting Stock or (ii) ten calendar days (or such later date
as may be determined by action of the Board of Directors prior to the time any
person or group of affiliated persons becomes an Acquiring Person) following the
commencement or announcement of an intention to make a tender offer or exchange
offer the consummation of which would result in such person acquiring, or
obtaining the right to acquire, beneficial ownership of Voting Stock having 10%
or more of the voting power of the outstanding shares of Voting Stock (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of
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the Company's Common Stock certificates outstanding as of the Record Date, by
such Common Stock certificates. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the
Company's Common Stock. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Common Stock certificates issued after the Record
Date upon transfer or new issuance of the Company's Common Stock will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any of the Company's Common Stock certificates outstanding as of the
Record Date will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Company's Common Stock
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on the date that is the 10 year anniversary of
the Record Date, unless earlier redeemed or exchanged by the Company as
described below.
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Exercise of Rights for Common Stock of the Company
In the event that a Person becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
Exercise of Rights for Shares of the Acquiring Company
In the event that, at any time following the Shares Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction,
or (ii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the Exercise Price of the Right. The events set forth in this paragraph
and in the preceding paragraph are referred to as the "Triggering Events."
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Adjustments to Purchase Price
The Purchase Price payable, and the number of shares of Preferred Stock (or
Common Stock or other securities, as the case may be) issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for shares of the
Preferred Stock or convertible securities at less than the current market price
of the Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends out of earnings or retained earnings or dividends
payable in the Preferred Stock) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued (other than fractional
shares which are integral multiples of one one-hundredth of a share of Preferred
Stock) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.
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Redemption and Exchange of Rights
At any time after the occurrence of the event set forth under the heading
"Exercise of Rights for Common Stock of the Company" above, the Board of
Directors (with the concurrence of a majority of the Independent Directors) may
exchange the Rights (other than Rights owned by the Acquiring Person which shall
have become void), in whole or in part, at an exchange ratio of one share of
Common Stock (or a fraction of a share of Preferred Stock having the same market
value) per Right (subject to adjustment).
At any time prior to 5:00 P.M. New York City time on the tenth calendar day
following the Shares Acquisition Date, the Company may redeem the Rights in
whole, but not in part, at a price of $.001 per Right (the "Redemption Price").
Under certain circumstances set forth in the Rights Agreement, the decision to
redeem shall require that there be Independent Directors in office and that a
majority of the Independent Directors concur in such decision. Immediately upon
the action of the Board of Directors of the Company electing to redeem the
Rights with, if required, the concurrence of the Independent Directors, the
Company shall make announcement thereof, and upon such action, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
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Until a Right is exercised or exchanged, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
Terms of the Preferred Stock
The Preferred Stock will rank junior to all other series of NCE's preferred
stock with respect to payment of dividends and as to distribution of assets in
liquidation. Each share of Preferred Stock will have a quarterly dividend rate
per share equal to the greater of $1.00 or 100 times the per share amount of any
dividend (other than a dividend payable in shares of Common Stock or a
subdivision of the Common Stock) declared from time to time on the Common Stock,
subject to certain adjustments. The Preferred Stock will not be redeemable. In
the event of liquidation, the holders of the Preferred Stock will be entitled to
receive a preferred liquidation payment per share of an amount equal to 100
times the Purchase Price (plus accrued and unpaid dividends) or, if greater, an
amount equal to 100 times the payment to be made per share of Common Stock,
subject to certain adjustments. Generally, each share of Preferred Stock will
vote together with the Common Stock and any other series of cumulative preferred
stock entitled to vote in such manner and will be entitled to 100 votes, subject
to certain adjustments. In the event of any merger, consolidation,
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combination or other transaction in which shares of Common Stock are exchanged
for or changed into other stock or securities, cash and/or other property, each
share of Preferred Stock will be entitled to receive 100 times the aggregate
amount of stock, securities, cash and/or other property, into which or for which
each share of Common Stock is changed or exchanged, subject to certain
adjustments. The foregoing dividend, voting and liquidation rights of the
Preferred Stock are protected against dilution in the event that additional
shares of Common Stock are issued pursuant to a stock split or stock dividend or
distribution. Because of the nature of the Preferred Stock's dividend, voting,
liquidation and other rights, the value of the one one-hundredth of a share of
Preferred Stock purchasable with each Right is intended to approximate the value
of one share of Common Stock.
Amendments to Terms of the Rights
Any of the provisions of the Rights Agreement may be amended by the Board
of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board (in certain circumstances, with the concurrence of the Independent
Directors) in order to cure any ambiguity, defect or inconsistency, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring
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Person); provided, however, that no supplement or amendment may be made after
the Distribution Date which changes those provisions relating to the principal
economic terms of the Rights. The Board of Directors may also, with the
concurrence of a majority of the Independent Directors, extend the redemption
period for up to an additional 20 days.
The term "Independent Directors" means any member of the Board of Directors
of the Company who either (i) was a member of the Board on the date of the
Rights Agreement, or (ii) any person who is subsequently elected to the Board
(x) in accordance with Article V(B)(1) of the Company's Restated Certificate of
Incorporation, (y) if such person was nominated pursuant to the method described
in Article V(E) of the Company's Restated Certificate of Incorporation or (z) if
such person is recommended or approved by a majority of the Independent
Directors, but shall not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
IV. AUTHORIZATIONS SOUGHT
NCE herein seeks authorization to implement the shareholder
rights plan as described in this application-declaration and embodied in the
Agreement. This would include,
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among other actions permitted by the Agreement, the following transactions:
The dividend distribution of the Rights
The making of adjustments to the Purchase Price
The sale and issuance of Preferred Stock, Common Stock or other NCE
securities, or the transfer of other assets, upon exercise of the
Rights
The redemption of Rights and the issuance of Common Stock in connection
therewith, and the issuance of Common Stock or other NCE securities, or
the transfer of other assets, in exchange for Rights
Amending of the Agreement as permitted by the terms thereof.
(b) Describe briefly, and where practicable state the approximate amount
of, any material interest in the proposed transaction, direct or indirect, of
any associate company or affiliate of the applicant or any affiliate of any such
associate company.
None.
(c) If the proposed transaction involves the acquisition of securities not
issued by a registered holding company or a subsidiary thereof, describe briefly
the business and property, present or proposed, of the issuer of such
securities.
Not applicable.
(d) If the proposed transaction involves the acquisition or disposition of
assets, describe briefly such assets, setting forth original cost, vendor's book
cost (including the basis of determination) and applicable valuation and
qualifying reserves.
Not applicable.
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Rule 54 promulgated under the Act states that in determining whether to
approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an exempt wholesale generator ("EWG") or
a foreign utility company ("FUCO"), or other transactions by such registered
holding company or its subsidiaries other than with respect to EWGs or FUCOs,
the Commission shall not consider the effect of the capitalization or earnings
of any subsidiary which is an EWG or a FUCO upon the registered holding company
system if Rules 53(a), (b) or (c) are satisfied.
Rule 53 requires that the aggregate investment in EWGs and FUCOs not exceed
50% of a system's consolidated retained earnings. Fifty percent of NCE's
retained earnings, pro forma as of September 30, 1996 was $380,033,000; NCE's
pro forma aggregate investment (as defined in Rule 53(a)(1)(i)) in EWGs and
FUCOs is estimated to be approximately $8,207,000, thereby satisfying Rule
53(a)(1).
NCE and its Subsidiaries will maintain books and records to identify the
investments in and earnings from EWGs and FUCOs in which they directly or
indirectly hold an interest, thereby satisfying Rule 53(a)(2). In addition, the
books and records of each such entity are and will be kept in conformity with
United States generally accepted accounting princi
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ples ("GAAP"), the financial statements are and will be prepared according to
GAAP, and NCE undertakes to provide the Commission access to such books and
records and financial statements as it may request.
Employees of NCE's domestic public-utility companies will not render
services, directly or indirectly, to the EWGs or FUCOs in the NCE System,
thereby satisfying Rule 53(a)(3).
NCE, in connection with any Form U-1 seeking approval of EWG or FUCO
financing, will submit copies of the documents described in Rule 53(a)(4) with
every federal, state or local regulation having jurisdiction over the retail
rates of the public-utility companies in the NCE System. Rule 53(a)(4) will be
correspondingly satisfied.
None of the conditions described in Rule 53(b) exist with respect to NCE,
thereby satisfying Rule 53(b) and making Rule 53(c) inapplicable.
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Item 2. Fees, Commissions and Expenses
(a) State (1) the fees, commissions and expenses paid or incurred, or to be
paid or incurred, directly or indirectly, in connection with the proposed
transaction by the applicant or declarant or any associate company thereof, and
(2) if the proposed transaction involves the sale of securities at competitive
bidding, the fees and expenses to be paid to counsel selected by applicant or
declarant to act for the successful bidder.
It is estimated that the fees, commissions and expenses ascertainable at
this time to be incurred by NCE in connection with the proposed transactions
will not exceed $140,000. $10,000 for the Agent's fees, $100,000 for outside
counsel's fees, $25,000 for printing and mailing costs and $5,000 for
miscellaneous other expenses.
(b) If any person to whom fees or commissions have been or are to be paid
in connection with the proposed transaction is an associate Company or an
affiliate of the applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.
None.
Item 3. Applicable Statutory Provisions
(a) State the sections of the Act and the rules thereunder believed to be
applicable to the proposed transaction. If any section or rule would be
applicable in the absence of a specific exemption, state the basis of exemption.
Sections 6(a), 7, 9(a), 10 and 12(c) of the Act and Rule 42 under the Act
are deemed to be applicable to the pro
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posed dividend distribution of Rights, and any subsequent exercise or redemption
of the Rights.
While the Rights are technically a dividend on the Common Stock for
corporate law purposes, in and of themselves they have no economic value and,
therefore, are not a "dividend" out of capital or capital surplus for the
purpose of Section 12(c) of the Act.
Because there is no intent that the Rights ever become exercisable, they
are regarded more appropriate as being in the nature of an addition to the
rights of shareholders under Sections 6(a)(2) and 7(e) rather than as an
issuance of securities under Section 6(a)(1) and 7(c) and (d). However, if such
latter sections were to be regarded as applicable, then any issuance of shares
of Preferred Stock or Common Stock pursuant to the Rights are deemed to meet the
requirements of Section 7(c)(2)(D) and none of the negative findings required
under Section 7(d) can be made.
To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section of
the Act or provision of the rules or regulations other than those specifically
referred to herein, request for such authorization, approval or exemption is
hereby made.
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(b) If an applicant is not a registered holding company or a subsidiary
thereof, state the name of each public utility company of which it is an
affiliate, or of which it will become an affiliate as a result of the proposed
transactions, and the reasons why it is or will become such an affiliate.
Not applicable.
Item 4. Regulatory Approval
(a) State the nature and extent of the jurisdiction of any State commission
or any Federal commission (other than the Securities and Exchange Commission)
over the proposed transaction.
No State commission and no other Federal commission has jurisdiction over
the proposed transactions.
(b) Describe the action taken or proposed to be taken before any commission
named in answer to paragraph (a) of this item in connection with the proposed
transaction.
None.
Item 5. Procedure
(a) State the date when Commission action is requested. If the date is less
than 40 days from the date of the original filing, set forth the reasons for
acceleration.
NCE requests that the Commission issue its order with respect to the
proposed transaction as soon as practicable after the filing hereof to enable
the Rights to be issued at the time of the Merger. The Commission is
respectfully requested to issue and publish the requisite notice under Rule 23
with
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respect to the filing of this Application not later than February 24, 1997, such
notice to specify a date not later than March 21, 1997, by which comments may be
entered and a date not later than the date of the order for the Merger U-1 as
the date which an order of the Commission granting and permitting the
Application to become effective may be entered by the Commission.
(b) State (i) whether there should be a recommended decision by a hearing
officer, (ii) whether there should be a recommended decision by any other
responsible officer of the Commission, (iii) whether the Division of Corporate
Regulation may assist in the preparation of the Commission's decision, and (iv)
whether there should be a 30-day waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
It is submitted that a recommended decision by a hearing or other
responsible officer of the Commission is not needed with respect to the proposed
transactions. The Office of Public Utility Regulation of the Division of
Investment Management may assist in the preparation of the Commission's
decision. There should be no waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
Item 6. Exhibits and Financial Statements
The following exhibits are made a part of this statement:
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(a) Exhibits
A-1 Restated Certificate of Incorporation of NCE filed as Annex VIII to
the Registration Statement on Form S-4 on December 13, 1995
(Registration No. 33-64951) and incorporated herein by reference.
A-2 Restated Bylaws of NCE filed as Annex IX to the Registration Statement
on Form S-4 on December 13, 1995 (Registration No. 33-64951), and
incorporated herein by reference.
A-3 Draft of Rights Agreement, including exhibits.
F-1 Opinion of counsel. (To be filed by amendment) G-1 Proposed notice
pursuant to Rule 22(f).
G-2 Financial Data Schedule (incorporated by reference to the Annual
Report of NCE for the fiscal year ended December 31, 1996).
(b) Financial Statements
1.1 Pro-Forma Balance Sheet of NCE and subsidiaries, consolidated, as of
September 30, 1996 (incorporated by reference to the Annual Report on
Form 10-K of SPS for the fiscal year ended August 31, 1996 (File No.
1-3789)).
1.2 Pro-Forma Statement of Income of NCE and subsidiaries, for the 12
months ended September 30, 1996 (incorporated by reference to the
Annual Report of Form 10-K of SPS for the fiscal year ended August 31,
1996 (File No. 1-3789)).
2.1 Balance Sheet of PSCo as of September 30, 1996 (incorporated by
reference to the Quarterly Statement on Form 10-Q of PSCo for the
quarter ended September 30, 1996 (File No. 1-3280)).
2.2 Statement of Income and Retained Earnings of PSCo for the nine months
ended September 30, 1996 (incorporated by reference to the Quarterly
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Statement on Form 10-Q of PSCo for the quarter ended September 30,
1996 (File No. 1-3280)).
3.1 Balance Sheet of SPS as of November 30, 1996 (incorporated by
reference to the Quarterly Statement on Form 10-Q of SPS for the
quarter ended November 30, 1996 (File No. 1-3789)).
3.2 Statement of Earnings for the three months ended November 30, 1996
(incorporated by reference to the Quarterly Statement on form 10-Q of
SPS for the quarter ended November 30, 1996 (File No. 1-3789)).
Item 7. Information as to Environmental Effects
(a) Describe briefly the environmental effects of the proposed transaction
in terms of the standards set forth in Section 102(2)(C) of the National
Environmental Policy Act (42 U.S.C. 4312(2)(C)). If the response to this item is
a negative statement as to the applicability of Section 102(2)(C) in connection
with the proposed transaction, also briefly state the reasons for that response.
As more fully described in Item 1(a), the proposed transactions subject to
the jurisdiction of this Commission relate only to the dividend of the Rights
and any subsequent exercise, redemption or exchange of the Rights and involve no
major federal action significantly affecting the human environment.
(b) State whether any other federal agency has prepared or is preparing an
environmental impact statement ("EIS") with respect to the proposed transaction.
If any other Federal agency has prepared or is preparing an EIS, state which
agency or agencies and indicate the status of that EIS preparation.
None.
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SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this statement to be signed on its
behalf by the undersigned thereunto duly authorized.
NEW CENTURY ENERGIES, INC.
By:/s/ Doyle R. Bunch II
------------------------------
Name: Doyle R. Bunch II
Title: Chairman and Secretary
Date: February 18, 1997
================================================================================
NEW CENTURY ENERGIES, INC.
and
, Rights Agent
RIGHTS AGREEMENT
Dated as of
, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions................................................2
Section 2. Appointment of Rights Agent.......................................12
Section 3. Issue of Right Certificates.......................................13
Section 4. Form of Right Certificates........................................17
Section 5. Countersignature and Registration.................................19
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates......................21
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.....23
Section 8. Cancellation and Destruction of Right Certificates................28
Section 9. Reservation and Availability of Shares of Capital Stock...........29
Section 10. Preferred Stock Record Date......................................33
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights....................................................................34
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.......54
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power................................................................55
Section 14. Fractional Rights and Fractional Shares..........................60
Section 15. Rights of Action.................................................63
<PAGE>
Section 16. Agreement of Right Holders.......................................64
Section 17. Right Certificate Holder Not Deemed a Stockholder................66
Section 18. Concerning the Rights Agent......................................67
Section 19. Merger or Consolidation or Change of Name of Rights Agent........68
Section 20. Duties of Rights Agent...........................................70
Section 21. Change of Rights Agent...........................................75
Section 22. Issuance of New Right Certificates...............................78
Section 23. Redemption and Termination.......................................79
Section 24. Exchange ........................................................82
Section 25. Notice of Certain Events.........................................85
Section 26. Notices .........................................................87
Section 27. Supplements and Amendments.......................................88
Section 28. Successors ......................................................90
Section 29. Determinations and Actions by the Board of Directors.............90
Section 30. Benefits of this Agreement.......................................91
Section 31. Severability ....................................................92
Section 32. Governing Law ...................................................92
Section 33. Counterparts ....................................................93
Section 34. Descriptive Headings.............................................93
EXHIBIT A Certificate of Designation, Description and Certain Terms of
Series A Participating Preferred Stock.....................................A-1
EXHIBIT B Form of Right Certificate........................................B-1
<PAGE>
EXHIBIT C Summary of Rights to Purchase Preferred Stock....................C-1
<PAGE>
RIGHTS AGREEMENT
Rights Agreement, dated as of , 1997 between New Century Energies,
Inc., a Delaware corporation (the "Company"), and , a national banking
association (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company on , 1997 (the "Rights
Dividend Declaration Date") authorized and declared a dividend distribution (the
"Distribution") of one Right for each outstanding share of the Common Stock, $1
par value, of the Company (the "Common Stock") outstanding at the close of
business on , 1997 (the "Record Date")1 subject to regulatory clearance from the
Securities and Exchange Commission on or before the Record Date and has
authorized and directed the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p) hereof) in
respect of each share of Common Stock issued (whether originally issued or
delivered from the Company's treasury stock) between the Record Date and the
earlier of the Distribution Date or the Expiration Date (as such terms are
- ----------
* Same date as merger date.
<PAGE>
2
hereinafter defined), each Right initially representing the right to purchase,
under certain circumstances, one one-hundredth of a share of Series A Junior
Participating Preferred Stock of the Company having the rights, powers and
preferences set forth in the Certificate of Designation attached hereto as
Exhibit A, upon the terms and subject to the conditions hereinafter set forth
(the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of securities of the Company constituting a
Substantial Block (as such term is hereinafter defined), but shall not
include (i) the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any
Person
<PAGE>
3
organized, appointed or established by the Company or any Subsidiary of the
Company for or pursuant to the terms of any such plan, (ii) any Person who
or which, together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of a Substantial Block solely as a result of a
change in the aggregate number of shares of Voting Stock outstanding since
the last date on which such Person acquired Beneficial Ownership of any
shares of the Voting Stock constituting all or a portion of such
Substantial Block; and (iii) any Person who or which, together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of a
Substantial Block in the good faith belief that such acquisition would not
(x) cause such Person and its Affiliates and Associates to become the
Beneficial Owner of a Substantial Block and such Person relied in good
faith in computing the percentage of its voting power on publicly file
reports or documents of the Company which are inaccurate or out-of-date or
(y) otherwise cause a Distribution Date or the adjustment provided for in
Section 11(a) to occur. Notwithstanding clause (ii) or (iii) of the prior
sentence, if any Person that is not an Acquiring Person due to such clause
(ii) or (iii) does not cease to be the Beneficial Owner of a Substantial
Block by the close of business on the fifth Business Day after no-
<PAGE>
4
tice from the Company (the date of notice being the first day) that such
Person is the Beneficial Owner of a Substantial Block, such Person shall,
at the end of such five Business Day period, become an Acquiring Person
(and such clause (ii) or (iii) shall no longer apply to such Person). For
purposes of this definition, the determination whether any Person acted in
"good faith" shall be conclusively determined by the Board of Directors of
the Company, acting by a vote of those directors of the Company whose
approval would be required to redeem the Rights under Section 23.
(b) "Act" shall have the meaning set forth in Section 9(c) hereof.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
(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 Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date hereof .
(e) "Agreement" shall have the meaning set forth in the introduction
hereto.
<PAGE>
5
(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 has, directly or indirectly, the right to acquire (whether
such right is exercisable immediately or only after the passage of
time or upon the occurrence of an event) 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 be
deemed the "Beneficial Owner" of, or to "beneficially own," (1)
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, (2)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event or (3) securities issuable upon
exercise of Rights from and after the occurrence of a Triggering
Event, 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
<PAGE>
6
3(a) hereof ("Original Rights") or pursuant to Section 11(i) or
Section 22 hereof in connection with an adjustment made with respect
to Original Rights; or
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, 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) if the agreement, arrangement or
understanding to vote such security (1) 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 rules and
regulations of the Exchange Act and (2) is not then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Per-
<PAGE>
7
son 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 securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall
cause a Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired in a bona fide firm commitment underwriting pursuant to
an underwriting agreement with the Company.
(g) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(h) "Certification" shall have the meaning set forth in Section 18
hereof.
(i) "close of business" on any given date shall mean 5:00 P.M., New
York City time, on such date, provided,
<PAGE>
8
however, if such date is not a Business Day it shall mean 5:00 P.M. on the
next succeeding Business Day.
(j) "Common Stock" when used with reference to the Company shall mean
the Common Stock, $1 par value, of the Company. "Common Stock" when used
with reference to any Person other than the Company shall mean either the
capital stock with the greatest voting power of such other Person or, if
such Person is a Subsidiary of another Person, the equity securities or
other equity interest having power to control or direct the management of
such Person.
(k) "Company" shall have the meaning set forth in the introduction
hereto.
(l) "Current Market Price" shall have the meaning set forth in Section
11(d) hereof.
(m) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(n) "Distribution" shall have the meaning set forth in the recitals
hereto.
(o) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
<PAGE>
9
(p) "Equivalent Common Stock" shall have the meaning set forth in
Section 11(b) hereof.
(q) "Exchange Act" shall have the meaning set forth in the definitions
of "Affiliate" and "Associate" above.
(r) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(s) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(t) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(u) "Independent Director" shall mean any member of the Board of
Directors of the Company, 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 either (i) was a member of the Board on the
date hereof, or (ii) was recommended or elected to succeed the Independent
Director in accordance with Article V(B)(1) of the Company's Restated
Certificate of Incorporation or pursuant to the method described in Article
V(E) of the Company's Restated Certificate of Incorporation or by a
majority of the Independent Directors.
<PAGE>
10
(v) "Original Rights" shall have the meaning set forth in the
definition of "Beneficial Owner" above.
(w) "Person" shall mean any individual, firm, corporation, partnership
or other entity.
(x) "Preferred Stock" shall mean the shares of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the Company.
(y) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(z) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(aa) "Record Date" shall have the meaning set forth in the recitals
hereto.
(bb) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(cc) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(dd) "Rights" shall have the meaning set forth in the recitals hereto.
<PAGE>
11
(ee) "Rights Agent" shall have the meaning set forth in the
introduction hereto.
(ff) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals hereto.
(gg) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii).
(hh) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii).
(ii) "Section 13 Event" shall mean any event described in Section
13(a).
(jj) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, includes a report
filed pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(kk) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ll) "Subsidiary" shall mean, with reference to any Person, any
corporation (or other entity) of which an amount of voting securities (or
comparable ownership interests) sufficient to elect at least a majority of
the
<PAGE>
12
directors (or comparable individuals) of such corporation (or other entity)
is beneficially owned or otherwise controlled, directly or indirectly, by
such Person.
(mm) "Substantial Block" shall mean a number of shares of the Voting
Stock which has 10% or more of the aggregate voting power of all
outstanding shares of Voting Stock.
(nn) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(oo) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(pp) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(qq) "Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13 Event.
(rr) "Voting Stock" shall mean the outstanding shares of Common Stock,
$1.00 par value, and any other shares of capital stock of the Company which
are entitled to vote generally in the election of directors.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Com-
<PAGE>
13
pany in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company shall act as Co-Rights Agent and
may from time to time appoint such other Co-Rights Agents as it may deem
necessary or desirable upon ten calendar days' written notice to the Rights
Agent. In no event shall the Rights Agent have any duty to supervise or in any
way be liable for such Co-Rights Agents.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the close of business on the tenth calendar day after the Shares Acquisition
Date (or, if the tenth calendar day after the Shares Acquisition Date occurs
before the Record Date, the close of business on the Record Date) or (ii) the
close of business on the tenth calendar day (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement of, or first
public announcement of the intent of 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 organized, appointed or established by
the Company or any Subsidiary of the Company or any Person organized, appointed
or established by the Company or any Subsidiary of the Company for or pursuant
to the terms of such plan) to commence, a tender or exchange offer if, upon
consummation thereof, such Person would be an Acquiring Person
<PAGE>
14
(the earlier of the dates in subsections (i) and (ii) hereof 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 the Common Stock shall be deemed also to be
Right Certificates) and not by separate Right Certificates, and (y) the right to
receive Right Certificates will be transferable only in connection with the
transfer of Common Stock. As soon as practicable after receipt by the Rights
Agent of written notice from the Company of the Distribution Date, the Rights
Agent, at the Company's expense, will send by first-class, postage prepaid mail,
to each record holder of 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, a Right Certificate, in substantially the form of Exhibit B hereto,
evidencing one Right for each share of the Common Stock so held, subject to
adjustment as provided herein. As of the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) As soon as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Stock, in substantially
the form attached hereto as Exhibit C (the "Summary of Rights"), by first-class,
<PAGE>
15
postage prepaid mail, to each record holder of Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company. With respect to certificates for Common Stock outstanding as of
the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates for Common Stock, and the registered holders of the Common
Stock shall also be the registered holders of the associated Rights. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the certificates for Common Stock outstanding
on the Record Date shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock
issued after the Record Date but prior to the earlier of the Distribution Date
or the Expiration Date (as such term is defined in Section 7), or, in certain
circumstances provided in Section 22 hereof, after the Distribution Date.
Certificates representing such shares of Common Stock shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between New Century Energies,
Inc. and dated as of ,
<PAGE>
16
1997 (the "Rights Agreement"), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of New Century Energies, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. New Century Energies, Inc. will mail to the holder of this
certificate a copy of the Rights Agreement as in effect on the date of
mailing without charge within five Business Days after receipt of a written
request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights beneficially owned by an Acquiring Person may become null
and void.
After the due execution of any supplement or amendment to this Agreement in
accordance with the terms hereof, the reference to this Agreement in the
foregoing legend shall mean the Agreement as so supplemented or amended. Until
the Distribution Date, the Rights associated with the Common Stock represented
by certificates containing the foregoing legend shall be evidenced by such
certificates alone, and the surrender for transfer of any of such certificates
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. 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 Common Stock shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with the shares of Common Stock which are no longer
outstanding. The failure to print the foregoing legend on any such
<PAGE>
17
Common Stock certificate or any other defect therein shall not affect in any
manner whatsoever the application or interpretation of the provisions of Section
7(e) hereof.
Section 4. Form of Right Certificates. (a) The Right Certificates (and
the forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. The Right Certificates
shall be in machine-printable format and in a form reasonably satisfactory to
the Rights Agent. Subject to the provisions of Section 11 and Section 22 hereof,
the Right Certificates, whenever distributed, shall be dated as of the Record
Date, shall show the date of countersignature, and on their face shall entitle
the holders thereof to purchase such number of shares of Preferred Stock (or
following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as shall be set forth therein at the price per one
one-hundredth of a share of Preferred
<PAGE>
18
Stock set forth therein (the "Purchase Price"), but the number of such shares
and the Purchase Price shall be subject to adjustment as provided herein.
(b) Notwithstanding any other provision of this Agreement, (i) any
Right Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (x) an Acquiring Person or any
Associate or Affiliate thereof, (y) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person became such, or (z) 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
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding (whether or not in writing) which has as a primary
purpose or effect avoidance of Section 7(e) hereof, (ii) any Right Certificate
issued at any time to any nominee of such Acquiring Person, Associate or
Affiliate, and (iii) any Right Certificate issued
<PAGE>
19
pursuant to Section 6 or Section 11 hereof, upon transfer, exchange, replacement
or adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible following the written instruction of the Company
to the Rights Agent) the following legend, modified as applicable to apply to
such Person:
The Rights represented by this Right Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
an Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Right Certificate and the Rights
represented may become null and void in the circumstances specified in
Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by one of its authorized officers
either manually or by facsimile signature. The Right Certificates shall be
countersigned by an authorized signatory of 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 Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
issued and delivered with the same force and effect as though the person who
signed such Right Certificates
<PAGE>
20
had not ceased to be such officer of the Company; and any Right Certificate may
be signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
In case any authorized signatory of the Rights Agent who shall have
countersigned any of the Right Certificates shall cease to be such signatory
before delivery by the Company, such Right Certificates, nevertheless, may be
issued and delivered by the Company with the same force and effect as though the
person who countersigned such Right Certificates not ceased to be such
signatory; and any Right Certificate may be countersigned on behalf of the
Rights Agent by any person who, at the actual date of the countersignature of
such Right Certificate, shall be a proper signatory of the Rights Agent to
countersign such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such a signatory.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office designated for such purpose, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names
<PAGE>
21
and addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates, and the date of
each of the Right Certificates and the date of countersignature of each of the
Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost orSection 6. Transfer, Split Up,
Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates. Subject to the provisions of Section 14 hereof, at
any time after the close of business on the Distribution Date, and at or prior
to the close of business on the Expiration Date, any Right Certificate or Right
Certificates may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock (or following a Triggering
Event, Common Stock, other securities, cash or other assets, as the case may be)
as the Right Certificate or Right Certificates surrendered then entitled such
holder (or former holder in the case of a transfer) to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such
<PAGE>
22
purpose, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request. Neither the Rights
Agent nor the Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Right Certificate and shall
have provided such additional evidence, as the Company shall reasonably request,
of the identity of the Beneficial Owner, Affiliates or Associates thereof or of
the holder, or of any other Person with which such holder or any of such
holder's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting or disposing of securities of the Company. Thereupon the Rights Agent
shall, subject to Section 14 and Section 20(k) hereof, countersign and deliver
to the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment from a Right
Certificate holder of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft,
<PAGE>
23
destruction or mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, along
with a signature guarantee and such other further documentation as the Rights
Agent may reasonably request 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 Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, the restrictions on
exercisability set forth in Sections 9(c), 11(a)(iii), 23(b) and 24(b) hereof)
in whole or in part at any time after the Distribution Date upon surrender of
the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the designated office of the
Rights Agent, together with payment of the aggregate Purchase Price for the
total number of one one-hundredths of shares of Preferred Stock (or shares of
Common Stock, other securities, cash
<PAGE>
24
or other assets, as the case may be) as to which the Rights are then
exercisable, at or prior to the earliest of (i) the close of business on , 2007
(the "Final Expiration Date"), (ii) the time at which the Rights are exchanged
as provided in Section 24, or (iii) the time at which the Rights are redeemed as
provided in Section 23 (such earliest date being herein referred to as the
"Expiration Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $ , shall
be subject to adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed
and completed accompanied by payment of the Purchase Price for the number of one
one-hundredths of shares of Preferred Stock (or shares of Common Stock, other
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax, the Rights Agent shall thereupon,
subject to Section 20(k), promptly (i) requisition from any transfer agent of
Preferred Stock certificates for the number of one one hundredths of shares of
Preferred Stock to be purchased and the Company hereby
<PAGE>
25
irrevocably authorizes its transfer agent to comply with all such requests, (ii)
if the Company shall have elected to deposit the total number of shares of
Preferred 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 Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company hereby directs the depositary agent to comply with such request, (iii)
when appropriate, requisition from any transfer agent of the Common Stock of the
Company certificates for the total number of shares of Common Stock to be paid
in accordance with Section 11(a)(ii) and 11(a)(iii), (iv) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14, (v) promptly after receipt
of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder and (vi) when
appropriate, after receipt promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate. The payment of the then
Purchase Price may be made in cash or by certified bank check or bank
<PAGE>
26
draft or money order payable to the order of the Company or the Rights Agent. In
the event that the Company is obligated to issue securities, distribute property
or pay cash pursuant to Section 11(a)(iii) hereof, the Company will make all
arrangements necessary so that cash, property or securities are available for
issuance, distribution or payment by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the-Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any 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
became 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
<PAGE>
27
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
(whether or not in writing) regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is a part of a plan,
arrangement or understanding (whether or not in writing) which has as a primary
purpose or effect the avoidance of this Section 7(e), shall become null and void
without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to insure
that the provisions of this Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Right Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
<PAGE>
28
have (i) completed and signed the certificate contained in the form of election
to purchase set forth on the reverse side of the Right Certificate surrendered
for such exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner, Affiliates or Associates thereof or of the holder, or of
any other Person with which such holder or any of such holder's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding, voting or disposing of any
securities of the Company as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the
<PAGE>
29
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Capital Stock.
(a) The Company covenants and agrees that it WILL cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock (and
following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities) or out of its
authorized and issued shares of Preferred Stock (and, following the occurrence
of a Triggering Event, out of its authorized and issued Common Stock and/or
other securities) held in its treasury, the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that will be sufficient to permit the exercise in full of all
outstanding Rights (it being understood that any of the foregoing shares or
securities may also be reserved for other purposes) or will take such other
steps as are appropriate to assure that the number of such shares or securities
(or their equivalents) sufficient to permit the exercise in full of all
outstanding Rights will be available upon such exercise.
<PAGE>
30
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
upon the exercise of Rights may be listed on any national securities exchange,
the Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable (but only to the extent that it is reasonably likely
that the Rights will be exercised), all shares reserved for such issuance to be
listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (X) (i) to file, as soon as
practicable following the first occurrence of a Section 11(a)(ii) Event, or as
soon as required by law, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to 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 and (Y) (i) to file appropriate
applications with any state or federal regulatory bodies having jurisdiction
over the issuance of the securities (or assets) purchaseable upon exercise of
the Rights in order to ob-
<PAGE>
31
tain any approvals or orders of such bodies as may be legally required, (ii) to
cause such approvals to be obtained or orders to be issued as soon as
practicable after such filing and (iii) to cause such approvals or orders to
remain effective until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities (or assets), and (B) the Expiration Date,
to the extent not previously obtained. The Company will also take such action as
may be appropriate under the blue sky laws of the various states. The Company
may temporarily suspend, (X) for a period of time not to exceed ninety (90) days
after the date set forth in clause (X)(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 and (Y) for a period of
time not in excess of 180 days after such date (or for such longer period as is
required by any applicable law, rule or regulation of any appropriate regulatory
bodies), the exercisability of the Rights in order to obtain any such required
regulatory body approvals or orders. Upon any such suspension, the Company shall
issue a public announcement and shall give simultaneous written notice to the
Rights Agent stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement and notice to the Rights Agent at
such time as the suspension is no longer in effect. Notwithstanding
<PAGE>
32
any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualifications in such
jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of the Preferred 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) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any shares of the Preferred Stock (or Common Stock and/or other securities,
as the case may be) upon the exercise of Rights. The Company shall not, however,
be required (a) to pay any transfer tax which may be payable in respect of any
transfer involved in the transfer or delivery of Right Certificates or the
issuance or delivery of certificates for the Preferred Stock (or Common Stock
and/or other securities, as the case may be) in a name
<PAGE>
33
other than that of the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or (b) to issue or deliver any certificates for
shares of the Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for any number of shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
whole and/or fractional shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made and shall show the date of countersignature; provided,
however, that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such person shall be
<PAGE>
34
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
(or Common Stock and/or other securities, as the case may be) transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights. The Purchase Price, the number of shares covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in shares
of the Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C)
combine the outstanding Preferred Stock into a smaller number of shares or (D)
issue any shares of its capital stock in a reclassification of
<PAGE>
35
the Preferred 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) hereof, the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive upon payment of the Purchase Price then in
effect the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Stock (or Common Stock and/or other securities) transfer books of the
Company were open, he or she would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, 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).
<PAGE>
36
(ii) Subject to Section 24 of this Agreement, in the event any Person,
alone or together with its Affiliates and Associates, becomes an Acquiring
Person except as the result of a transaction set forth in Section 13(a) hereof,
then, prior to the later of (x) the date on which the Company's rights of
redemption pursuant to Section 23(a) expire, or (y) five (5) days after the date
of the first occurrence of a Section 11(a)(ii) Event, proper provision shall be
made so that each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have a right to receive, upon exercise thereof at the then
current Purchase Price for the number of one one-hundredths of a share of
Preferred Stock for which such Right is then exercisable in accordance with the
terms of this Agreement, in lieu of shares of Preferred Stock, such number of
shares of the Common Stock of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable and dividing that product by (y) 50% of the Current Market Price per
share of the Common Stock of the Company (determined pursuant to Section 11(d))
on the date of the occurrence of the event listed above in this subparagraph
(ii) (such number of shares are hereinafter referred to as the "Adjustment
Shares") provided that the Purchase Price and the number of Adjustment
<PAGE>
37
Shares shall be further adjusted as provided in this Agreement to reflect any
events occurring after the date of such first occurrence.
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's Restated Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), 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, make adequate provision to
substitute for the Adjustment Shares, upon exercise of the Rights and payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which a majority of
the Independent Directors and the Board of Directors of the Company have deemed
to have the same value as shares of Common Stock (such shares of preferred
stock, "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
<PAGE>
38
Value, where such aggregate value has been determined by a majority of the
Independent Directors and the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the Board
of Directors of the Company; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the Company's rights of redemption
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, 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 of Directors of the Company
shall determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
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
<PAGE>
39
"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)
hereof, 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
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 and shall give
simultaneous written notice to the Rights Agent stating that the exercisability
of the Rights has been temporarily suspended, as well as a public announcement
and notice to the Rights Agent at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Common Stock
shall be the Current Market Price (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock on the Section 11(a)(ii) 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. The Company shall give the Rights Agent notice
of the selection of any Common Stock Equivalent under this Section 11(a)(iii).
<PAGE>
40
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or securities having substantially
the same rights, privileges and preferences as the shares of Preferred Stock
("Equivalent Preferred Stock") or convertible into the Preferred Stock or
Equivalent Preferred Stock) at a price per share of the Preferred Stock or
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into the Preferred Stock or Equivalent Preferred Stock)
less than the Current Market Price (as defined in Section 11(d) per share of the
Preferred Stock or Equivalent Preferred Stock, as the case may be) 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, of which the numerator shall be the number of shares
of Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock or Equivalent Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock or Equivalent Preferred Stock
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Market
Price
<PAGE>
41
and of which the denominator shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of additional shares of
Preferred Stock and/or Equivalent Preferred Stock to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by delivery
of consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular periodic cash dividend or a dividend pay-
<PAGE>
42
able in Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, of which the numerator
shall be the Current Market Price per share of Preferred Stock (as defined in
Secton 11(d)) on such record date, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of Preferred Stock and of which the
denominator shall be such Current Market Price per share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, other than
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 30 consecutive
<PAGE>
43
Trading Days (as such term is hereinafter defined in this paragraph (d))
immediately prior to such date and for purposes of computations made pursuant to
Section 11(a)(iii) hereof, the "Current Market Price" per share of Common Stock
on any date shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of Common Stock is determined during the 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 prior to the expiration of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above after the ex-dividend date for such dividend or
distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the Current Market Price shall be
appropriately adjusted to take into account ex-dividend trading. The closing
price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of the Common Stock are
not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction re-
<PAGE>
44
porting system with respect to securities listed on the principal national
securities exchange on which the shares of the Common Stock are listed or
admitted to trading or, if the shares of the 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 the Common Stock are not quoted by
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 of Directors of the Company. 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
shall be as determined in good faith by the Independent Directors if the
Independent Directors constitute a majority of the Board of Directors or, in the
event the Independent Directors do not constitute a majority of the Board of
Directors, by an independent investment banking firm
<PAGE>
45
selected by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
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 the
Common Stock are not listed or admitted to trading on any national securities
exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which banking
institutions in the State of New York are not authorized or obligated by law or
executive order to close. 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 Independent Directors if the
Independent Directors constitute a majority of the Board of Directors or, in the
event the Independent Directors do not constitute a majority of the Board of
Directors, by an independent investment banking firm selected by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "Current Market
Price" per share of Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in clause (i) of this Section 11(d) (other
than
<PAGE>
46
the last sentence thereof). If the Current Market Price per share of Preferred
Stock cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in an manner described in clause
(i) of this Section 11(d), the "Current Market Price" per share of Preferred
Stock shall be conclusively deemed to be an amount equal to 100 (as such number
may be appropriately adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock occurring after the date
of this Agreement) multiplied by the Current Market Price per share of the
Common Stock. If neither the Common Stock nor the Preferred Stock is publicly
held or so listed or traded, "Current Market Price" per share of the Preferred
Stock shall mean the fair value per share as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
For all purposes of this Agreement, the "Current Market Price" of one
one-hundredths of a share of Preferred Stock shall be equal to the "Current
Market Price" of one share of Preferred Stock divided by 100.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at
<PAGE>
47
least 1% in such price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of
a share of Common Stock or one millionth of a share of Preferred Stock as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than shares of Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in Section 11(a) through (q),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Stock shall apply on like terms to any such other shares.
<PAGE>
48
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares (calculated to
the nearest one-millionth) 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) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of
<PAGE>
49
shares of Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of shares of Preferred 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 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 the adjustment of the Purchase
Price. The Company shall make a public announcement and shall give simultaneous
written notice to the Rights Agent of its election to adjust the number of
Rights, indicating the record date for the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option
of
<PAGE>
50
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of shares of Preferred Stock issuableupon the exercise of the Rights,
the Right 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 Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one hundredth of the then stated value, if any, of
a share of Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which 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 one one-
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51
hundredths of a share of such Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Board of Directors of the Company shall determine to be
advisable in order that any consolidation or subdivision of shares of Preferred
Stock, issuance wholly for cash of any of
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52
shares of Preferred Stock at less than the Current Market Price, issuance wholly
for cash of the Preferred Stock or securities which by their terms are
convertible into or exchangeable for Preferred Stock, stock dividends or
issuance of rights, options or warrants referred to hereinabove in this Section
11, hereafter made by the Company to holders of its Preferred Stock shall not be
taxable to such stockholders.
(n) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Sections 23, 24 and 27 hereof, take
(nor will it permit any of its Subsidiaries 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.
(o) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(n))
(ii) merge with or into any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(n)), or (iii) sell or transfer
(or permit any of its Subsidiaries to sell or transfer), in one or more
transactions, assets or or earning power aggregating more than 50% of the assets
or earn-
<PAGE>
53
ing 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(n)) if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially 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 or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Record 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 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
<PAGE>
54
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.
(q) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date, the Company may, in lieu of making any adjustment to
the Purchase Price, the number of shares of Preferred Stock eligible for
purchase on exercise of each Right or the number of Rights outstanding, which
adjustment would otherwise be required by Section 11(a)(i), 11(b), 11(c), 11(h)
or 11(i), make such other equitable adjustment or adjustments thereto as the
Board of Directors (whose determination shall be conclusive) deems appropriate
in the circumstances and not inconsistent with the objectives of the Board of
Directors in adopting this Agreement and such Sections.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as pro-
<PAGE>
55
vided in Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief statement of the facts
accounting for such adjustment and the adjusted Purchase Price, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Stock
and the Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 26. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Shares Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n)) and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(n)) shall consolidate, merge with and into the Company and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any
<PAGE>
56
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 or more transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company or any
of its Subsidiaries in one or more transactions each of which complies with
Section 11(n) hereof), then, and in each such case proper provision shall be
made so that (i) each holder of a Right (except as provided in Section 7(e))
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement, such
number of validly issued, fully paid, non-assessable and freely tradable shares
of Common Stock of the Principal Party (as hereinafter defined), not subject to
any liens, encumbrances, rights of call or first refusal, or other adverse
claims as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the then number of one one-hundredths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such one one-hundredths of a share for which a Right was exercisable im-
<PAGE>
57
mediately prior to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first occurrence), and
dividing that product (which, following the first occurrence of a Section 13
Event, shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2) 50% of the Current Market Price per share of
the Common Stock of such Principal Party (determined in the manner described in
Section 11(d)) on the date of consummation of such consolidation, merger, sale
or transfer; (ii) the Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 shall thereafter apply to such
Principal Party; (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 accordance with Section 9) in connection with such consummation as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof
<PAGE>
58
shall be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(1) in the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted
in such merger or consolidation, and if no securities are so issued, the
Person that is the other party to the merger or consolidation; and
(2) in the case of any transaction described in (z) of the first
sentence in this Section 13, the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (x) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another corporation the Common Stock of which
is and has been so registered, "Principal Party" shall refer to such other
corporation; (y) if such Person is a Sub-
<PAGE>
59
sidiary, directly or indirectly, of more than one corporation, the Common Stocks
of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such corporations is the issuer of the Common Stock having
the greatest market value.
(c) The Company shall not consummate any Section 13 Event unless all
regulatory approvals for the consummation of such Section 13 Event and the
exercise of the Rights in accordance with the terms of this Agreement have been
obtained and the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which are neither outstanding nor reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on
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60
an appropriate form, will use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing and
will use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
The provisions of this Section 13 shall similarly apply to successive Section 13
Events. In the event that a Section 13 Event shall occur at any time after the
occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company shall pay to the registered holders of the Right
Certificates
<PAGE>
61
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the 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
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62
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares (other than fractions
which are integral multiples of one one-hundredth of a share of Preferred
Stock). In lieu of fractional shares that are not integral multiples of one
one-hundredth of a share of Preferred Stock, the Company may pay to the
registered holders of Right Certificates at the time the Rights evidenced
thereby are exercised or exchanged as herein provided an amount in cash equal to
the same fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii)) for the Trading Day immediately prior to the date of such
exercise.
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63
(c) 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 Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one (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) hereof) for the Trading Day immediately prior to the date of
such exercise.
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as otherwise permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right 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 Right
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64
Certificate (or, prior to the Distribution Date, of the Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
respect of, his right to exercise the Rights evidenced by such Right Certificate
in the manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the
<PAGE>
65
Rights Agent if surrendered at the office of the Rights Agent designated
for such purpose, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates fully executed,
along with a signature guarantee and such other and further documentation
as the Rights Agent may reasonably request;
(c) subject to Section 6 and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights Agent shall
be required to be affected by any notice to the contrary;
(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 prelimi-
<PAGE>
66
nary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred 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 Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the
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67
Right or Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent
(including the reasonable fees and expenses of counsel), for anything done or
omitted by the Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending against any
claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate or
certificate for Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorse-
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68
ment, affidavit, letter, notice, direction, consent, instruction, adjustment
notice, 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.
In addition to the foregoing, the Rights Agent shall be protected and
shall incur no liability for, or in respect of, any action taken or omitted by
it in connection with its administration of this Agreement in reliance upon (i)
the proper execution of the certification concerning beneficial ownership
appended to the Form of Assignment and the Form of Election to Purchase included
as part of Exhibit B hereto (the "Certification"), unless the Rights Agent shall
have actual knowledge that, as executed, the Certification is untrue or (ii) the
non-execution or failure to complete the Certification including, without
limitation, any refusal to honor any otherwise permissible assignment or
election by reason of such non-execution or failure.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any suc-
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69
cessor Rights Agent shall be a party, or any corporation, succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at
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70
that time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name or
in its changed name; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with the legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a cer-
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71
tificate signed by any one of the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization to
the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct. The issuance or non-issuance
of a Right Certificate or Preferred Stock or other security issued in lieu
of Preferred Stock in accordance with instructions given to the Rights
Agent by the Company pursuant to Section 20(k) hereof or in accordance with
the terms hereof shall not constitute negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or
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72
the execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any adjustment required under the provisions of Sections 11
or 13 or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock or Common Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock or Common Stock will, when issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
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73
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any one of the
Chairman of the Board, the President, any Vice President, the Secretary or
the Treasurer of the Company, and is authorized to apply to such officers
for advice or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer. An application by the
Rights Agent for instructions may set forth in writing any action proposed
to be taken or omitted by the Rights Agent with respect to its duties and
obligations under this Agreement and the date on and/or after which such
action shall be taken, and the Rights Agent shall not be liable for any
action taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall not be
less than one Business Day after the Company receives such application)
without the consent of the Company unless prior to taking or omitting such
ac-
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74
tion, the Rights Agent has received written instructions in response to
application specifying the actions to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either by 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 thereof.
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75
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its 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
if, with respect to any Rights Certificate surrendered to the not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response, the Rights
Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting the Company. The Company
shall give the Rights Agent prompt written instructions as to the action to
be taken regarding the Rights Certificates involved. The Rights Agent shall
not be liable for acting in accordance with such instructions.
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)
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76
days' notice in writing mailed to the Company and to each transfer agent of the
Preferred Stock and the Common Stock by registered or certified mail, and, at
the Company's expense, to the holders of the Right Certificates by first class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
thirty (30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Preferred
Stock and the Common Stock by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company), then the Company shall become the temporary Rights
Agent and the registered holder of any Right Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business un-
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77
der the laws of the United States or of the State of New York (or of any other
state of the United States so long as such corporation is authorized to do
business as a banking or trust institution in the State of New York), in good
standing, having a principal office in the State of New York, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority or which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $25 million. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Preferred Stock and the Common Stock, and mail a notice thereof in writing
to the registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity
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78
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration 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 hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Right Certificate shall be issued if, and to the
extent that, the Company shall be advised by counsel that such issuance would
create a significant risk
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79
of material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no such Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Board of Directors of
the Company may, at its option, at any time prior to the earlier of (x) the
close of business on the tenth calendar day following the Shares Acquisition
Date (or if the Shares Acquisition Date shall have occurred prior to the Record
Date, the close of business on the tenth day following the Record Date), or (y)
the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.001 per Right as 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"), and the Company may, at its option, pay
the Redemption Price either in shares of its Common Stock (valued at their
Current Market Price as defined in Section 11(d)(i) on the date of the
redemption), other securities, cash or other assets; provided, however, that if
the Board of Directors of the Company authorizes redemption of the Rights in
either of the circumstances set forth in clauses (x) or (y) below then there
must be Independ-
<PAGE>
80
ent Directors in office and such authorization shall require the concurrence of
a majority of the Independent Directors: (x) such authorization occurs on or
after the Shares Acquisition Date or (y) such authorization occurs on or after
the date of a change (resulting from a proxy or consent solicitation) in a
majority of the directors of the Company in office at the commencement of such
solicitation if any Person who is a participant in such solicitation has stated
(or if upon the commencement of such solicitation a majority of the directors of
the Company has determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider taking, any action
which would result in such Person becoming an Acquiring Person or which would
cause the occurrence of a Triggering Event. Notwithstanding anything contained
in this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11(a)(ii) Event until such time as the Company's
right of redemption hereunder has expired.
(b) In deciding whether or not to exercise the Company's right of
redemption hereunder, the Board of Directors of the Company shall act in good
faith, in a manner they reasonably believe to be in the best interests of the
Company and with such care, including reasonable inquiry, skill and diligence,
as a person of ordinary prudence would use under similar cir-
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81
cumstances, and they may consider the long-term and short-term effects of any
action upon employees, customers and creditors of the Company and upon
communities in which offices or other establishments of the Company are located,
and all other pertinent factors.
(c) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right held. Within 10 days after the action of the
Board of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to the Rights Agent and 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 which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than
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82
that specifically set forth in this Section 23, and other than in connection
with the repurchase of Common Stock prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may,
at its option (provided that there are then Independent Directors in office and
a majority of the Independent Directors concur), at any time and from time to
time on or after a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for shares of
Common Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of shares of Common Stock equal to the number of
such Rights held by such holder multiplied by
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83
the Exchange Ratio. Promptly after the action of the Board of Directors ordering
an exchange of the Rights, the Company shall give notice of any such exchange to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute shares of Preferred Stock (or Equivalent Preferred Stock,
as such term is defined in Section 11(b) hereof) for shares of Common Stock
exchangeable for the Rights, at the initial rate of one one-hundredth of a share
of Preferred Stock (or Equivalent Preferred Stock) for each share of Common
Stock, as appropriately adjusted to
<PAGE>
84
reflect adjustments in the dividend rights of the Preferred Stock pursuant to
the terms thereof.
(d) In the event that there shall not be sufficient shares of Common
Stock or Preferred Stock issued, but not outstanding, or authorized but
unissued, to permit any exchange of Rights as contemplated in accordance with
this Section 24 or that any regulatory actions or approvals are required in
connection therewith, the Company shall take all such action as may be necessary
to authorize additional Common Stock or Preferred Stock for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue fractional shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock pursuant to this Section 24. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Common Stock. For the purposes of this
Section 24(e), the current market value of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as determined pursuant to the
second sentence of Section 11(d)(i)
<PAGE>
85
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.
(f) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute for any share of Common Stock exchangeable for a Right
(i) Common Stock Equivalents (ii) cash, (iii) debt securities of the Company,
(iv) other assets, or (v) any combination of the foregoing, having an aggregate
value which a majority of the Independent Directors and the Board of Directors
of the Company shall have determined in good faith to be equal to the Current
Market Price of one share of Common Stock (determined pursuant to Section 11(d)
hereof) on the Trading Date immediately preceding the date of exchange pursuant
to this Section 24.
Section 25. Notice of Certain Events. In case the Company shall
propose at any time following the Distribution Date (a) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
periodic cash dividend), or (b) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities, rights
or options, or (c) to effect any reclassification of Preferred Stock (other than
a
<PAGE>
86
reclassification involving only the subdivision of outstanding Preferred Stock),
or (d) to effect any consolidation or merger into or with any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 11(n) hereof), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(n) hereof), or (e) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to the Rights Agent and to each holder of a Right,
in accordance with Section 26, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or Rights, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the Preferred 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 (a) or (b) above at least twenty (20) days prior to
the record date for determining holders of the Preferred Stock for pur-
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87
poses of such action, and in the case of any such other action, at least twenty
(20) days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Stock, whichever shall be
the earlier.
In case a Section 11(a)(ii) Event shall occur, then, in any such case,
the Company shall as soon as practicable thereafter give to the Rights Agent and
to each holder of a Right, to the extent feasible and in accordance with Section
26, a notice of the occurrence of such event, which shall specify the event and
the consequences of the event to holders of Rights under Section 11(a)(ii) and
all references in the preceding paragraph to Preferred Stock shall be deemed to
thereafter refer to Common Stock and/or other securities, as the case may be.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
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88
New Century Energies, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
Attention:
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
Attention:
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the earlier of the
Distribution Date or the Shares Acquisition Date and subject to the ultimate
sentence of this Section 27, the Company may from time to time supplement or
amend this Agreement without the approval of any holders of Right Certifi-
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89
cates. From and after the earlier of the Distribution Date or the Shares
Acquisition Date, and subject to the penultimate sentence of this Section 27,
the Company may from time to time supplement or amend this Agreement without the
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, or (iii) to
lengthen the time period during which the Rights may be redeemed following the
Shares Acquisition Date for up to an additional twenty days beyond the time
period set forth in Section 23(a) (provided that any such lengthening shall be
effective only if there are Independent Directors and shall require the
concurrence of a majority of such Independent Directors), 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 Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). 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 unless the Rights Agent shall have
determined in good faith that such supplement or amendment would adversely
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90
affect its interests under this Agreement. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment shall be made on or after
the Distribution Date which changes the Redemption Price, the Final Expiration
Date, the Purchase Price or the number of shares of Preferred Stock for which a
Right is then exercisable.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors. For
all purposes of this Agreement, any calculation of the number of 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 provisions of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company (and, where specifically
provided for herein, the Independent Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or the Company (or, as expressly provided, the
Independ-
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91
ent Directors), 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 the purpose of clause (ii) below, all omissions with respect to
the foregoing) which are done or made by the Board (or, as provided for, by the
Independent Directors) in good faith, shall (i) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Right Certificates and all
other parties, and (ii) not subject the Board or the Independent Directors to
any liability to the holders of the Right Certificates.
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 Right Certificates (and, prior to the
Distribution Date, 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 Right Certificates (and, prior to the Distribution Date, registered holders
of the Common Stock).
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92
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State except that the rights,
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93
duties and obligations of the Rights Agent under this Agreement shall be
governed by 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.
<PAGE>
94
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.
SEAL]
NEW CENTURY ENERGIES, INC.
Attest
By:__________________ By:__________________________
Name: Name:
Title: Title:
[SEAL]
Attest: [ ]
By:___________________ By:___________________________
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
NEW CENTURY ENERGIES, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
New Century Energies, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that the following resolution was adopted by the
Board of Directors of the Corporation as required by Section 151 of the General
Corporation Law, at a meeting duly convened and held on __________, 1997:
"RESOLVED, that pursuant to the authority granted and vested
in the Board of Directors of the Corporation (the "Board of Directors") in
accordance with the provisions of the Restated Certificate of Incorporation, the
Board of Directors hereby creates a series of preferred stock, par value $1 per
share (the "Preferred Stock"), of the Corporation and hereby states the
designation and number of shares, and fixes the relative rights, preferences,
and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be ____________. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock
<PAGE>
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shall be entitled prior to the payment of any dividends on shares ranking junior
to the Series A Preferred Stock to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of February, May, August and November
in each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of common stock,
par value $1 per share, of the Corporation (the "Common Stock") or a subdivision
of the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Corporation shall at any time (i) declare or
pay any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in subparagraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
<PAGE>
-3-
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters voted on at a meeting of the stockholders of the
Corporation. In the event the Corporation shall at any time (i) declare or pay
any dividend on Common Stock payable in shares of Common Stock, or (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the hold-
<PAGE>
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ers of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one voting group on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
<PAGE>
-5-
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under subparagraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein or in the Restated Certificate of Incorporation.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received $ per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation
<PAGE>
-6-
Preference, no additional distributions shall be made to the holders of shares
of Series A Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph
(C) below to reflect such events as stocks splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Preferred Stock and Common Stock, respectively, holders of
Series A Preferred Stock and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to the Series A
Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, which rank on a parity with the Series A Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common Stock into
a smaller number of shares, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 7. Merger, Consolidation, etc. In case the Corporation
shall enter into any merger, consolidation, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case
<PAGE>
-7-
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Ranking. The Series A Preferred Stock shall rank,
with respect to the payment of dividends and distribution of assets, junior to
all series of any other class of the Corporation's Preferred Stock unless the
terms of any such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of
Incorporation, including the Certificate of Designation establishing the rights
and preferences of the Series A Preferred Stock, shall not be amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of a majority of the outstanding shares of
Series A Preferred Stock, voting separately as one voting group.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
<PAGE>
-8-
IN WITNESS WHEREOF, New Century Energies, Inc. has caused
this Certificate of Designation to be signed by its President and attested by
its Secretary, this ___ day of ________, 1997.
NEW CENTURY ENERGIES, INC.
By: ________________________________
President
Attest:
- ---------------------
Secretary
<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER _________, 2007 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY
THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO
WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF THE RIGHTS AGREEMENT.]1
NEW CENTURY ENERGIES, INC.
Right Certificate
This certifies that ________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement dated as of _________, 1997 (the "Rights Agreement") between New
Century Energies, Inc., a Delaware corporation (the "Company"), and
______________, a national banking association (the "Rights Agent"), to purchase
from the Company at
- ----------
1 The portion of the legend in brackets shall be inserted only if applicable.
B-1
<PAGE>
any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (New York City time) on , 2007 at the
designated office of the Rights Agent, or its successors as Rights Agent, in New
York, New York, one one-hundredth of a fully paid non assessable share of the
Series A Junior Participating Preferred Stock, without par value (the "Preferred
Stock"), of the Company, at a purchase price of $ per one one-hundredth of a
share (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase and related certificate duly
executed, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request. The number of Rights
evidenced by this Right 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 , 1997, based on
the Preferred Stock of the Company as constituted at such date.
Upon the occurrence of a Triggering Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any
B-2
<PAGE>
such Acquiring Person (as such terms are defined in the Rights Agreement), (ii)
a transferee of any such Acquiring Person, Associate or Affiliate, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
person who after such transfer, became an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock (or, in certain circumstances,
common stock and/or other securities) which may be purchased upon the exercise
of the Rights evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events, including Triggering Events
(as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are
B-3
<PAGE>
on file at the above-mentioned office of the Rights Agent, and at the executive
offices of the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the Rights Agent, along
with a signature guarantee and such other and further documentation as the
Rights Agent may reasonably request, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of one one-hundredths
of a share of Preferred Stock as the Rights evidenced by the Right Certificate
or Right Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof, along with a signature guarantee and
such other and further documentation as the Rights Agent may reasonably request,
another Right Certificate or Right Certificates for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be (i) redeemed by the Company at a redemption
price of $.001 per Right or (ii) exchanged by the Company in whole or in part
for shares of common stock or Preferred Stock.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby
B-4
<PAGE>
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of , 1997.
B-5
<PAGE>
[SEAL]
ATTEST: NEW CENTURY ENERGIES, INC.
By:______________________ By: _________________________
Name: Name:
Title: Title:
Countersigned:
, as Rights Agent
By:__________________________
Authorized Signature
Date:
B-6
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Right Certificates.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _______________, ____
---------------------------------
Signature
Signature Guaranteed:_______________________________________________________
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
B-7
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ________________, ____
----------------------------------------
Signature
Signature Guaranteed:_______________________________________________________
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
B-8
<PAGE>
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-9
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
New Century Energies, Inc.:
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Right Certificate to purchase the
shares of the Preferred Stock issuable upon the exercise of such Rights (or such
other securities of the Company or of any other Person which may be issuable
upon the exercise of the Rights) and requests that certificates for such shares
be issued in the name of:
Please insert social security or
other taxpayer identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
B-10
<PAGE>
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security or
other taxpayer identifying number
(Please print name and address)
Dated: _________________, ____
----------------------------------------
Signature
Signature Guaranteed: ______________________________________________________
(Signatures must be guaranteed by a commercial bank or trust company or by a
member of the New York Stock Exchange.)
B-11
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ]
are not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ______________, ____ ________________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
B-12
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On , 1997, the Board of Directors of New Century Energies,
Inc. (the "Company") declared a dividend distribution of one Right for each
outstanding share of Common Stock, $1 par value (the "Common Stock"), of the
Company. The distribution is payable on , 1997 (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company one one-hundredth of
a share of Series A Junior Participating Preferred Stock (the "Preferred
Stock"), at a price of $ per one one-hundredth share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and , as Rights
Agent (the "Rights Agent").
Distribution Date; Transfer of Rights
Until the earlier to occur of (i) ten calendar days following
the date (the "Shares Acquisition Date") of public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") acquired, or
obtained the right to acquire, beneficial ownership of Common Stock or other
voting securities ("Voting Stock") that have 10% or more of the voting power of
the outstanding shares of Voting Stock or (ii) ten calendar days (or such later
date as may be determined by action of the Board of Directors prior to the time
any person or group of affiliated persons becomes an Acquiring Person) following
the commencement or announcement of an intention to make a tender offer or
exchange offer the consummation of which would result in such person acquiring,
or obtaining the right to acquire, beneficial ownership of Voting Stock having
10% or more of the voting power of the outstanding shares of Voting Stock (the
earlier of such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Company's Common Stock certificates
outstanding as of the Record Date, by such Common Stock certificates. The Rights
Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Company's Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Stock certificates issued after the Record Date upon transfer or new
issuance of the Company's Common Stock will contain a notation incorporating the
Rights Agreement by reference. Until the Dis
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<PAGE>
tribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Company's Common Stock certificates
outstanding as of the Record Date will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate. As soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Company's Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire at the close of business on , 2007, unless earlier
redeemed or exchanged by the Company as described below.
Exercise of Rights for Common Stock of the Company
In the event that a Person becomes an Acquiring Person, each
holder of a Right will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times the exercise price of the
Right. Notwithstanding any of the foregoing, following the occurrence of any of
the events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void.
Exercise of Rights for Shares of the Acquiring Company
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction, or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter have the right
to receive, upon exercise, common stock of the acquiring company having a value
equal to two times the Exercise Price of the Right.
Adjustments to Purchase Price
The Purchase Price payable, and the number of shares of
Preferred Stock (or Common Stock or other securities, as the case may be)
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or
C-2
<PAGE>
reclassification of the Preferred Stock, (ii) upon the grant to holders of the
Preferred Stock of certain rights or warrants to subscribe for shares of the
Preferred Stock or convertible securities at less than the current market price
of the Preferred Stock or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends out of earnings or retained earnings or dividends
payable in the Preferred Stock) or of subscription rights or warrants (other
than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until the earlier of (i) three years from the date of the event
giving rise to such adjustment and (ii) the time at which cumulative adjustments
require an adjustment of at least 1% in such Purchase Price. No fractional
shares will be issued (other than fractional shares which are integral multiples
of one one-hundredth of a share of Preferred Stock) and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.
Redemption and Exchange of Rights
At any time after the occurrence of the event set forth under
the heading "Exercise of Rights for Common Stock of the Company" above, the
Board of Directors (with the concurrence of a majority of the Independent
Directors) may exchange the Rights (other than Rights owned by the Acquiring
Person which shall have become void), in whole or in part, at an exchange ratio
of one share of Common Stock (or a fraction of a share of Preferred Stock having
the same market value) per Right (subject to adjustment).
At any time prior to 5:00 P.M. New York City time on the tenth
calendar day following the Shares Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.001 per Right (the "Redemption
Price"). Under certain circumstances set forth in the Rights Agreement, the
decision to redeem shall require that there be Independent Directors in office
and that a majority of the Independent Directors concur in such decision.
Immediately upon the action of the Board of Directors of the Company electing to
redeem the Rights with, if required, the concurrence of the Independent
Directors, the Company shall make announcement thereof, and upon such action,
the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
C-3
<PAGE>
Until a Right is exercised or exchanged, the holder thereof,
as such, will have no rights as a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends.
Terms of the Preferred Stock
The Preferred Stock will rank junior to all other series of
the Company's preferred stock with respect to payment of dividends and as to
distributions of assets in liquidation. Each share of Preferred Stock will have
a quarterly dividend rate per share equal to the greater of $1.00 or 100 times
the per share amount of any dividend (other than a dividend payable in shares of
Common Stock or a subdivision of the Common Stock) declared from time to time on
the Common Stock, subject to certain adjustments. The Preferred Stock will not
be redeemable. In the event of liquidation, the holders of the Preferred Stock
will be entitled to receive a preferred liquidation payment per share of $ (plus
accrued and unpaid dividends) or, if greater, an amount equal to 100 times the
payment to be made per share of Common Stock, subject to certain adjustments.
Generally, each share of Preferred Stock will vote together with the Common
Stock and any other series of cumulative preferred stock entitled to vote in
such manner and will be entitled to 100 votes, subject to certain adjustments.
In the event of any merger, consolidation, combination or other transaction in
which shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or other property, each share of Preferred Stock will be
entitled to receive 100 times the aggregate amount of stock, securities, cash
and/or other property, into which or for which each share of Common Stock is
changed or exchanged, subject to certain adjustments. The foregoing dividend,
voting and liquidation rights of the Preferred Stock are protected against
dilution in the event that additional shares of Common Stock are issued pursuant
to a stock split or stock dividend or distribution. Because of the nature of the
Preferred Stock's dividend, voting, liquidation and other rights, the value of
the one one-hundredth of a share of Preferred Stock purchasable with each Right
is intended to approximate the value of one share of Common Stock.
Amendments to Terms of the Rights
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended by
the Board (in certain
C-4
<PAGE>
circumstances, with the concurrence of the Independent Directors) in order to
cure any ambiguity, defect or inconsistency, or to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person); provided, however, that no supplement or amendment may be
made after the Distribution Date which changes those provisions relating to the
principal economic terms of the Rights. The Board of Directors may also, with
the concurrence of a majority of the Independent Directors, extend the
redemption period for up to an additional 20 days.
The term "Independent Directors" means any member of the Board
of Directors of the Company who either (i) was a member of the Board on the date
of the Rights Agreement or (ii) is subsequently elected to the Board (x) in
accordance with Article V(B)(1) of the Company's Restated Certificate of
Incorporation, (y) if such person was nominated pursuant to the method described
in Article V(E) of the Company's Restated Certificate of Incorporation or (z) if
such person is recommended or approved by a majority of the Independent
Directors, but shall not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing
entities.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement on
Form 8-A dated , 1997. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
C-5
EXHIBIT G
New Century Energies, Inc. (70-)
New Century Energies, Inc. ("NCE"), 1225 Seventeenth Street, Denver,
Colorado 80202, a Delaware corporation, has filed a declaration under
sections6(a), 7, 9(a), 10, and 12(c) of the Act and rules 42 and 54 thereunder.
NCE seeks authorization to implement a stockholder rights plan ("Plan") and
to enter into a related Rights Agree ment ("Agreement") with an agent to be
named therein. To implement the Plan, the board of directors of NCE would
declare a dividend distribution of one right ("Right") for each out standing
share of common stock, $1.00 par value, of NCE ("Com mon Stock") to stockholders
of record at the close of business on a specified record date. Each Right would
entitle the holder the purchase from NCE one one-hundreth of a share of SeriesA
Junior Participating Preferred Stock (the "Preferred Stock"), at a price per one
one-hundreth share to be determined by the NCE Board of Directors, subject to
adjustment ("Purchase Price"). Initially, the Rights will be evidenced by the
cer tificates for shares of Common Stock to which they relate, and will be
transferable only with the Common Stock. Until a Right is exercised or
exchanged, as described below, the holder, as such, will have no rights as a
stockholder of NCE.
Upon the earlier to occur of (a)ten days after the date ("Shares
Acquisition Date") of the public announcement that a person or affiliated group
("Acquiring Person") has acquired or obtained the right to acquire beneficial
ownership of securities having 10% or more of the voting power of the
outstanding voting securities of NCE, or (b)ten days after commencement of, or
announcement of the intention of a person to make, a tender or exchange offer
that would result in such person acquiring, or obtaining the right to acquire,
beneficial ownership of securities having 10% or more of the voting power of the
outstanding voting securities of NCE (the earlier of such dates being the
"Distribution Date"), separate certifi cates evidencing the Rights will be
mailed to holders of record of Common Stock as of the close of business on the
Distribution Date.
The Rights will become exercisable after the Distri bution Date on the
following terms: (1)In the event that a person becomes an Acquiring Person, each
holder (other than an Acquiring Person) may exercise a Right and receive Common
Stock (or, in certain cases, cash, property or other securities of
<PAGE>
-2-
NCE) having a value equal to two times the Purchase Price of the Right then in
effect. Rights that are beneficially owned by an Acquiring Person will be null
and void. (2)If, after the Shares Acquisition Date, NCE is acquired in a
business com bination transaction or 50% or more of its assets or earning power
is sold or transferred, each holder of a Right (except Rights which previously
have been voided) will have the right to receive, upon exercise, common stock of
the acquiring com pany having a value equal to two times the Purchase Price of
the Right then in effect.
The Purchase Price is subject to adjustment to pre vent dilution in certain
situations involving stock dividends, splits, combinations or reclassification;
grants of warrants to subscribe for or purchase the Preferred Stock or
convertible securities at less than market price; or distribution to hold ers of
the Preferred Stock of evidences of indebtedness or assets or of subscription
rights or warrants. With certain exceptions, no adjustments will be required
until cumulative adjustments require a 1% or more change in the Purchase Price.
NCE may redeem the Rights in whole, but not in part, prior to 5:00p.m. on
the tenth day after the Shares Acquisi tion Date (subject to extension by the
board of directors of NCE for an additional 20days), at a price of one-tenth of
$0.001 per Right, payable in cash or stock. In addition, at any time after a
person becomes an Acquiring Person, the board may exchange the Rights (other
than Rights held by an Acquiring Person, which become void), in whole or in
part, at an exchange ratio of one share of Common Stock (or a fraction of a
share of Preferred Stock having the same market value) per Right, sub ject to
adjustment.
The Agreement may be amended by the board of direc tors of NCE without the
consent of the holders of Rights prior to the Distribution Date. Thereafter, the
board may amend the Agreement in order to cure any ambiguity, defect or inconsis
tency or to make changes that do not adversely affect the interests of holders
of Rights (other than any Acquiring Per son), provided that no amendment may be
made on and after the Distribution Date that changes the principal economic
terms of the Rights.
