SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: March 26, 1996
ENSERCH Corporation
(Exact name of registrant as specified in its charter)
Texas 1-3183 75-0399066
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
ENSERCH Center, 300 South St. Paul Street, Dallas, TX 75201-5598
(Address of principal executive offices) (Zip Code)
(214) 651-8700
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events.
On March 26, 1996, the Board of Directors of
ENSERCH Corporation (the "Company") approved the
extension of the benefits afforded by the Company's
existing rights plan by adopting a new shareholder rights
plan. The new plan, like the existing plan, is intended
to promote continuity and stability, deter coercive or
partial offers which will not provide fair value to all
shareholders and enhance the Board's ability to represent
all shareholders and thereby maximize shareholder values.
Pursuant to the new Rights Agreement between the
Company and Harris Trust Company of New York, as Rights
Agent (the "1996 Rights Agreement"), one Right will be
issued for each outstanding share of common stock, par
value $4.45 per share, of the Company on the expiration
of the existing rights (May 5, 1996). Each of the new
Rights will entitle the registered holder to purchase
from the Company one two-hundredth of a share of $200
Participating Voting Preference Stock, Series C, without
par value, at a price of $60 per one two-hundredth of a
share. The Rights generally will not become exercisable
unless and until, among other things, any person acquires
15% or more of the outstanding stock, rather than 20% or
more or, in certain circumstances, 30% or more, under the
existing plan. The new Rights are redeemable under
certain circumstances at $.01 per Right and will expire,
unless earlier redeemed or extended, on May 5, 2006. A
summary of the 1996 Rights Agreement is attached as
Exhibit B thereto.
The description and terms of the new Rights are
set forth in the 1996 Rights Agreement, a copy of which
is filed herewith and is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(c) Exhibits.
Exhibit No. Exhibit
-------------- --------
4 Rights Agreement, dated as of
May 5, 1996, between ENSERCH
Corporation and Harris Trust
Company of New York, which
includes as Exhibit A thereto,
the Form of Rights Certificate.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ENSERCH Corporation
(Registrant)
BY: /s/J.W. Pinkerton
___________________________
Name: J.W. Pinkerton
Title: Vice President and
Controller
Dated: March 29, 1996
INDEX TO EXHIBITS
Exhibit No. Exhibit Page
-------------- -------- -----
4 Rights Agreement, dated as of
March 26, 1996, between ENSERCH
Corporation and Harris Trust
Company of New York, which
includes as Exhibit A thereto,
the Form of Rights Certificate.
ENSERCH CORPORATION
and
HARRIS TRUST COMPANY OF NEW YORK,
Rights Agent
____________________
Rights Agreement
Dated as of March 26, 1996
Table of Contents
Section Page
1. Certain Definitions . . . . . . . . . . . . . . 2
2. Appointment of Rights Agent . . . . . . . . . . 9
3. Issuance of Rights Certificates . . . . . . . . 9
4. Form of Rights Certificates . . . . . . . . . . 11
5. Countersignature and Registration . . . . . . . 13
6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates . . . . . . . . . 14
7. Exercise of Rights; Purchase Price; Expiration
Date of Rights . . . . . . . . . . . . . . . . . 15
8. Cancellation and Destruction of Rights
Certificates . . . . . . . . . . . . . . . . . . 18
9. Reservation and Availability of Capital Stock . 19
10. Preference Stock Record Date . . . . . . . . . . 21
11. Adjustment of Purchase Price, Number and Kind
of Shares or Number of Rights . . . . . . . . . 21
12. Certification of Adjusted Purchase Price or
Number of Shares . . . . . . . . . . . . . . . . 34
13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power . . . . . . . . . . . . 35
14. Fractional Rights and Fractional Shares . . . . 38
15. Rights of Action . . . . . . . . . . . . . . . . 40
16. Agreement of Rights Holders . . . . . . . . . . 41
17. Rights Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . 42
18. Concerning the Rights Agent . . . . . . . . . . 42
19. Merger or Consolidation or Change of Name of
Rights Agent . . . . . . . . . . . . . . . . . . 43
20. Duties of Rights Agent . . . . . . . . . . . . . 44
21. Change of Rights Agent . . . . . . . . . . . . . 46
22. Issuance of New Rights Certificates . . . . . . 48
23. Redemption and Termination . . . . . . . . . . . 48
24. Notice of Certain Events . . . . . . . . . . . . 50
25. Notices . . . . . . . . . . . . . . . . . . . . 51
26. Supplements and Amendments . . . . . . . . . . . 52
27. Successors . . . . . . . . . . . . . . . . . . . 53
28. Determinations and Actions by the Board of
Directors, etc. . . . . . . . . . . . . . . . . 53
29. Benefits of this Agreement . . . . . . . . . . . 53
30. Severability . . . . . . . . . . . . . . . . . . 54
31. Governing Law . . . . . . . . . . . . . . . . . 54
32. Counterparts . . . . . . . . . . . . . . . . . . 54
33. Descriptive Headings . . . . . . . . . . . . . . 54
Exhibit A -- Form of Rights Certificate
Exhibit B -- Summary of Rights to Purchase Voting
Preference Stock
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 26, 1996
(the "Agreement"), between ENSERCH Corporation, a Texas
corporation (the "Company"), and Harris Trust Company of
New York, a New York trust company (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on April 15, 1986 (the "1986 Rights
Declaration Date"), the Board of Directors of the Company
(the "Board") authorized the Rights Agreement, dated as
of April 15, 1986, between the Company and the Rights
Agent (the "1986 Agreement"), authorized the issuance and
distribution of one right (a "1986 Right") for each share
of common stock, par value $4.45 per share, of the
Company (the "Common Stock") outstanding at the close of
business on May 5, 1986 (the "1986 Record Date"), and
authorized the issuance of one 1986 Right for each share
of Common Stock issued between the 1986 Record Date
(whether originally issued or delivered from the
Company's treasury) and the Distribution Date, as defined
in the 1986 Rights Agreement, with each 1986 Right
representing the right to purchase one two-hundredth of a
share of $200 Participating Voting Preference Stock,
Series C (the "Preference Stock") of the Company having
the rights, powers and preferences set forth in the
Statement of Resolution of the Company, filed with the
Secretary of State of Texas on April 23, 1986;
WHEREAS, on March 26, 1996, the Board of
Directors determined it desirable and in the best
interests of the Company and its shareholders for the
Company to extend and refine the benefits afforded by the
1986 Agreement and to implement such extension and
refinement by executing this Agreement;
WHEREAS, on March 26, 1996, (the "Rights
Declaration Date"), the Board authorized the issuance and
distribution of one Right for each share of Common Stock
outstanding upon the earlier of (i) the close of business
on May 5, 1996 and (ii) the date on which the 1986 Rights
are redeemed (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Common Stock issued between the
Record Date (whether originally issued or delivered from
the Company's treasury) and the Distribution Date (as
hereinafter defined), each Right initially representing
the right to purchase one two-hundredths of a share of
Preference Stock, 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 I. Certain Definitions. For purposes
of this Agreement, the following terms have the meanings
indicated:
A. "Acquiring Person" shall mean any
Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner
of fifteen percent (15%) or more of the shares of Common
Stock then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary
of the Company, (iv) any Person or entity organized,
appointed or established by the Company for or pursuant
to the terms of any such plan or (v) any such Person who
has reported or is required to report such ownership (but
less than 20%) on Schedule 13G under the Exchange Act (or
any comparable or successor report) or on Schedule 13D
under the Exchange Act (or any comparable or successor
report) which Schedule 13D does not state any intention
to or reserve the right to control or influence the
management or policies of the Company or engage in any of
the actions specified in Item 4 of such Schedule (other
than the disposition of the Common Stock) and, within 10
Business Days of being requested by the Company to advise
it regarding the same, certifies to the Company that such
Person acquired shares of Common Stock in excess of 14.9%
inadvertently or without knowledge of the terms of the
Rights and who, together with all Affiliates and
Associates, thereafter does not acquire additional shares
of Common Stock while the Beneficial Owner of fifteen
percent (15%) or more of the shares of Common Stock then
outstanding; provided, however, that if the Person
requested to so certify fails to do so within 10 Business
Days, then such Person shall become an Acquiring Person
immediately after such 10 Business Day Period.
B. "Act" shall mean the Securities Act
of 1933.
C. "Adjustment Shares" shall have the
meaning set forth in Section 11(a)(ii) hereof.
D. "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended and in effect
on the date of this Agreement (the "Exchange Act").
E. A Person shall be deemed the
"Beneficial Owner" of, and shall be deemed to
"beneficially own," any securities:
1. which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether
such right is exercisable immediately or only
after the passage of time) pursuant to any
agreement, arrangement or understanding
(whether or not in writing) or upon the
exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise;
provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates
or Associates until such tendered securities
are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at
any time prior to the occurrence of a
Triggering Event or (C) securities issuable
upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights
were acquired by such Person or any of such
Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a)
or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any
Original Rights;
2. which such Person or any of such
Person's Affiliates or Associates, directly or
indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined
pursuant to Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or
understanding, whether or not in writing;
provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this
subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such
security if such agreement, arrangement or
understanding: (A) arises solely from a
revocable proxy given in response to a public
proxy or consent solicitation made pursuant to,
and in accordance with, the applicable
provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not
reportable by such Person on Schedule 13D under
the Exchange Act (or any comparable or
successor report); or
3. which are beneficially owned,
directly or indirectly, by any other Person (or
any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement
or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii)
of this paragraph (e)) or disposing of any
voting securities of the Company;
provided, however, that nothing in this paragraph (e)
shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a
firm commitment underwriting until the expiration of
forty (40) days after the date of such acquisition.
Notwithstanding anything contained in this
Section 1(e) to the contrary, securities (including any
securities issuable upon conversion or exercise of such
securities) issued (or agreed to be issued) by the
Company or a Subsidiary of the Company to any Person or
Persons prior to the Stock Acquisition Date shall not be
deemed to be "beneficially owned" by such Person or
Persons for purposes of determining whether any such
Person is an Acquiring Person or whether a Stock
Acquisition Date or a Section 11(a)(ii) Event (as
hereinafter defined) has occurred, provided that (i) such
securities were issued (or agreed to be issued) as part
of a business combination (as hereinafter defined)
involving such Person or Persons which is approved by a
majority of the Continuing Directors (as hereinafter
defined) at such time as there are Continuing Directors
then in office, and (ii) it is contemplated at the time
of issuance (or agreement to issue) that such securities
will be transferred (and in fact are transferred within
one year of issuance) to other Persons. In the event
that such securities are not transferred to other Persons
within one year of issuance, then such Person or Persons
shall be deemed to "beneficially own" all such securities
beneficially owned by it or them at the end of such year.
For purposes hereof, the term "business combination"
shall mean any merger or consolidation of the Company or
any Subsidiary of the Company with any other Person, any
sale or exchange to the Company or any Subsidiary of the
Company of all or any part of the assets of any other
Person or any Subsidiary of such other Person, any share
exchange transaction under the Texas Business Corporation
Act or any other transaction pursuant to which all or any
part of the assets and operations of any other Person and
its Subsidiaries are combined with or acquired by the
Company or any Subsidiary of the Company.
F. "Business Day" shall mean any day
other than a Saturday, Sunday or a day on which banking
institutions in the States of Texas or New York are
authorized or obligated by law or executive order to
close.
G. "Close of business" on any given date
shall mean 5:00 P.M., New York City time (or Dallas time
for purposes of Section 23 hereof), on such date;
provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time (or
Dallas time for purposes of Section 23 hereof), on the
next succeeding Business Day.
H. "Common Stock" shall mean the common
stock, par value $4.45 per share, of the Company, except
that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or
the equity securities or other equity interest having
power to control or direct the management, of such
Person.
I. "Common Stock Equivalents" shall have
the meaning set forth in Section 11(a)(iii) hereof.
J. "Continuing Director" shall mean (i)
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 of an Acquiring
Person or of any such Affiliate or Associate, and was a
member of the Board prior to the date of this Agreement,
or (ii) any Person who subsequently becomes a member of
the Board, while such Person is a member of the Board,
who is not an Acquiring Person, or an Affiliate or
Associate of an Acquiring Person, or a representative of
an Acquiring Person or of any such Affiliate or
Associate, if such Person's nomination for election or
election to the Board is recommended or approved by a
majority of the Continuing Directors.
K. "Current Market Price" shall have the
meaning set forth in Section 11(d)(i) hereof.
L. "Current Value" shall have the
meaning set forth in Section 11(a)(iii) hereof.
M. "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof.
N. "Equivalent Preference Stock" shall
have the meaning set forth in Section 11(b) hereof.
O. "Exchange Act" shall have the meaning
set forth in Section 1(d) hereof.
P. "Expiration Date" shall have the
meaning set forth in Section 7(a) hereof.
Q. "Final Expiration Date" shall mean
the close of business on May 5, 2006.
R. "NASDAQ" shall have the meaning set
forth in Section 11(d)(i) hereof.
S. "Original Rights" shall have the
meaning set forth in Section 1(e) hereof.
T. "Person" shall mean any individual,
firm, corporation, partnership, limited liability
company, trust or other entity.
U. "Preference Stock" shall mean shares
of $200 Participating Voting Preference Stock, Series C,
without par value, of the Company and, to the extent that
there are not a sufficient number of shares of $200
Participating Voting Preference Stock, Series C
authorized to permit the full exercise of the then
outstanding Rights, such other series of Voting
Preference Stock, without par value, of the Company
designated by the Board of Directors for such purpose
containing terms substantially similar to the terms of
the $200 Participating Voting Preference Stock, Series C.
V. "Principal Party" shall have the
meaning set forth in Section 13(b) hereof.
W. "Purchase Price" shall have the
meaning set forth in Section 4(a) hereof.
X. "Qualified Offer" shall have the
meaning set forth in Section 11(a)(ii) hereof.
Y. "Record Date" shall have the meaning
set forth in the third WHEREAS clause at the beginning of
this Agreement.
Z. "Redemption Price" shall have the
meaning set forth in Section 23(a) hereof.
(aa) "Rights" shall have the meaning set
forth in the third WHEREAS clause at the beginning of
this Agreement.
(bb) "Rights Agent" shall have the meaning
set forth in the parties clause at the beginning of this
Agreement.
(cc) "Rights Certificates" shall have the
meaning set forth in Section 3(a) hereof.
(dd) "Rights Declaration Date" shall have
the meaning set forth in the third WHEREAS clause at the
beginning of this Agreement.
(ee) "Section 11(a)(ii) Event" shall mean
any event described in Section 11(a)(ii) hereof.
(ff) "Section 11(a)(ii) Trigger Date"
shall have the meaning set forth in Section 11(a)(iii)
hereof.
(gg) "Section 13 Event" shall mean any
event described in clauses (x), (y) or (z) of Section
13(a) hereof.
(hh) "Spread" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(ii) "Stock Acquisition Date" shall mean
the first date of public announcement (which, for
purposes of this definition, shall include, without
limitation, a report filed or amended pursuant to Section
13(d) under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become
such.
(jj) "Subsidiary" shall mean, with
reference to any Person, any corporation or other entity
of which an amount of securities or other equity
interests with voting power (in the absence of a
contingency) sufficient to elect at least a majority of
the directors, managers or the equivalent of such
corporation or other entity is beneficially owned,
directly or indirectly, by such Person, or otherwise
controlled by such Person. The foregoing
notwithstanding, each limited partnership of which the
Company or any of its other Subsidiaries is a general
partner shall be deemed to be a Subsidiary of the
Company.
(kk) "Substitution Period" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(ll) "Summary of Rights" shall have the
meaning set forth in Section 3(b) hereof.
(mm) "Trading Day" shall have the meaning
set forth in Section 11(d)(i) hereof.
(nn) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
Section II. Appointment of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent
for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of the Common
Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint
such Co-Rights Agents as it may deem necessary or
desirable.
Section III. Issuance of Rights Certificates.
A. Until the earlier of (i) the close of
business on the tenth day after the Stock Acquisition
Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the close of business
on the Record Date), or (ii) the close of business on the
tenth Business Day (or such later date as the Board shall
determine) after the date that a tender or exchange offer
by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first
published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of fifteen percent (15%) or
more of the shares of Common Stock then outstanding (the
earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this
Section 3) by the certificates for the Common Stock
registered in the names of the holders of the Common
Stock (which certificates for Common Stock shall be
deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the
underlying shares of Common Stock (including a transfer
to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-
class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder
shown on the records of the Company, one or more right
certificates, in substantially the form of Exhibit A
hereto (the "Rights Certificates"), evidencing one Right
for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common
Stock has been made pursuant to Section 11(p) hereof, at
the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such Rights
Certificates.
B. The Company will make available a
copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit B (the "Summary of Rights"),
to any holder of Rights who may so request from time to
time. With respect to certificates for the Common Stock
outstanding as of the Record Date, or which were issued
subsequent to the Record Date, unless and until the
Distribution Date shall occur, the Rights will be
evidenced by such certificates for the Common Stock and
the registered holders of the Common Stock shall also be
the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration
Date, the transfer of any certificates representing
shares of Common Stock in respect of which Rights have
been issued shall also constitute the transfer of the
Rights associated with such shares of Common Stock.
C. Rights shall be issued in respect of
all shares of Common Stock which are issued (whether
originally issued or from the Company's treasury) after
the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates
representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall bear the
following legend (or the legend required under the 1986
Agreement):
This certificate also evidences and
entitles the holder hereof to certain Rights as
set forth in the Rights Agreement between
ENSERCH Corporation and the Rights Agent
thereunder (the "Rights Agreement"), the terms
of which are hereby incorporated herein by
reference and a copy of which is on file at the
principal offices of the Rights Agent. Under
certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be
evidenced by this certificate. The Rights
Agent will mail to the holder of this
certificate a copy of the Rights Agreement, as
in effect on the date of mailing, without
charge, promptly after receipt of a written
request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was
or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined
in the Rights Agreement), whether currently
held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the
foregoing legend (or the legend required under the 1986
Agreement), until the earlier of (i) the Distribution
Date or (ii) the Expiration Date, the Rights associated
with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and
registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the
transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the
Common Stock represented by such certificates.
Section IV. Form of Rights Certificates.
A. The Rights Certificates (and the
forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto
and may have such marks of identification or designation
and such legends, summaries or endorsements printed
thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law
or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section
11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record
Date and on their face shall entitle the holders thereof
to purchase such number of one two-hundredths of a share
of Preference Stock as shall be set forth therein at the
price set forth therein (such exercise price per one two-
hundredth of a share, the "Purchase Price"), but the
amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof
shall be subject to adjustment as provided herein.
B. Any Rights Certificate issued
pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes
such, or (iii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement,
arrangement or understanding (whether or not in writing)
regarding the transferred Rights or (B) a transfer which
the Board 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, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was
or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this
Rights Certificate and the Rights represented hereby
may become null and void in the circumstances
specified in Section 7(e) of the Rights Agreement.
The Company shall notify the Rights Agent, and,
if such notification is given orally, the Company shall
confirm same in writing on or prior to the Business Day
next following, at such time as the Company has notice
that any Person constitutes an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, and until
such notice is received by the Rights Agent, the Rights
Agent may conclusively presume for all purposes that the
foregoing legend need be imprinted only on Rights
Certificates beneficially owned by Persons that the
Company has previously identified to the Rights Agent as
constituting an Acquiring Person or an Affiliate or
Associate of an Acquiring Person and transferees of any
such Persons. The Rights Agent, however, will use its
best efforts to assist the Company in its efforts to
identify any such persons.
Section V. Countersignature and Registration.
A. The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the
Board, its President or any Vice President, either
manually or by facsimile signature, and shall have
affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid
for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may
be signed on behalf of the Company by any person who, at
the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to
sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was
not such an officer.
B. Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its
principal office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise
or transfer, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of
the Rights Certificates, the number of Rights evidenced
on its face by each of the Rights Certificates and the
date of each of the Rights Certificates.
Section VI. Transfer, Split Up, Combination
and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates.
A. Subject to the provisions of Section
4(b), Section 7(e) and 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 Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the
registered holder to purchase a like number of one two-
hundredths of a share of Preference Stock (or, following
a Triggering Event, Common Stock, other securities, cash
or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then 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 Rights Certificate or
Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up,
combined or exchanged at the principal office or offices
of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer
of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the
certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall,
subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled
thereto a Rights Certificate or Rights Certificates, as
the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection
with any transfer, split up, combination or exchange of
Rights Certificates.
B. Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the
Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the
Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
Section VII. Exercise of Rights; Purchase
Price; Expiration Date of Rights.
A. Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c),
Section 11(a)(iii) and Section 23(a) hereof) in whole or
in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse
side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent
designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number
of one two-hundredths of a share (or other securities,
cash or other assets, as the case may be) as to which
such surrendered Rights are then exercisable, at or prior
to the earlier of (i) the close of business on May 5,
2006 (the "Final Expiration Date"), or (ii) the time at
which the Rights are redeemed as provided in Section 23
hereof (the earlier of (i) and (ii) being herein referred
to as the "Expiration Date").
B. The Purchase Price for each one two-
hundredth of a share of Preference Stock pursuant to the
exercise of a Right shall initially be $60, and shall be
subject to adjustment from time to time as provided in
Section 11 and Section 13(a) hereof and shall be payable
in accordance with paragraph (c) below.
C. Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of
election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one two-hundredth of
a share of Preference Stock (or other shares, securities,
cash or other assets, as the case may be) to be purchased
as set forth below and an amount equal to any applicable
transfer tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly (i) (A) requisition from
any transfer agent of the shares of Preference Stock (or
make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one
two-hundredths of a share of Preference Stock to be
purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the
total number of shares of Preference Stock issuable upon
exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of one two-hundredths of a share
of Preference Stock as are to be purchased (in which case
certificates for the shares of Preference Stock
represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such
request, (ii) requisition from the Company the amount of
cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of
such certificates or depositary receipts, cause the same
to be delivered to or, upon the order of the registered
holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, and
(iv) after receipt thereof, deliver such cash, if any, to
or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made in cash or by certified bank check
or bank draft payable to the order of the Company. In
the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section
11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or
other property are available for distribution by the
Rights Agent, if and when appropriate.
D. In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder
of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the
provisions of Section 14 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 an
Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee
of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person
has any continuing agreement, arrangement or
understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board has
determined is 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 neither the Company nor the Rights
Agent shall have any liability to any holder of Rights
Certificates or other Person as a result of the Company's
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
Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request.
Section VIII. Cancellation and Destruction of
Rights Certificates. All Rights Certificates surrendered
for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the
Company or any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to
the Company, or shall, at the written request of the
Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction
thereof to the Company.
Section IX. Reservation and Availability 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 Preference Stock
(and, following the occurrence of a Triggering Event, out
of its authorized and unissued shares of Common Stock or
other securities, or both, or out of its authorized and
issued shares held in its treasury), the number of shares
of Preference Stock (and, following the occurrence of a
Triggering Event, Common Stock or other securities, or
both) that, as provided in this Agreement including
Section 11(a)(iii) hereof, will be sufficient to permit
the exercise in full of all outstanding Rights.
B. So long as the shares of Preference
Stock (and, following the occurrence of a Triggering
Event, Common Stock or other securities, or both)
issuable and deliverable upon the exercise of the 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, 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
to (i) file, as soon as practicable following the
earliest date after the occurrence of a Section 11(a)(ii)
Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined
in accordance with Section 11(a)(iii) hereof, a
registration statement under the Act, with respect to the
securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement
to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting
the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for
such securities, and (B) the date of the expiration of
the Rights. The Company will also take such action as
may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not
to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c),
the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall
issue a public announcement stating that the
exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time
as the suspension is no longer in effect. In addition,
if the Company shall determine that a registration
statement is required following the Distribution Date,
the Company may temporarily suspend the exercisability of
the Rights until such time as a registration statement
has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction has not been
obtained, the exercise thereof is not permitted under
applicable law or a registration statement has not been
declared effective.
D. The Company covenants and agrees that
it will take all such action as may be necessary to
ensure that all one two-hundredths of a share of
Preference Stock (and, following the occurrence of a
Triggering Event, Common Stock or other securities, or
both) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and
nonassessable.
E. The Company further covenants and
agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for a number
of one two-hundredths of a share of Preference Stock (or
Common Stock or other securities, or both, as the case
may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which
may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the
issuance or delivery of a number of one two-hundredths of
a share of Preference Stock (or Common Stock or other
securities, or both, as the case may be) in respect of a
name other than that of, the registered holder of the
Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a
number of one two-hundredths of a share of Preference
Stock (or Common Stock or other securities, or both, as
the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax being payable
by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section X. Preference Stock Record Date. Each
person in whose name any certificate for a number of one
two-hundredths of a share of Preference Stock (or Common
Stock or other securities, or both, 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 fractional shares of Preference Stock (or Common
Stock or other securities, or both, as the case may be)
represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment
of the Purchase Price (and all applicable transfer taxes)
was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preference
Stock (or Common Stock or other securities, or both, as
the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the
record holder of such shares (fractional or otherwise)
on, and such certificate shall be dated, the next
succeeding Business Day on which the Preference Stock (or
Common Stock or other securities, or both, as the case
may be) transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any
rights of a 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 XI. Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The
Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in
this Section 11.
A.1. In the event the Company shall at
any time after the date of this Agreement (A)
declare a dividend on the Preference Stock
payable in shares of Preference Stock, (B)
subdivide the outstanding Preference Stock, (C)
combine the outstanding Preference Stock into a
smaller number of shares, or (D) issue any
shares of its capital stock in a
reclassification of the Preference Stock
(including any such reclassification in
connection with a consolidation or merger in
which the Company is the continuing or
surviving corporation), 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 Preference 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
Preference Stock or capital stock, as the case
may be, which, if such Right had been exercised
immediately prior to such date and at a time
when the Preference Stock transfer books of the
Company were open, such holder would have owned
upon such exercise and been entitled to receive
by virtue of such dividend, subdivision,
combination or reclassification. If an event
occurs which would require an adjustment under
both this Section 11(a)(i) and Section
11(a)(ii) hereof, 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) hereof.
2. In the event any Person, alone or
together with its Affiliates and Associates,
shall, at any time after the Rights Declaration
Date, becomes an Acquiring Person, unless the
event causing such Person to become an
Acquiring Person is a transaction set forth in
Section 13(a) hereof, or is an acquisition of
shares of Common Stock pursuant to a tender
offer or an exchange offer for all outstanding
shares of Common Stock at a price and on terms
determined by a least a majority of the members
of the Board who are not officers of the
Company and who are not representatives,
nominees, Affiliates or Associates of an
Acquiring Person, after receiving advice from
one or more investment banking firms selected
by them, to be (a) at a price that is fair to
stockholders (taking into account all factors
that such members of the Board deem relevant
including, without limitation, prices that
could reasonably be achieved if the Company or
its assets were sold on an orderly basis
designed to realize maximum value) and (b)
otherwise in the best interests of the Company
and its stockholders (a "Qualified Offer"),
then, promptly following the occurrence of such
event, proper provision shall be made so that
each holder of a Right (except as provided
below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon
exercise thereof at the then current Purchase
Price in accordance with the terms of this
Agreement, in lieu of a number of one two-
hundredths of a share of Preference Stock, such
number of shares of Common Stock of the Company
as shall equal the result obtained by (x)
multiplying the then current Purchase Price by
the then number of one two-hundredths of a
share of Preference Stock for which a Right was
exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and
(y) dividing that product (which, following
such first occurrence, shall thereafter be
referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement)
by fifty percent (50%) of the Current Market
Price (determined pursuant to Section 11(d)
hereof) per share of Common Stock on the date
of such first occurrence (such number of
shares, the "Adjustment Shares").
3. In the event that the number of
shares of Common Stock which are authorized by
the Company's Articles of Incorporation but not
outstanding or reserved for issuance for
purposes other than upon exercise of the Rights
are not sufficient to permit the exercise in
full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section
11(a), the Company shall: a. determine the
value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value")
and b. with respect to each Right (subject to
Section 7(e) hereof), make adequate provision
to substitute for the Adjustment Shares, upon
the exercise of a Right 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 voting preference stock,
such as the Preference Stock, which the Board
has deemed to have essentially the same value
or economic rights as shares of Common Stock
(such shares of voting preference stock being
referred to as "Common Stock Equivalents")),
(4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing,
having an aggregate value (in the case of
clauses (1), (3), (4), (5) and (6)) equal to
the Current Value (less the amount of any
reduction in the Purchase Price), where such
aggregate value has been determined by the
Board based upon the advice of a nationally
recognized investment banking firm selected by
the Board; provided, however, that if the Board
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
right of redemption pursuant to Section 23(a)
expires (the later of (x) and (y) being
referred to herein as the "Section 11(a)(ii)
Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for
exercise of a Right and without requiring
payment of the Purchase Price, 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. For
purposes of the preceding sentence, the term
"Spread" shall mean the excess of (i) the
Current Value over (ii) the Purchase Price. If
the Board determines 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 thirty (30) day
period, as it may be extended, is hereinafter
called the "Substitution Period"). To the
extent that some action is to be taken pursuant
to the first and/or third sentences of this
Section 11(a)(iii) the Company (1) shall
provide, subject to Section 7(e) hereof, that
such action shall apply uniformly to all
outstanding Rights, and (2) may suspend the
exercisability of the Rights until the
expiration of the Substitution Period in order
to seek such shareholder approval for such 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 stating that the
exercisability of the Rights has been
temporarily suspended, as well as a public
announcement at such time as the suspension is
no longer in effect. For purposes of this
Section 11(a)(iii), the value of each
Adjustment Share shall be the current market
price per share of the Common Stock on the
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.
B. In case the Company shall fix a record
date for the issuance of rights, options or warrants to
all holders of Preference Stock entitling them to
subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date)
Preference Stock (or shares having the same rights,
privileges and preferences as the shares of Preference
Stock ("Equivalent Preference Stock")) or securities
convertible into Preference Stock or Equivalent
Preference Stock at a price per share of Preference Stock
or per share of Equivalent Preference Stock (or having a
conversion price per share, if a security convertible
into Preference Stock or Equivalent Preference Stock)
less than the Current Market Price (as determined
pursuant to Section 11(d) hereof) per share of Preference
Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preference Stock
outstanding on such record date, plus the number of
shares of Preference Stock which the aggregate offering
price of the total number of shares of Preference Stock
and/or Equivalent Preference 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 the denominator of
which shall be the number of shares of Preference Stock
outstanding on such record date, plus the number of
additional shares of Preference Stock and/or Equivalent
Preference 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 may be in a form other
than cash, the value of such consideration shall be as
determined in good faith by the Board, whose
determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of
Preference Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and in
the event that such rights 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 a distribution to all holders of Preference
Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is
the continuing corporation) of evidences of indebtedness,
cash (other than a regular quarterly dividend out of the
earnings or retained earnings of the Company), assets
(other than a regular quarterly dividend referred to
above or a dividend payable in Preference Stock, but
including any dividend payable in stock other than Pref-
erence Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof),
the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current
Market Price (as determined pursuant to Section 11(d)
hereof) per share of Preference Stock on such record
date, less the fair market value (as determined in good
faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent) of
the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription
rights or warrants applicable to a share of Preference
Stock and the denominator of which shall be such Current
Market Price (as determined pursuant to Section 11(d)
hereof) per share of Preference Stock. Such adjustments
shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such
record date had not been fixed.
D.1. For the purpose of any
computation hereunder, other than 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 thirty (30)
consecutive Trading Days (as hereinafter
defined) 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 the Common Stock is
determined during a period following the
announcement by the issuer of such Common Stock
of (A) a dividend or distribution on such
Common Stock payable in shares of such Common
Stock or securities convertible into shares of
such Common Stock (other than the Rights), or
(B) any subdivision, combination or
reclassification of such Common Stock, and the
ex-dividend date for such dividend or
distribution, or the record date for such
subdivision, combination or reclassification
shall not have occurred prior to the
commencement of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as
set forth above, then, and in each such case,
the "Current Market Price" shall be properly
adjusted to take into account ex-dividend
trading. The closing price for each 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 Common Stock are
not listed or admitted to trading on the New
York Stock Exchange, as reported in the
principal consolidated transaction reporting
system with respect to securities listed on the
principal national securities exchange on which
the shares of Common Stock are listed or
admitted to trading or, if the shares of Common
Stock are not listed or admitted to trading on
any national securities exchange, the last
quoted price or, if not so quoted, the average
of the high bid and low asked prices in the
over-the-counter market, as reported by the
National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ") or
such other system then in use, or, if on any
such date the shares of Common Stock are not
quoted by any such organization, the average of
the closing bid and asked prices as furnished
by a professional market maker making a market
in the Common Stock selected by the Board. If
on any such date no market maker is making a
market in the Common Stock, the fair value of
such shares on such date as determined in good
faith by the Board shall be used. The term
"Trading Day" shall mean a day on which the
principal national securities exchange on which
the shares of Common Stock are listed or
admitted to trading is open for the transaction
of business or, if the shares of Common Stock
are not listed or admitted to trading on any
national securities exchange, a Business Day.
If the Common Stock is not publicly held or not
so listed or traded, "Current Market Price" per
share shall mean the fair value per share as
determined in good faith by the Board, whose
determination shall be described in a statement
filed with the Rights Agent and shall be
conclusive for all purposes.
2. For the purpose of any
computation hereunder, the "Current Market
Price" per share of Preference 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 Preference Stock cannot be
determined in the manner provided above or if
the Preference Stock is not publicly held or
listed or traded in a manner described in
clause (i) of this Section 11(d), the "Current
Market Price" per share of Preference Stock
shall be conclusively deemed to be an amount
equal to 200 (as such number may be
appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations
with respect to the Common Stock occurring
after the date of this Agreement) multiplied by
the Current Market Price per share of the
Common Stock. If neither the Common Stock nor
the Preference Stock is publicly held or so
listed or traded, "Current Market Price" per
share of the Preference Stock shall mean the
fair value per share as determined in good
faith by the Board, whose determination shall
be described in a statement filed with the
Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement,
the "Current Market Price" of one two-hundredth
of a share of Preference Stock shall be equal
to the "Current Market Value" of one share of
Preference Stock divided by 200.
E. Anything herein to the contrary not-
withstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preference
Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment, or (ii) the
Expiration Date.
F. If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof,
the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other
than Preference 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 Preference Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preference 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
twohundredths of a share of Preference Stock purchasable
from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
H. Unless the Company shall have
exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of
one two-hundredths of a share of Preference Stock
(calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one two-hundredths of a
share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase
Price, and (ii) dividing the product so obtained by the
Purchase Price in effect immediately after such
adjustment of the Purchase Price.
I. The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust
the number of Rights, in lieu of any adjustment in the
number of one two-hundredths of a share of Preference
Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number
of Rights shall be exercisable for the number of one
two-hundredths of a share of Preference Stock for which a
Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one-ten-
thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make
a public announcement of its election to adjust the
number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been
issued, shall be at least ten (10) days later than the
date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall,
as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section
14 hereof, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so
to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record
date specified in the public announcement.
J. Irrespective of any adjustment or
change in the Purchase Price or the number of one
two-hundredths of a share of Preference Stock issuable
upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express
the Purchase Price per one two-hundredth of a share and
the number of one two-hundredths of a share which were
expressed in the initial Rights Certificates issued
hereunder.
K. Before taking any action that would
cause an adjustment reducing the Purchase Price below the
then stated value, if any, of the number of one
two-hundredths of a share of Preference 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 two-hundredths of a share of
Preference 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 number of one
two-hundredths of a share of Preference Stock and other
capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of
one two-hundredths of a share of Preference 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
(fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
M. Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith
judgment the Board shall determine to be advisable in
order that any (i) consolidation or subdivision of the
Preference Stock, (ii) issuance wholly for cash of any
shares of Preference Stock at less than the Current
Market Price, (iii) issuance wholly for cash of shares of
Preference Stock or securities which by their terms are
convertible into or exchangeable for shares of Preference
Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its
Preference Stock shall not be taxable to such
stockholders.
N. The Company covenants and agrees that
it shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), 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
shareholders 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.
O. The Company covenants and agrees that,
after the Distribution Date, it will not, except as
permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the
Rights.
P. Anything in this Agreement to the
contrary notwithstanding, in the event that the Company
shall at any time after the Rights Declaration Date and
prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding shares of
Common Stock, or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior
to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any
such event shall equal the result obtained by multiplying
the number of Rights associated with each share of Common
Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such
event.
Section XII. Certification of Adjusted
Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 and Section
13 hereof, the Company shall A. promptly prepare a
certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, B.
promptly file with the Rights Agent, and with each
transfer agent for the Preference Stock and the Common
Stock, a copy of such certificate, and C. if a
Distribution Date has occurred, mail a brief summary
thereof to each holder of a Rights Certificate in
accordance with Section 25 hereof. The Rights Agent
shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section XIII. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
A. In the event that, following the Stock
Acquisition Date, directly or indirectly, (w) the Common
Stock shall be acquired by any other Person (other than a
Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) pursuant to a share exchange
transaction effected in accordance with the applicable
provisions of the Texas Business Corporation Act, (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(o)
hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(y) any Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof)
shall consolidate with, or merge with or 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 outstanding shares of Common Stock shall
be changed into or exchanged for stock or other
securities of any other Person or cash or any other
property, or (z) except by way of a pro-rata
distribution to all holders of Common Stock, the Company
shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets
or earning power aggregating more than fifty percent
(50%) of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any Subsidiary of the
Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each
such case (except as may be contemplated by Section 13(d)
hereof), proper provision shall be made so that: (i) each
holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-
assessable and freely tradeable shares of Common Stock of
the Principal Party (as hereinafter defined), not subject
to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase
Price by the number of one two-hundredths of a share of
Preference 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 two-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)
fifty percent (50%) of the Current Market Price
(determined pursuant to Section 11(d)(i) hereof) per
share of the Common Stock of such Principal Party on the
date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the
obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11
hereof shall apply only to such Principal Party following
the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary
to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation
to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no effect following
the first occurrence of any Section 13 Event.
B. "Principal Party" shall mean:
1. in the case of any transaction
described in clause (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 such merger or
consolidation; and
2. in the case of any transaction
described in clause (z) of the first sentence
of Section 13(a), the Person that is the party
receiving the greatest portion of the assets or
earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has
been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and
have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
C. The Company shall not consummate any
such consolidation, merger, sale or transfer unless the
Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 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:
1. prepare and file a registration
statement under the Act, with respect to the
Rights and the securities purchasable upon
exercise of the Rights on an appropriate form,
and will use its best efforts to cause such
registration statement to (A) become effective
as soon as practicable after such filing and
(B) remain effective (with a prospectus at all
times meeting the requirements of the Act)
until the Expiration Date; and
2. 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 mergers or consolidations or sales or other
transfers. 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).
D. Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be
applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares
of Common Stock pursuant to a Qualified Offer (or a
wholly owned subsidiary of any such Person or Persons),
(ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common
Stock whose shares were purchased pursuant to such tender
offer or exchange offer and (iii) the form of
consideration being offered to the remaining holders of
shares of Common Stock pursuant to such transaction is
the same as the form of consideration paid pursuant to
such tender offer or exchange offer. Upon consummation
of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section XIV. Fractional Rights and Fractional
Shares.
A. The Company shall not be required to
issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or
to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of
a whole Right. For purposes of this Section 14(a), the
current market value of a whole Right shall be the
closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale
price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the Rights are listed or admitted to trading, or if
the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported
by NASDAQ or such other system then in use or, if on any
such date the Rights are not quoted by any such
organization, the average of the closing bid and asked
prices as furnished by a professional market maker making
a market in the Rights selected by the Board. If on any
such date no such market maker is making a market in the
Rights the fair value of the Rights on such date as
determined in good faith by the Board shall be used.
B. The Company shall not be required to
issue fractions of shares of Preference Stock (other than
fractions which are integral multiples of one two-
hundredth of a share of Preference Stock) upon exercise
of the Rights or to distribute certificates which
evidence fractional shares of Preference Stock (other
than fractions which are integral multiples of one two-
hundredth of a share of Preference Stock). In lieu of
fractional shares of Preference Stock that are not
integral multiples of one two-hundredth of a share of
Preference Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one
two-hundredth of a share of Preference Stock. For
purposes of this Section 14(b), the current market value
of one two-hundredth of a share of Preference Stock shall
be one two-hundredth of the closing price of a share of
Preference Stock (as determined pursuant to Section
11(d)(ii) hereof) 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 Rights Certificates at the time
such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of
this Section 14(c), the current market value of one share
of Common Stock shall be the closing price of one share
of Common Stock (as determined pursuant to Section
11(d)(i) 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 permitted by this
Section 14.
Section XV. Rights of Action. All rights of
action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder
of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate
in the manner provided in such Rights Certificate and in
this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach
of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive
relief against actual or threatened violations of the
obligations hereunder of any Person subject to this
Agreement.
Section XVI. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
A. prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common Stock;
B. after the Distribution Date, the
Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and
certificates fully executed;
C. subject to Section 6(a) and Section
7(f) hereof, the Company and the Rights Agent may deem
and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on
the Rights Certificates or the associated Common Stock
certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last
sentence of Section 7(e) hereof, shall be required to be
affected by any notice to the contrary; and
D. notwithstanding anything in this
Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts
to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section XVII. Rights Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of
one two-hundredths of a share of Preference Stock or any
other securities of the Company which may at any time be
issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder
of any Rights Certificate, as such, any of the rights of
a 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 Section 24 hereof),
or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such
Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section XVIII. Concerning the Rights Agent.
A. The Company agrees to pay to the
Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements
incurred in the administration and execution of this
Agreement and the acceptance, exercise or performance of
its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done, suffered
or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement,
including the costs and expenses of defending against any
claim of liability in the premises (including reasonable
counsel fees and expenses).
B. The Rights Agent shall be protected
and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged,
by the proper Person or Persons.
Section XIX. Merger or Consolidation or Change
of Name of Rights Agent.
A. Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution
or filing of any paper or any further act on the part of
any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been
countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign
such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent;
and in all such cases such Rights Certificates shall have
the full force provided in the Rights Certificates and in
this Agreement.
B. In case at any time the name of the
Rights Agent shall be changed and at such time any of the
Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights
Certificates shall have the full force provided in the
Rights Certificates and in this Agreement.
Section XX. 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 Rights Certificates, by their acceptance thereof,
shall be bound:
A. The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent
as to any action taken, suffered or omitted by it in good
faith and in reliance upon such opinion.
B. Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter
(including, without limitation, the identity of any
Acquiring Person and the determination of "Current Market
Price") be proved or established by the Company prior to
taking, suffering or omitting any action hereunder, such
fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer,
the Corporate Secretary or any Assistant Corporate
Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full and complete
authorization to the Rights Agent for any action taken,
suffered or omitted 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.
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, the Summary of
Rights or in the Rights Certificates or be required to
verify the same (except as to its countersignature on
such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the
Company only.
E. The Rights Agent shall not be under
any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or
in any Rights Certificate; nor shall it be responsible
for any adjustment required under the provisions of
Section 11 or Section 13 hereof or responsible for the
manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise
of Rights evidenced by Rights Certificates after actual
notice of any such adjustment); nor shall it by any act
hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any
shares of Common Stock or Preference Stock to be issued
pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or Preference
Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
F. The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the
provisions of this Agreement.
G. The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of
the Board, the President, any Vice President, the
Corporate Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and
to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable
for any action taken, suffered or omitted to be taken by
it in good faith in reliance upon instructions of any
such officer.
H. The Rights Agent and any
stockholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
I. The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection
and continued employment 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 repayment of such funds or
adequate indemnification against such risk or liability
is 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 to clause 1 or 2 thereof, or both,
the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without
first consulting with the Company.
Section XXI. 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 Common Stock
and Preference Stock, by registered or certified mail,
and to the holders of the Rights Certificates by first-
class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days' notice
in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and Preference Stock, by
registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty (30)
days after giving notice of such removal or after it has
been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Rights Certificate (who shall, with
such notice, submit his Rights Certificate for inspection
by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a (a) legal business
entity organized and doing business under the laws of the
United States or of the States of Texas or New York (or
of any other state of the United States so long as such
corporation is authorized to do business in the States of
Texas or New York), in good standing, having a principal
office in the States of Texas or New York which is
authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or
examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined
capital and surplus of at least $25,000,000 or (b) an
affiliate of a legal business entity described in clause
(a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of
any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock and the
Preference Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section
21, 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 XXII. Issuance of New Rights
Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the
Board to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other
securities or property purchasable under the Rights
Certificates made in accordance with the provisions of
this Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following the
Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with
respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded as of
the Distribution Date, 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, issue Rights
Certificates representing the appropriate number of
Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would
create a significant risk of material adverse tax
consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof.
Section XXIII. Redemption and Termination.
A. The Board may, at its option, at any
time prior to the earlier of (i) the close of business on
the fifteenth day following the Stock Acquisition Date
(or, if the Stock Acquisition Date shall have occurred
prior to the Record Date, the close of business on the
fifteenth day following the Record Date), as such date
may be extended from time to time (but in no event more
than a year from the Stock Acquisition Date) by the Board
while the Rights are redeemable in accordance with the
terms of this Agreement, or (ii) the Final Expiration
Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per
Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, if the Board
authorizes redemption of the Rights or the extension of
the redemption period in either of the circumstances set
forth in clauses (i) and (ii) below, then there must be
Continuing Directors then in office and such
authorization shall require the concurrence of a majority
of such Continuing Directors: (i) such authorization
occurs on or after the time a Person becomes an Acquiring
Person, or (ii) such authorization occurs on or after the
date of a change (resulting from a proxy or consent
solicitation) in a majority of the directors in office at
the commencement of such solicitation if any Person who
is a participant in such solicitation has stated (or, if
upon the commencement of such solicitation, a majority of
the Board 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 unless,
concurrent with such solicitation, such Person (or one or
more of its Affiliates or Associates) is making a tender
offer which constitutes a Qualified Offer (as defined in
Section 11(a)(ii) hereof). If so designated by the
Board, payment of the redemption price under the 1986
Agreement also shall constitute payment of the Redemption
Price hereunder. 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. Immediately upon the action of the
Board ordering the redemption of the Rights, evidence of
which shall have been filed with the Rights Agent and
without any further action and without any notice, the
right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held.
Promptly after the action of the Board ordering the
redemption of the Rights, the Company shall give notice
of such redemption to the Rights Agent and the holders of
the then outstanding Rights by mailing such notice to all
such holders at each holder's last address as it appears
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.
Section XXIV. Notice of Certain Events.
A. In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of
Preference Stock or to make any other distribution to the
holders of Preference Stock (other than a regular
quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders
of Preference Stock rights or warrants to subscribe for
or to purchase any additional shares of Preference Stock
or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any
reclassification of its Preference Stock (other than a
reclassification involving only the subdivision of
outstanding shares of Preference Stock), or (iv) 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(o) 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 transaction or a series of related
transactions, of more than fifty percent (50%) of the
assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), or (v) to effect the
liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of
such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of
the shares of Preference Stock, if any such date is to be
fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least
twenty (20) days prior to the record date for determining
holders of the shares of Preference 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 shares of Preference Stock
whichever shall be the earlier.
B. In case any of the events set forth in
Section 11(a)(ii) hereof shall occur, then, in any such
case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section 25
hereof, 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) hereof, and
(ii) all references in the preceding paragraph to
Preference Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
Section XXV. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the
Rights Agent) as follows:
ENSERCH Corporation
ENSERCH Center
300 South St. Paul Street
Dallas, Texas 75201
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 Rights 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:
Harris Trust Company of New York
77 Water Street
New York, New York 10005
Attention: Corporate Trust
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be
sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address
of such holder as shown on the registry books of the
Company.
Section XXVI. Supplements and Amendments.
Prior to the Distribution Date, the Company and the
Rights Agent shall, if the Company so directs, supplement
or amend any provision of this Agreement without the
approval of any holders of certificates representing
shares of Common Stock. From and after the Distribution
Date, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights
Certificates in order 1. to cure any ambiguity, 2. to
correct or supplement any provision contained herein
which may be defective or inconsistent with any other
provisions herein, 3. to conform, in the opinion of the
Board, to applicable law, or 4. to change or supplement
the provisions hereunder in any manner which the Company
may deem necessary or desirable and which shall not
adversely affect in any material respect the interests of
the holders of Rights Certificates. 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 26, the
Rights Agent shall execute such supplement or amendment.
Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the
interests of the holders of Common Stock.
Notwithstanding anything contained herein to the
contrary, this Agreement may not be amended prior to the
Distribution Date and following the first occurrence of
an event set forth in clauses (i) and (ii) of the proviso
to Section 23(a) hereof, unless there are Continuing
Directors and such amendment is approved by a majority of
the Continuing Directors.
Section XXVII. 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 XXVIII. Determinations and Actions by
the Board of Directors, etc. For all purposes of this
Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time,
including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule 13d-
3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board (with, where specifically
provided for herein, the concurrence of the Continuing
Directors) shall have the exclusive power and authority
to administer this Agreement and to exercise all rights
and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the
Continuing Directors) or to the Company, or as may be
necessary or advisable in the administration of this
Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement,
and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement
(including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations
(including, for purposes of clause (y) below, all
omissions with respect to the foregoing) which are done
or made by the Board (with, where specifically provided
for herein the concurrence of the Continuing Directors)
in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the
Board or the Continuing Directors to any liability to the
holders of the Rights.
Section XXIX. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and,
prior to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section XXX. Severability. If any term,
provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable
and the Board determines in its good faith judgment that
severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 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. Without limiting the
foregoing, if any provision requiring a majority of the
Continuing Directors to act is held by a court of
competent jurisdiction or other authority to be invalid,
void or unenforceable, such determination shall then be
made by the Board in accordance with applicable law and
the Company's Articles of Incorporation and By-Laws.
Section XXXI. Governing Law. This Agreement,
each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of
the State of Texas and for all purposes shall be governed
by and construed in accordance with the laws of such
State applicable to contracts made and to be performed
entirely within such State, except that the rights and
obligations of the Rights Agent shall be governed by the
laws of the State of New York.
Section XXXII. 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 XXXIII. Descriptive Headings.
Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of
the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above
written.
Attest: ENSERCH CORPORATION
By /s/Robert L. Jay By /s/D.W. Biegler
Name: Robert L. Jay Name: D.W. Biegler
Title: Assistant Corporate Title: Chairman and
Secretary President
Attest: HARRIS TRUST COMPANY
OF NEW YORK
By /s/Charles V. Zade By /s/Donald W. Koslow
Name: Charles V. Zade Name: Donald W. Koslow
Title: Assistant Vice Title: Vice President
President
Exhibit A
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER MAY 5, 2006 OR EARLIER IF REDEEMED
BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT)
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.](1)
Rights Certificate
ENSERCH CORPORATION
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 March 26,
1996 (the "Rights Agreement"), between ENSERCH
Corporation, a Texas corporation (the "Company"), and
Harris Trust Company of New York, a New York trust
company (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 P.M. (New York City
time) on May 5, 2006 at the office or offices of the
Rights Agent designated for such purpose, or its
successors as Rights Agent, one two-hundredth of a fully
paid, non-assessable share of $200 Participating Voting
Preference Stock, Series C (the "Preference Stock") of
the Company, at a purchase price of $60 per one two-
hundredth of a share (the "Purchase Price"), upon
presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of March 26,
1996, based on the Preference Stock as constituted at
such date.
_____________________
1 The portion of the legend in brackets shall be
inserted only if applicable and shall replace the
preceding sentence.
Upon the occurrence of a Section 11(a)(ii)
Event (as such term is defined in the Rights Agreement),
if the Rights evidenced by this Rights 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 Section 11(a)(ii) Event.
As provided in the Rights Agreement, the
Purchase Price and the number and kind of shares of
Preference Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by
this Rights Certificate are subject to modification and
adjustment upon the happening of certain events,
including Triggering Events.
This Rights 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
Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such
Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on
file at the above-mentioned office of the Rights Agent
and are also available upon written request to the Rights
Agent.
This Rights Certificate, with or without other
Rights Certificates, upon surrender at the principal
office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate
or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate
number of one two-hundredths of a share of Preference
Stock as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate
shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights
Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights
Agreement, the Rights evidenced by this Certificate may
be redeemed by the Company at its option at a redemption
price of $.01 per Right at any time prior to the earlier
of the close of business on (i) the fifteenth day
following the Stock Acquisition Date (as such time period
may be extended for up to a year pursuant to the Rights
Agreement), and (ii) the Final Expiration Date. Under
certain circumstances set forth in the Rights Agreement,
the decision to redeem or extend the period for
redemption shall require the concurrence of a majority of
the Continuing Directors.
No fractional shares of Preference Stock will
be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral
multiples of one two-hundredth of a share of Preference
Stock which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a
cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be
entitled to vote or receive dividends or be deemed for
any purpose the holder of shares of Preference Stock or
of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any
of the rights of a 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 Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of _________ __, 1996
ATTEST: ENSERCH CORPORATION
________________________________ By______________________
Secretary Title:
Countersigned:
HARRIS TRUST COMPANY OF NEW YORK
By______________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ______________________________________
hereby sells, assigns and transfers unto ________________
_________________________________________________________
(Please print name and address of transferee)
_________________________________________________________
this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably
constitute and appoint ______________ Attorney, to
transfer the within Rights Certificate on the books of
the within-named Company, with full power of
substitution.
Dated: _______________, 19__
___________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking
the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ]
is not being sold, assigned and transferred by or on
behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person
(as such terms are defined 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 Rights Certificate
from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: _________, 19__ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon
the face of this Rights Certificate in every particular,
without alteration or enlargement or any change
whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: ENSERCH CORPORATION:
The undersigned hereby irrevocably elects to
exercise _________ Rights represented by this Rights
Certificate to purchase the shares of Preference Stock
issuable upon the exercise of the 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 and delivered to:
Please insert social security
or other identifying number
_________________________________________________________
(Please print name and address)
_________________________________________________________
If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new Rights
Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number
_________________________________________________________
(Please print name and address)
_________________________________________________________
_________________________________________________________
Dated: ___________, 19__
___________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking
the appropriate boxes that:
(1) the Rights evidenced by this Rights
Certificate [ ] are [ ] are not being exercised by
or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined 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 Rights
Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: ____________, 19__ ___________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to
Purchase and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any
change whatsoever.
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
VOTING PREFERENCE STOCK
On March 26, 1996, the Board of Directors of
ENSERCH Corporation (the "Company") authorized the
issuance and distribution of one Right for each
outstanding share of ENSERCH Common Stock to shareholders
of record at the close of business on May 5, 1996, the
expiration date of the Rights issued and distributed to
shareholders in 1986 (the "Record Date"). Each Right
entitles the registered holder to purchase from the
Company a unit consisting of one two-hundredth of a share
of $200 Participating Voting Preference Stock, Series C,
without par value (the "Preference Stock"), at a Purchase
Price of $60 per one two-hundredth of a share, subject to
adjustment. The description and terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement")
between the Company and Harris Trust Company of New York,
as Rights Agent.
Initially, the Rights will be attached to all
Common Stock certificates representing shares then
outstanding, and no separate Rights Certificates will be
distributed. The Rights will be separate from the Common
Stock and a Distribution Date will occur upon the earlier
of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the
outstanding shares of Common Stock (the "Stock
Acquisition Date"), or (ii) 10 business days (or such
later date as the Board shall determine) following the
commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 15%
or more of such outstanding shares of Common Stock.
Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation
incorporating the Rights Agreement by reference and (iii)
the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of
the Rights associated with the Common Stock represented
by such certificate.
The Rights are not exercisable until the
Distribution Date and will expire at the close of
business on May 5, 2006, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution
Date, Rights Certificates will be mailed to holders of
record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
Except as otherwise determined by the Board of Directors
and except in certain circumstances set forth in the
Rights Agreement, only shares of Common Stock issued
prior to the Distribution Date will be issued with
Rights.
In the event that a Person becomes the
beneficial owner of 15% or more of the then outstanding
shares of Common Stock (except pursuant to an offer for
all outstanding shares of Common Stock which the
independent directors determine to be fair to and
otherwise in the best interests of the Company and its
shareholders), each holder of a Right will thereafter
have the right to receive, upon exercise, Common Stock
(or, in certain circumstances, other consideration 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 the event set
forth in this paragraph, all Rights that are, or (under
certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person will be
null and void. However, Rights are not exercisable
following the occurrence of the event set forth above
until such time as the Rights are no longer redeemable by
the Company as set forth below.
For example, at an exercise price of $60 per
Right, each Right not owned by an Acquiring Person (or by
certain related parties) following an event set forth in
the preceding paragraph would entitle its holder to
purchase $120 worth of Common Stock (or other
consideration, as noted above) for $60. Assuming that
the Common Stock had a per share value of $15 at such
time, the holder of each valid Right would be entitled to
purchase 8 shares of Common Stock for $60.
In the event that, at any time following the
Stock Acquisition Date, (i) the Company is acquired in a
merger or other business combination transaction in which
the Company is not the surviving corporation (other than
a merger which follows an offer described in the second
preceding paragraph), (ii) the Company is acquired
pursuant to a share exchange transaction under the Texas
Business Corporation Act, or (iii) 50% or more of the
Company's assets or earning power is sold or transferred,
each holder of a Right (except Rights which previously
have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of
the acquiring company having a value equal to two times
the exercise price of the Right. The events set forth in
this paragraph and in the second preceding paragraph are
referred to as the "Triggering Events."
At any time until fifteen days following the
Stock Acquisition Date, or such later date not to exceed
one year from the Stock Acquisition Date which may be set
by the Board while the Rights are still redeemable, the
Company may redeem the Rights in whole, but not in part,
at a price of $.01 per Right. Under certain
circumstances set forth in the Rights Agreement, the
decision to redeem or extend the period of redemption
shall require the concurrence of a majority of the
Continuing Directors. Immediately upon the action of the
Board ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights
will be to receive the $.01 redemption price.
The term "Continuing Directors" means any
member of the Board of Directors of the Company who was a
member of the Board prior to the date of the Rights
Agreement, and any person who is subsequently elected to
the Board if such person is recommended or approved by a
majority of the Continuing Directors, but shall not
include an Acquiring Person, or an affiliate or associate
of an Acquiring Person, or any representative of the
foregoing entities.
Until a Right is exercised, 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. While the distribution of the
Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the
circumstances, recognize taxable income in the event that
the Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the
acquiring company as set forth above.
Any of the provisions of the Rights Agreement
may be amended by the Board (in certain circumstances
with the concurrence of a majority of the Continuing
Directors) prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement
may be amended by the Board in order to cure any
ambiguity, to correct any inconsistency, to conform to
applicable law or to make changes which do not adversely
affect in any material respect the interests of holders
of Rights.
A copy of the Rights Agreement is being filed
with the Securities and Exchange Commission as an Exhibit
to a Current Report on Form 8-K. A copy of the Rights
Agreement is available free of charge from the Rights
Agent. This summary description of the Rights does not
purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is
incorporated herein by reference.
