Exhibit Index on Page 7
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
NEW CENTURY ENERGIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 84-1334327
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
1225 Seventeenth Street
Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
Preferred Stock New York Stock Exchange, Inc.
Purchase Rights
If this Form relates to the registration of a class of debt securities
and is effective upon filing pursuant to General Instruction A.(c)(1), please
check the following box. [ ]
If this Form relates to the registration of a class of debt securities
and is to become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box.
[ ]
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of class)
Page 1 of 81 Pages
Exhibit Index on Page 7
<PAGE>
Item 1. Description of Registrant's Securities to Be Registered.
On April 30, 1997, the Board of Directors of New Century Energies, Inc.
(the "Company") declared, subject to the receipt of certain regulatory
clearances, 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 the day immediately preceding the date of
consummation of the business combination of Public Service Company of Colorado,
Southwestern Public Service Company and the Company (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 of a 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 The Bank of New York, 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. 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. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the
Company's Common Stock and the surrender for transfer of any of the Company's
Common Stock certificates outstanding 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.
Page 2 of 81 Pages
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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.
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 Purchase Price of the Right.
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person 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 Purchase 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
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.
Page 3 of 81 Pages
<PAGE>
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.
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 $10,000
(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,
Page 4 of 81 Pages
<PAGE>
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, 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 is filed herewith as Exhibit 1. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such Exhibit, which is hereby
incorporated herein by reference.
Item 2. Exhibits
1 Form of Rights Agreement between New Century Energies, Inc. and
The Bank of New York, as Rights Agent, including form of Rights
Certificate.
Page 5 of 81 Pages
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
NEW CENTURY ENERGIES, INC.
Date: June 23, 1997 By: Richard C. Kelly
------------------------
Name: Richard C. Kelly
Title: Executive Vice President,
Chief Financial Officer
and Treasurer
Page 6 of 81 Pages
<PAGE>
EXHIBIT INDEX
Number Description Page
- ------ ----------- ----
1. Form of Rights Agreement between New New Century Energies,
Inc. and The Bank of New York, as Rights Agent, including
form of Rights Certificate. 8
Page 7 of 81 Pages
===============================================================================
NEW CENTURY ENERGIES, INC.
and
THE BANK OF NEW YORK, Rights Agent
RIGHTS AGREEMENT
Dated as of
, 1997
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Certain Definitions.............................................1
Section 2. Appointment of Rights Agent.....................................7
Section 3. Issue of Right Certificates.....................................7
Section 4. Form of Right Certificates......................................9
Section 5. Countersignature and Registration..............................11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates.................12
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights ...................................13
Section 8. Cancellation and Destruction of Right
Certificates.................................................15
Section 9. Reservation and Availability of Shares
of Capital Stock.............................................16
Section 10. Preferred Stock Record Date....................................18
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights...................................18
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares..........................................29
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power..........................29
Section 14. Fractional Rights and Fractional Shares........................32
Section 15. Rights of Action...............................................33
Section 16. Agreement of Right Holders.....................................34
-i-
<PAGE>
Page
Section 17. Right Certificate Holder Not Deemed a
Stockholder..................................................35
Section 18. Concerning the Rights Agent....................................35
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.........................................36
Section 20. Duties of Rights Agent.........................................37
Section 21. Change of Rights Agent.........................................40
Section 22. Issuance of New Right Certificates.............................41
Section 23. Redemption and Termination.....................................42
Section 24. Exchange ......................................................43
Section 25. Notice of Certain Events.......................................45
Section 26. Notices .......................................................46
Section 27. Supplements and Amendments.....................................47
Section 28. Successors ....................................................47
Section 29. Determinations and Actions by the Board
of Directors.................................................47
Section 30. Benefits of this Agreement.....................................48
Section 31. Severability ..................................................48
Section 32. Governing Law .................................................49
Section 33. Counterparts ..................................................49
Section 34. Descriptive Headings...........................................49
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
EXHIBIT C Summary of Rights to Purchase
Preferred Stock...............................................C-1
-ii-
<PAGE>
RIGHTS AGREEMENT
Rights Agreement, dated as of , 1997 between New Century Energies, Inc., a
Delaware corporation (the "Company"), and The Bank of New York, a New York
corporation (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company on April 30,
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") 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
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
<PAGE>
2
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 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 filed reports or documents of the Company
which are inaccurate or out-of-date or (y) otherwise cause a Distribution
Date or the adjustment provided for in Section 11(a) to occur.
Notwithstanding clause (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 notice 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 Ex-
<PAGE>
3
change 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.
(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 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
<PAGE>
4
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 Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (f))
or disposing of any 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, 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.
<PAGE>
5
(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.
(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.
(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.
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6
(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.
(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 in-
<PAGE>
7
terests) sufficient to elect at least a majority of the 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 Company 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 Rights 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,
<PAGE>
8
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 (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,
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
<PAGE>
9
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 The Bank of New York (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 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
<PAGE>
10
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 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 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:
<PAGE>
11
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 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>
12
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 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
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.
<PAGE>
13
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, 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 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 $100, 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,
<PAGE>
14
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 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 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
<PAGE>
15
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
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 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
<PAGE>
16
lieu thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of 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.
(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
<PAGE>
17
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 obtain 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 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
<PAGE>
18
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 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 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
<PAGE>
19
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 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).
(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
<PAGE>
20
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 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 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
<PAGE>
21
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 "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).
(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 Pre-
<PAGE>
22
ferred 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 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 payable 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
<PAGE>
23
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 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 reporting 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 re-
<PAGE>
24
ported 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 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 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 any 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
<PAGE>
25
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 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.
(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.
<PAGE>
26
(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 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 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
<PAGE>
27
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-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 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
<PAGE>
28
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 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)) 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
<PAGE>
29
each share of Common Stock then outstanding, or issued or delivered thereafter
but prior to the Distribution Date, shall be proportionately adjusted so that
the number of Rights thereafter associated with each share of Common Stock
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each share of Common Stock immediately prior to
such event by a fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event.
(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 provided 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 other
Person or cash or any other property, or (z) the Company
<PAGE>
30
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
immediately 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 shall be of no effect following the first
occurrence of any Section 13 Event.
<PAGE>
31
(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 Subsidiary, 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
<PAGE>
32
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 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
<PAGE>
33
Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue fractions of 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.
(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
<PAGE>
34
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 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 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
<PAGE>
35
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 preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however,
the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a 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 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
<PAGE>
36
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, endorsement, 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 successor 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
<PAGE>
37
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 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 certificate 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.
<PAGE>
38
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 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
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
<PAGE>
39
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 action, 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.
(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 re-
<PAGE>
40
payment 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) 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 under 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
<PAGE>
41
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 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
<PAGE>
42
that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such 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 Independent 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 circumstances, and they
may consider the long-term and short-term
<PAGE>
43
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 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
<PAGE>
44
to the number of such Rights held by such holder multiplied by 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 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
<PAGE>
45
Stock shall be the closing price of a share of Common Stock (as determined
pursuant to the second sentence of Section 11(d)(i) 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
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
<PAGE>
46
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 purposes 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:
New Century Energies, Inc.
1225 Seventeenth Street
Denver, Colorado 80202
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention:
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder
<PAGE>
47
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 Certificates.
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 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 calcula-
<PAGE>
48
tion 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 Independent 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).
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
<PAGE>
49
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, 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>
-50-
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: THE BANK OF NEW YORK,
as Rights Agent
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 April 30, 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 2,600,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A 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>
-2-
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>
-4-
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 $10,000 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 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
<PAGE>
-6-
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 Senior Vice President and attested by its
Secretary, this day of , 1997.
NEW CENTURY ENERGIES, INC.
By: ________________________________
Senior Vice 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 The Bank of New York, a New York
corporation (the "Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M. (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
- ----------
1 The portion of the legend in brackets shall be inserted only if applicable.
B-1
<PAGE>
$100 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 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 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 en-
B-2
<PAGE>
titling 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 (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.
B-3
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of , 1997.
[SEAL]
ATTEST: NEW CENTURY ENERGIES, INC.
By: _______________________ By: _________________________
Name: Name:
Title: Title:
Countersigned:
THE BANK OF NEW YORK, as Rights Agent
By: _________________________________
Authorized Signature
Date:
B-4
<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-5
<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.)
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-6
<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)
- --------------------------------------------------------------------------------
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-7
<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-8
<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On April 30, 1997, the Board of Directors of New Century Energies, Inc.
(the "Company") declared, subject to the receipt of certain regulatory
clearances, 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 $100 per one one-hundredth of a 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 The Bank of New York,
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 in-
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corporating 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 , 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
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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 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 termi-
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nate and the only right of the holders of Rights will be to receive the
Redemption Price.
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 $10,000
(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.
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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, 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
June 23, 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.
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