File No. 70-[ ]
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
___________________________________
INTERSTATE ENERGY CORPORATION
222 WEST WASHINGTON AVENUE
MADISON, WISCONSIN 53703-0192
(Name of company filing this statement
and address of principal executive offices)
___________________________________
INTERSTATE ENERGY CORPORATION
(Name of top registered holding company parent of each
applicant or declarant)
___________________________________
Erroll B. Davis, Jr.,
President and
Chief Executive Officer
Interstate Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703-0192
(Name and address of agent for service)
___________________________________
The Commission is requested to send copies of all notices,
orders and communications in connection with this
Application/Declaration to:
Barbara J. Swan, General Counsel William T. Baker, Jr., Esq.
Steven R. Suleski, Senior Attorney Thelen Reid & Priest LLP
Interstate Energy Corporation 40 West 57th Street
222 West Washington Avenue New York,New York 10019-4097
Madison, Wisconsin 53703-0192
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS.
------------------------------------
I. INTRODUCTION
Interstate Energy Corporation ("Interstate" or the
"Company") is a registered holding company under the Public
Utility Holding Company Act of 1935, as amended (the "Act").*
Interstate is proposing herein to implement a shareowners rights
plan.
The Board of Directors of Interstate ("Board") previously
authorized and implemented a shareowner rights plan, dated as of
February 22, 1989 (the "1989 Plan"). The Securities and Exchange
Commission (the "Commission") approved the 1989 Plan as part of
the initial Application-Declaration under the Act filed by
Interstate.** However, since the rights issued pursuant to
the 1989 Plan will expire at the close of business on February
22, 1999, the Board is considering implementing a new shareowners
rights plan as described herein.
II. BACKGROUND FOR PROPOSED RIGHTS DIVIDEND
Unsolicited attempts to acquire public companies have
required boards of directors and their shareowners to make
difficult decisions affecting the value, and on occasion the
existence, of companies within extremely short time periods.
Such takeover attempts often occur when a company is particularly
vulnerable and when its board has determined that the company's
inherent long-term values are inadequately recognized by the
marketplace. Many of these attempts have involved partial or
two-tiered offers, the breakup of the corporate structure and
sale of assets, or have taken the form of creeping acquisitions
of stock that deprive shareowners of participation in a control
premium.
The changing regulatory environment (including the possible
repeal or amendment of the Act) suggests that public utility
holding companies, such as Interstate, and their shareowners are
losing to some degree the regulatory protection against hostile
acquisitions that they formerly had. Recent significant
developments in the utility industry have also resulted in
increased takeover activity, including hostile or other unwanted
takeover bids, further indicating that Interstate's shareowners
may be at risk of losing the long-term value of Interstate if
the existing shareowner rights plan is not replaced by the time
of its expiration at the close of business on February 22, 1999.
Shareowner rights plans have become a widely accepted means
to maximize shareowner value by reducing the risk of
nonrealization of shareowner value due to opportunistic takeover
proposals. The continuation of such a plan by Interstate would
deter abusive takeover tactics by making them unacceptably
expensive to the party pursuing such tactics and would encourage
potential acquirors to negotiate with the Board and to assist it
____________________
* See WPL Holdings, Inc., et al., HCAR No. 26856 (April 14, 1998).
** See id.
<PAGE>
in obtaining the highest value for Interstate's shareowners,
especially in a hostile or unwanted takeover situation. The plan
therefore may, in certain circumstances, permit the Board to thwart
an inadequate offer. A shareowner rights plan would also provide
the Board with a role (supplemental to the role of the Commission
under the Act) in discouraging implicitly coercive takeover
tactics and would enable the Board to provide holders of
Interstate's common stock, $.01 par value per share (the "Common
Shares"), adequate time to properly assess a takeover bid without
undue pressure. Moreover, a shareowner rights plan may enhance
the probability that a competing bid will emerge. Over 2,000
American public companies have adopted rights plans, including
over 55% of the S&P 500 companies and over 45% of the Business
Week 1000 companies, and at least 29 public utility companies.
Indeed, the Commission has approved the adoption of shareowner
rights plans. See, e.g., Consolidated Natural Gas Company, HCAR
No. 26434 (December 19, 1995); National Fuel Gas Company, HCAR
No. 26532 (June 12, 1996); New Century Energies, Inc., HCAR No.
26751 (August 1, 1997); and Conectiv, Inc., HCAR No. 26861 (April
22, 1998).
A shareowner rights plan, however, would not make Interstate
acquisition-proof nor preclude a proxy contest. A shareowner
rights plan protects against takeover abuses, it gives all
parties an increased period of time in which to make decisions on
fundamental questions such as a takeover, and it strengthens the
ability of the Board to fulfill its fiduciary duties in
considering an offer that gives maximum long-term value to all
holders of Common Shares.
III. DESCRIPTION OF RIGHTS TO PURCHASE COMMON SHARES
General
-------
The Board proposes to declare a dividend distribution of one
common share purchase right (a "Right") for each Common Share
outstanding. The distribution will be payable on a record date
(the "Record Date") yet to be established. Each Right would
entitle the registered holder to purchase from the Company one-
half of one Common Share at an initial price of $95.00 per full
Common Share (equivalent to $47.50 for each one-half of one
Common Share) (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and
Firstar Bank Milwaukee, N.A. as Rights Agent (the "Rights
Agent"), a draft of which is attached hereto as Exhibit A-3.
Distribution Date; Transfer of Rights
-------------------------------------
Until the earlier of (i) the tenth day following the date of
a public announcement that any individual, firm, corporation or
other entity, including any successor (by merger or otherwise) of
such entity (each, a "Person") (not including the Company, any
subsidiary of the Company, any employee benefit plan of the
Company or of a subsidiary of the Company, any entity holding
Common Shares for or pursuant to the terms of any such plan, or
any trustee, administrator or fiduciary of such a plan) (an
"Acquiring Person") acquired, or obtained the right to acquire or
to vote, beneficial ownership of Common Shares aggregating 15% or
more of the Common Shares then outstanding or (ii) the tenth
business day (or such later date as may be determined by action
of the Board prior to such time as any Person becomes an
Acquiring Person) after the date of commencement or announcement
of an intention of any Person to commence a tender or exchange
offer the consummation of which would result in any Person (not
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including the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of a subsidiary of the
Company, any entity holding Common Shares for or pursuant to the
terms of any such plan, or any trustee, administrator or
fiduciary of such a plan) acquiring, or obtaining the right to
acquire or to vote, beneficial ownership of Common Shares
aggregating 15% or more of the then outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced by the certificates for Common
Shares registered in the names of the holders thereof. On the
Record Date, or as soon as practicable thereafter, the Company
will send a copy of the Summary of Rights to Purchase Common
Shares (the "Rights Summary") to each record holder of Common
Shares as of the close of business on the Record Date. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), new Common Shares certificates which become outstanding
after the Record Date will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender
for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Rights Summary,
shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby. As soon as practicable
after the Distribution Date, the Company will send or cause to be
sent to each record holder of Common Shares as of the close of
business on the Distribution Date, a separate certificate
evidencing the Rights ("Rights Certificate") evidencing one Right
for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
The Rights are not exercisable until the Distribution Date.
No less than two Rights and only integral multiples of two
Rights, may be exercised at any one time by any holder of Rights.
The Rights will expire at the close of business on the tenth
anniversary of the Record Date (the "Expiration Date"), unless
earlier redeemed or exchanged, or the Rights Agreement is
amended, by the Company as described below.
Exercise of Rights for Common Shares of the Company
---------------------------------------------------
In the event that any Person becomes an Acquiring Person
(other than in certain situations), each holder of a Right shall
thereafter have the right to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the
number of Common Shares for which a Right is then exercisable,
such number of Common Shares (or, in certain circumstances, cash,
property or other securities of the Company or a reduction in the
Purchase Price) equal to the result obtained by (i) multiplying
the then current Purchase Price per full share by the number of
Common Shares for which a Right is then exercisable and dividing
that product by (ii) 50% of the then current market price of the
Common Shares. From and after such time as a Person becomes an
Acquiring Person, any Rights that are (or, in certain
circumstances, were) acquired or beneficially owned by an
Acquiring Person shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights.
Exercise of Rights for Shares of the Acquiring Company
------------------------------------------------------
In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (i) the Company shall
consolidate with, or merge with and into, any other Person (other
than a subsidiary of the Company in certain situations) and the
Company shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) any Person (other than a
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subsidiary of the Company in certain situations) shall
consolidate with, or merge with and into, the Company and the
Company shall be the continuing or surviving corporation of such
consolidation or merger, or any Person or Persons (other than a
subsidiary of the Company in certain situations) shall consummate
a share exchange with the Company, and, in connection with such
consolidation, merger or share exchange, all or part of the
outstanding Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or
cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one of its subsidiaries shall sell or
otherwise transfer), in one 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 Person or Persons (other than the Company or a
subsidiary of the Company in certain situations), then proper
provision shall be made so that holders of Rights (except Rights
which previously have been voided as set forth above) shall
thereafter have the right to receive, upon the exercise thereof
at a price equal to the then current Purchase Price multiplied by
the number of Common Shares for which a Right is then
exercisable, such number of common shares of the acquiring person
equal to the result obtained by (i) multiplying the then current
Purchase Price per full share by the number of common shares for
which a Right is then exercisable and dividing that product by
(ii) 50% of the then current market price of the common shares of
the acquiring person.
Adjustments to Purchase Price
-----------------------------
The Purchase Price, the number of Common Shares covered by
each Right and the number of Rights outstanding are subject to
adjustment from time to time to prevent dilution in the event the
Company shall (i) declare a dividend on the Common Shares payable
in Common Shares, (ii) subdivide the outstanding Common Shares,
(iii) combine the outstanding Common Shares into a smaller number
of Common Shares or (iv) issue any shares of its capital stock in
a reclassification of the Common Shares (including any
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation),
except as otherwise provided.
With certain exceptions, no adjustment in the Purchase Price
shall be required until cumulative adjustments require an
adjustment of at least 1% in the Purchase Price. The Company
shall not be required to issue fractions of Common Shares and, in
lieu thereof, an adjustment in cash will be made based on the
market price of the Common Shares on the last trading date prior
to the date of exercise. No Rights may be exercised that would
entitle the holder thereof to any fractional Common Share greater
than one-half of a Common Share unless concurrently therewith
such holder purchases an additional fraction of a Common Share
which when added to the numbers of Common Shares to be received
upon such exercise, equals an integral number of Common Shares.
Redemption and Exchange of Rights
---------------------------------
At any time after any Person becomes an Acquiring Person and
before any Person (not including the Company, any subsidiary of
the Company, any employee benefit plan of the Company or of a
subsidiary of the Company, any entity holding Common Shares for
or pursuant to the terms of any such plan, or any trustee,
administrator or fiduciary of such a plan) acquired, or obtained
the right to acquire or to vote, beneficial ownership of 50% or
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more of the outstanding Common Shares of the Company, the Board
may, at its option, exchange the Rights (other than Rights owned
by an Acquiring Person which shall have become void), in whole or
in part, at an exchange ratio of one Common Share per Right,
subject to adjustment.
At any time prior to a Person becoming an Acquiring Person,
the Board may, at its option, redeem the Rights in whole, but not
in part, at a redemption price of $.001 per Right, subject to
adjustment (the "Redemption Price"). Immediately upon the
effectiveness of the action of the Board ordering the redemption
of the Rights or the exchange of any Rights, respectively, the
Company shall promptly give public notice of any such redemption
or exchange, and upon such action, the right to exercise such
Rights will terminate and the only right thereafter of a holder
of such Rights will be to receive the Redemption Price or
exchanged shares, respectively.
Until a Right is exercised or exchanged, the holder thereof,
as such, will have no rights as a shareowner of the Company,
including, without limitation, the right to vote or to receive
dividends.
Amendments to Terms of the Rights
---------------------------------
Prior to the Distribution Date, the Company may supplement
or amend any provision of the Rights Agreement without the
approval of the holders of Common Shares, including, without
limiting the foregoing, amending the Rights Agreement to lower
the 15% thresholds (as specified in "Distribution Date; Transfer
of Rights" supra) to not less than 10% with appropriate
exceptions for persons then beneficially owning Common Shares
constituting a percentage equal to or in excess of the new
threshold. From and after the Distribution Date, the Company may
supplement or amend the Rights Agreement in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision which may
be defective or inconsistent with any other provision in the
Rights Agreement, (iii) to shorten or lengthen any time period in
the Rights Agreement, or (iv) to change or supplement the
provisions of the Rights Agreement which the Company deems
necessary or desirable and which shall not adversely affect the
holders of Right Certificates (other than an Acquiring Person);
provided that the Rights Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Notwithstanding any of the
foregoing in this paragraph, no supplement or amendment shall be
made which reduces the then effective Redemption Price or moves
to an earlier date the then effective final Expiration Date.
IV. AUTHORIZATIONS SOUGHT
Interstate herein seeks authorization to implement the
shareowner rights plan as described in this
Application-Declaration and embodied in the Rights Agreement.
This would include, among other actions permitted by the Rights
Agreement, the following transactions:
(i) the dividend distribution of the Rights;
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(ii) the making of adjustments to the Purchase Price;
(iii) the sale and issuance of Common Shares or other
Interstate securities, or the transfer of other
assets, upon exercise of the Rights;
(iv) the redemption of the Rights and the issuance of Common
Shares in connection therewith, and the issuance of
Common Shares or other Interstate securities, or the
transfer of other assets, in exchange for the Rights;
and
(v) amending of the Rights Agreement as permitted by the
terms thereof.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
------------------------------
It is estimated that the fees, commissions and expenses
ascertainable at this time to be incurred by Interstate in
connection with the proposed transactions will be as follows:
Rights Agent Fees $ *
Outside Counsel's Fees & Advisor's Fees $ *
Printing and Mailing Costs $ *
Miscellaneous Expenses $ *
==========
$ *
* To be filed by amendment.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
-------------------------------
Sections 6(a), 7, 9(a), 10 and 12(c) of the Act and Rule 42
under the Act are deemed to be applicable to the proposed
dividend distribution of the Rights, and any subsequent exercise
or redemption of the Rights.
While the Rights are technically a dividend on the Common
Shares for corporate law purposes, in and of themselves they have
no economic value and, therefore, are not a "dividend" out of
capital or capital surplus for the purpose of Section 12(c) of
the Act.
Because there is no intent that the Rights ever become
exercisable, they are regarded more appropriately as being in the
nature of an addition to the rights of shareowners under Sections
6(a)(2) and 7(e) rather than as an issuance of securities under
Section 6(a)(1) and 7(c) and (d). However, if such latter
sections were to be regarded as applicable, then any issuance of
Common Shares pursuant to the Rights are deemed to meet the
requirements of Section 7(c)(2)(D) and none of the negative
findings required under Section 7(d) can be made.
To the extent that the proposed transactions are considered
by the Commission to require authorization, approval or exemption
under any section of the Act or provision of the rules or
regulations other than those specifically referred to herein,
request for such authorization, approval or exemption is hereby
made.
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The proposed transactions are also subject to the
requirements of Section 32(h)(4) and Rule 54 thereunder.
STATEMENT PURSUANT TO RULE 54
-----------------------------
Under Rule 54, in determining whether to approve the issue
or sale of a security by a registered holding company for
purposes other than the acquisition of an "exempt wholesale
generator" or "foreign utility company", as such terms are
defined in Sections 32 and 33, respectively, of the Act, or other
transactions by such registered holding company or its
subsidiaries other than with respect to "exempt wholesale
generators" or "foreign utility companies", the Commission shall
not consider the effect of the capitalization or earnings of any
subsidiary which is an "exempt wholesale generator" or a "foreign
utility company" upon the registered holding company system if
the "safe harbor" conditions of Rule 53 are satisfied.
Interstate currently meets all of the "safe harbor"
conditions of Rule 53. Interstate's "aggregate investment", as
defined in Rule 53(a)(1)(i) under the Act, in "exempt wholesale
generators" and "foreign utility companies" at June 30, 1998 was
approximately $68 million, representing approximately 11.5% of
Interstate's "consolidated retained earnings", as defined in Rule
53(a)(1)(ii), for the four quarters ended June 30, 1998 ($591
million). Furthermore, Interstate has and will continue to
comply with the record keeping requirements of Rule 53(a)(2)
concerning affiliated "exempt wholesale generators" and "foreign
utility companies." In addition, as required by Rule 53(a)(3),
no more than 2% of the employees of Interstate's operating
utility subsidiaries will, at any one time, directly or
indirectly, render services to "exempt wholesale generators" and
"foreign utility companies." Finally, since none of the
circumstances described in Rule 53(b) exists, the provisions of
Rule 53(a) are not made inapplicable by Rule 53(b).
ITEM 4. REGULATORY APPROVAL.
-------------------
No state regulatory body or agency and no other federal
commission or agency other than the Commission has jurisdiction
over the transactions proposed herein.
ITEM 5. PROCEDURE.
---------
The applicant requests that the Commission's order be issued
as soon as the rules allow, and in any event no later January 11,
1999, and that there be no thirty-day waiting period between the
issuance of the Commission's order and the date on which it is to
become effective. The applicant hereby waives a recommended
decision by a hearing officer or other responsible officer of the
Commission and hereby consents that the Division of Investment
Management may assist in the preparation of the Commission's
decision and/or order in the matter unless such Division opposes
the matters covered hereby.
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ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
---------------------------------
The following exhibits are made a part of this statement:
(a) Exhibits
A-1 Restated Articles of Incorporation of the Company,
as amended (incorporated by reference to Exhibit
3.2 to the Company's Current Report on Form 8-K,
dated April 21, 1998 (File No. 1-09894)).
A-2 Bylaws of the Company (incorporated by reference
to Exhibit 3.3 to the Company's Current Report on
Form 8-K, dated April 21, 1998 (File No. 1-
09894)).
A-3 Draft of Rights Agreement, including exhibits.
B None
C None
D None
E None
F Opinion of counsel (To be filed by amendment).
G Financial Data Schedule for the Company
(incorporated by reference to Exhibit 27.2 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998 (File No. 1-09894)).
H Proposed notice pursuant to Rule 22(f).
(b) Financial Statements
1 Consolidated Balance Sheet of the Company as of June
30, 1998 (incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998 (File No. 1-09894)).
2 Consolidated statement of income and surplus of the
Company for the six months ended June 30, 1998
(incorporated by reference to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998
(File No. 1-09894)).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
---------------------------------------
As more fully described in Item 1, the proposed transactions
subject to the jurisdiction of this Commission relate only to the
dividend of the Rights and any subsequent exercise, redemption or
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exchange of the Rights and involve no major federal action
significantly affecting the quality of the human environment
within the meaning of the National Environmental Policy Act.
No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed
transactions.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned thereunto
duly authorized.
INTERSTATE ENERGY CORPORATION
By: /s/ Erroll B. Davis, Jr.
-------------------------------
Name: Erroll B. Davis, Jr.
Title: President and Chief
Executive Officer
Date: October 27, 1998
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Exhibit Index
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Exhibit Description
------- -----------
A-3 Draft of Rights Agreement, including exhibits.
H Proposed notice pursuant to Rule 22(f).
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DRAFT 10/27/98
INTERSTATE ENERGY CORPORATION
AND
FIRSTAR BANK MILWAUKEE, N. A.
RIGHTS AGENT
-------------------
RIGHTS AGREEMENT
DATED AS OF , 1999
----------
<PAGE>
TABLE OF CONTENTS
SECTION 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT . . . . . . . . . . 4
SECTION 3. ISSUE OF RIGHT CERTIFICATES . . . . . . . . . . 4
SECTION 4. FORM OF RIGHT CERTIFICATES . . . . . . . . . . . 6
SECTION 5. COUNTERSIGNATURE AND REGISTRATION . . . . . . . 6
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF
RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR
STOLEN RIGHT CERTIFICATES . . . . . . . . . . . 6
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS . . . . . . . . . . . . . . . . . 7
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT
CERTIFICATES . . . . . . . . . . . . . . . . . . 9
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON SHARES . 9
SECTION 10. COMMON SHARES RECORD DATE . . . . . . . . . . 10
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR
NUMBER OF RIGHTS . . . . . . . . . . . . . . . 10
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES . . . . . . . . . . . . . . . . . . 17
SECTION 13. CONSOLIDATION, MERGER, SHARE EXCHANGE OR SALE OR
TRANSFER OF ASSETS OR EARNING POWER . . . . . 17
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES . . . 19
SECTION 15. RIGHTS OF ACTION . . . . . . . . . . . . . . . 20
SECTION 16. AGREEMENT OF RIGHT HOLDERS . . . . . . . . . . 21
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A
SHAREOWNER . . . . . . . . . . . . . . . . . . 21
SECTION 18. CONCERNING THE RIGHTS AGENT . . . . . . . . . 22
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT . . . . . . . . . . . . . . . . . 22
SECTION 20. DUTIES OF RIGHTS AGENT . . . . . . . . . . . . 23
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SECTION 21. CHANGE OF RIGHTS AGENT . . . . . . . . . . . . 24
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES . . . . . . 25
SECTION 23. REDEMPTION . . . . . . . . . . . . . . . . . . 25
SECTION 24. EXCHANGE . . . . . . . . . . . . . . . . . . . 26
SECTION 25. NOTICE OF CERTAIN EVENTS . . . . . . . . . . . 27
SECTION 26. NOTICES . . . . . . . . . . . . . . . . . . . 28
SECTION 27. SUPPLEMENTS AND AMENDMENTS . . . . . . . . . . 29
SECTION 28. SUCCESSORS . . . . . . . . . . . . . . . . . . 29
SECTION 29. BENEFITS OF THIS AGREEMENT . . . . . . . . . . 29
SECTION 30. SEVERABILITY . . . . . . . . . . . . . . . . . 30
SECTION 31. GOVERNING LAW . . . . . . . . . . . . . . . . 30
SECTION 32. COUNTERPARTS . . . . . . . . . . . . . . . . . 30
SECTION 33. DESCRIPTIVE HEADINGS . . . . . . . . . . . . . 30
SECTION 34. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS . . . . . . . . . . . . . . . . . . 30
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Common Shares
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RIGHTS AGREEMENT
----------------
THIS AGREEMENT, dated as of , 1999, between
----------
INTERSTATE ENERGY CORPORATION, a Wisconsin corporation (the
"Company"), and FIRSTAR BANK MILWAUKEE, N. A., a Wisconsin
corporation (the "Rights Agent").
WHEREAS, the Board of Directors of the Company
authorized the Rights Agreement, dated as of February 22, 1989
(the "1989 Agreement"), between the Company and Morgan
Shareholder Services Trust Company, declared a dividend of one
common share purchase right (a "1989 Right") for each Common
Share (as hereinafter defined) of the Company outstanding on
March 6, 1989 (the "1989 Record Date"), and authorized the
issuance of one 1989 Right for each Common Share issued between
the 1989 Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms
are defined in the 1989 Agreement), each 1989 Right representing
the right to purchase one-half of one Common Share of the
Company, upon the terms and subject to the conditions set forth
in the 1989 Agreement;
WHEREAS, the Board of Directors of the Company has
determined it is desirable and in the best interests of the
Company and its shareowners for the Company to extend the
benefits afforded by the 1989 Agreement and to implement such
extension by execution of this Agreement;
WHEREAS, the Board of Directors of the Company has
authorized and declared a dividend of one common share purchase
right (a "Right") for each Common Share of the Company
outstanding upon the close of business on , 1999
-------------
(the "Record Date") payable on such date (the "Payment Date"),
and has authorized and directed the issuance of one Right with
respect to each Common Share that shall become outstanding
between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such
terms are hereinafter defined), each Right representing the right
to purchase one-half of one Common Share of the Company upon the
terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of
-------------------
this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Common Shares of the
Company then outstanding, but shall not include the Company, any
Subsidiary (as such term is hereinafter defined) of the Company,
any employee benefit plan of the Company or any Subsidiary of the
Company, any entity holding Common Shares for or pursuant to the
terms of any such plan, or any trustee, administrator or
fiduciary of such a plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as a result of an
acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to 15% or more
of the Common Shares of the Company then outstanding; provided,
however, that if a Person would, but for the foregoing, become an
Acquiring Person by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares of the Company
at any time that the Person is or thereby becomes the Beneficial
Owner of 15% or more of the Common Shares of the Company then
outstanding (other than Common Shares acquired solely as a result
of corporate action of the Company not caused, directly or
indirectly, by such Person), then such Person shall be deemed to
be an "Acquiring Person". Notwithstanding the foregoing, if the
Board of Directors of the Company determines in good faith that a
Person who would otherwise be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such
Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring Person" for
any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as in effect on the
date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns,
directly or indirectly;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately
or only after the passage of time) pursuant to any
agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide
public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is
not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
or
(iii) which are beneficially owned,
directly or indirectly, by any other Person with which
such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with
respect to a bona fide public offering of securities)
for the purpose of, or with respect to, acquiring,
holding, voting (except to the extent contemplated by
the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase "then
outstanding," when used with reference to a Person's Beneficial
Ownership of securities of the Company, shall mean the number of
such securities then issued and outstanding together with the
number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
(d) "Business Day" shall mean any day other than a
Saturday, a Sunday or a day on which banking institutions in the
State of Wisconsin are authorized or obligated by law or
executive order to close.
(e) "Close of business" on any given date shall mean
5:00 P.M., Madison, Wisconsin time, on such date; provided,
however, that if such date is not a Business Day it shall mean
5:00 P.M., Madison, Wisconsin time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the
Company shall mean the shares of common stock, par value $.01, of
the Company, or shares having equivalent rights, privileges and
preferences to common stock. "Common Shares" when used with
reference to any Person other than the Company shall mean the
capital stock (or equivalent equity interest) with the greatest
voting power of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.
(h) "Final Expiration Date" shall have the meaning set
forth in Section 7 hereof.
(i) "Person" shall mean any individual, firm,
corporation or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(j) "Redemption Date" shall have the meaning set forth
in Section 7 hereof.
(k) "Shares 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.
(l) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the voting
power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The
---------------------------
Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Shares of the Company) in accordance
with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or
desirable.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
---------------------------
(a) Until the earlier of (i) the tenth day after the
Shares Acquisition Date or (ii) the tenth Business Day (or such
later date as may be determined by action of the Company's Board
of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement of, or of
the first public announcement of the intention of any Person to
commence, a tender or exchange offer the consummation of which
would result in 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, any entity holding
Common Shares for or pursuant to the terms of any such plan, or
any trustee, administrator, or fiduciary of such a plan) becoming
the Beneficial Owner of Common Shares of the Company aggregating
15% or more of the then outstanding Common Shares (including in
either case any such date which is after the date of this
Agreement and prior to the Payment Date; the earlier of such
dates being herein referred to as the "Distribution Date";
provided, however, that if the tenth day or Business Day, as the
case may be, after the pertinent date occurs before the Record
Date, "Distribution Date" shall mean the Record Date), (x) the
Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates, and (y) the right to receive
Right Certificates will be transferable only in connection with
the transfer of Common Shares. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder
of Common Shares as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of
Exhibit A hereto (a "Right Certificate"), evidencing one Right
for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(b) On the Payment Date, or as soon as practicable
thereafter, the Company will send a copy of a Summary of Rights
to Purchase Common Shares, in substantially the form of Exhibit B
hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of
business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for
Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof.
Until the Distribution Date (or the earlier of the Redemption
Date or Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby.
(c) Certificates for Common Shares which become
outstanding (including, without limitation, certificates for
reacquired Common Shares referred to in the last sentence of this
paragraph (c) and certificates issued on the transfer of Common
Shares) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration
Date shall have impressed on, printed on, written on or otherwise
affixed to them a legend in substantially the following form
(provided, however, that certificates for Common Shares in
existence on the Record Date may bear the legend required by the
Company's predecessor rights agreement):
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement between Interstate Energy Corporation
and Firstar Bank Milwaukee, N. A., dated as of
, 1999, and as such agreement may be amended
----------
(the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is
on file at the principal executive offices of
Interstate Energy Corporation. 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.
Interstate Energy Corporation will mail to the holder
of this certificate a copy of the Rights Agreement
without charge after receipt of a written request
therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, an
Acquiring Person or any Affiliate or Associate thereof
(as such terms are defined in the Rights Agreement),
whether held by such person or any subsequent holder,
shall become null and void.
With respect to such certificates containing the foregoing
legend, until the Distribution Date, the Rights associated with
the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for
transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares
represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares
shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES. The Right
--------------------------
Certificates (and the forms of election to purchase Common Shares
and of assignment to be printed on the reverse thereof) shall be
substantially the same as 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 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase
such number of Common Shares as shall be set forth therein at the
price per Common Share set forth therein (the "Purchase Price"),
but the amount and type of securities purchasable upon exercise
of each Right and the Purchase Price shall be subject to
adjustment as provided herein.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
---------------------------------
(a) The Right Certificates shall be executed on behalf
of the Company by its Chairman of the Board, Chief Executive
Officer, President or any Vice President either manually or by
facsimile signature, shall have affixed thereto the Company's
seal or a facsimile thereof, and shall be attested by the
Treasurer, an Assistant Treasurer, the Corporate Secretary or an
Assistant Corporate Secretary of the Company, either manually or
by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company
who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right
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 Right
Certificates had not ceased to be such officer of the Company;
and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office, books for
registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND
-----------------------------------
EXCHANGE OF RIGHT CERTIFICATES; MUTILATED, DESTROYED, LOST OR
-------------------------------------------------------------
STOLEN RIGHT CERTIFICATES.
-------------------------
(a) Subject to the provisions of Section 14 hereof, at
any time after the close of business on the Distribution Date,
and at or prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of
Common Shares as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any
Right Certificate or Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights
Agent. Thereupon the Rights Agent shall countersign and deliver
to the person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right
Certificates.
(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 Right Certificate and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE;
-----------------------------------
EXPIRATION DATE OF RIGHTS.
-------------------------
(a) Each Right shall be exercisable to purchase one-
half of one Common Share, subject to further adjustment as
provided herein. The registered holder of any Right Certificate
may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with
the form of election to purchase on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price for
each Common Share as to which the Rights are exercised, at or
prior to the earliest of (i) the close of business on ,
----------
2009, subject to extension (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in
Section 23 hereof (the "Redemption Date"), and (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof;
provided, however, that no less than two Rights, and only
integral multiples of two Rights, may be exercised at any time by
such registered holders; and, provided further, that if the
number of Rights exercised would entitle the holder thereof to
receive any fraction of a Common Share greater than one-half of a
Common Share, then the holder thereof shall not be entitled to
exercise such Rights unless such holder concurrently purchases
from the Company (and in such event the Company shall sell to
such holder), at a price in proportion to the Purchase Price, an
additional fraction of a Common Share which, when added to the
number of Common Shares to be received upon such exercise, will
equal an integral number of Common Shares.
(b) The Purchase Price for each full Common Share
pursuant to the exercise of Rights shall initially be $95.00
(equivalent to $47.50 for each one-half of one Common Share),
shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c)
below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the
Common Shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such
Right Certificate in accordance with Section 9 hereof, as set
forth below, the Rights Agent shall thereupon promptly (i)
requisition from any transfer agent of the Common Shares
certificates for the number of Common Shares to be purchased and
the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, (ii) when appropriate, requisition
from the Company the amount of cash to be paid in lieu of
issuance of fractional Common Shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates,
cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when
appropriate, after receipt, deliver such cash to or upon the
order of the registered holder of such Right Certificate. The
payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(iii) hereof) shall be made by certified
check, cashier's check, bank draft or money order payable to the
order of the Company, except that, if so provided by the Board of
Directors of the Company, the payment of the Purchase Price
following the occurrence of a Section 11(a)(ii) Event (as
hereinafter defined) and until the first occurrence of a
Section 13 Event (as hereinafter defined) may be made wholly or
in part by delivery of a certificate or certificates (with
appropriate stock powers executed in blank attached thereto)
evidencing a number of Common Shares of the Company equal to the
then Purchase Price divided by the closing price (as determined
pursuant to Section 11(d) hereof) per Common Share on the Trading
Day (as such term is hereinafter defined) immediately preceding
the date of such exercise. If the Company is obligated to issue
other securities 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 Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of
Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to take any action with respect to a registered holder
of a Right Certificate upon the occurrence of any purported
transfer, assignment or exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed
the certificate following the form of assignment or election to
purchase set forth on the reverse of the Right Certificate
surrendered for such transfer, assignment or exercise, and (ii)
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT
-------------------------------------
CERTIFICATES. All Right Certificates surrendered for the purpose
------------
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or if surrendered to the Rights Agent, shall be cancelled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Right Certificates
to the Company or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF COMMON
--------------------------------------
SHARES.
------
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued Common Shares or any authorized and issued Common Shares
held in its treasury, the number of Common Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights in accordance with Section 7.
(b) So long as the Common Shares issuable upon the
exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all Common
Shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all Common
Shares 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 shares (except as otherwise
provided by any corporation law applicable to the Company).
(d) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Common
Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable
in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates
for the Common Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any
certificates for Common Shares upon the exercise of any Rights
until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
SECTION 10. COMMON SHARES RECORD DATE. Each person
-------------------------
in whose name any certificate for Common Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Shares represented
thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable
transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Common Shares
transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day
on which the Common Shares transfer books of the Company are
open.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF
---------------------------------------
SHARES OR NUMBER OF RIGHTS. The Purchase Price, the number of
--------------------------
Common Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at
any time after the date of this Agreement (A) declare a
dividend on the Common Shares payable in Common Shares,
(B) subdivide the outstanding Common Shares, (C)
combine the outstanding Common Shares into a smaller
number of Common Shares or (D) issue any shares of its
capital stock in a reclassification of the Common
Shares (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), the
Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such
subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on
such date, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall
be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time
when the Common Shares transfer books of the Company
were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of
capital stock of the Company issuable upon exercise of
one Right. If an event occurs which would require an
adjustment under both Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement,
in the event any Person shall become an Acquiring
Person, other than pursuant to any transaction set
forth in Section 13(a), each holder of a Right shall
thereafter have a right to receive, upon exercise
thereof at a price equal to the then current Purchase
Price per full Common Share multiplied by the number of
Common Shares for which a Right is then exercisable, in
accordance with the terms of this Agreement, such
number of Common Shares of the Company as shall equal
the result obtained by (x) multiplying the then current
Purchase Price per full Common Share by the number of
Common Shares for which a Right is then exercisable and
dividing that product by (y) 50% of the then current
per share market price of the Common Shares of the
Company (determined pursuant to Section 11(d)) on the
date the Person became an Acquiring Person (such number
of shares, the "Adjustment Shares").
From and after such time as a Person becomes
an Acquiring Person (a "Section 11(a)(ii) Event"), any
Rights that are or were acquired or beneficially owned
by such Acquiring Person (or any Associate or Affiliate
of such Acquiring Person) shall be void and any holder
of such Rights shall thereafter have no right to
exercise such Rights under any provision of this
Agreement. No Right Certificate shall be issued
pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any
Associate or Affiliate thereof; no Right Certificate
shall be issued at any time upon the transfer of any
Rights to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence or any
Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any
Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person whose Rights would be
void pursuant to the preceding sentence shall be
cancelled. The Company shall use all reasonable
efforts to ensure that the provisions of this paragraph
are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a
result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(iii) In the event that there shall not
be sufficient Common Shares of the Company issued but
not outstanding or authorized but unissued (and not
reserved for issuance for purposes other than upon
exercise of the Rights) to permit the exercise in full
of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall: (A) determine the
excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price payable with
respect to such Right (such excess, the "Spread"), and
(B) with respect to each Right, make adequate provision
to substitute for the Adjustment Shares, upon payment
of the applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common Shares or
other equity securities of the Company (including,
without limitation, shares, or units of shares, of
preferred stock, if any, which the Board of Directors
of the Company has deemed to have the same value as
Common Shares (such shares of preferred stock,
hereinafter referred to as "common stock
equivalents")), (4) debt securities of the Company, (5)
other assets or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value,
where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm
selected by the Board of Directors of the Company;
provided, however, if the Company shall not have made
adequate provision to substitute for the Adjustment
Shares pursuant to clause (B) above within thirty (30)
days following the occurrence of a Section 11(a)(ii)
Event (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 any portion of the Purchase Price, Common
Shares (to the extent available) and then, if
necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith
that it is likely that sufficient additional Common
Shares might be authorized for issuance for 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 shareowner approval for the
authorization of such additional shares (such period,
as it may be extended, the "Substitution Period"). To
the extent that the Company determines that some action
need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x)
shall provide, subject to the last paragraph of
Section 11(a)(ii) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the
expiration of the Substitution Period to seek any
authorization of additional shares and/or to decide the
appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof.
In the event of any such suspension, the Company shall
issue a public announcement 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 the
Common Shares shall be the current per share market
price (as determined pursuant to Section 11(d) hereof)
of the Common Shares 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
Shares 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
Common Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or
purchase Common Shares (or securities convertible into Common
Shares) at a price per Common Share (or having a conversion price
per share, if a security convertible into Common Shares) less
than the then current per share market price of the Common Shares
(as defined in Section 11(d)) 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 Common Shares outstanding on such record date plus
the number of Common Shares which the aggregate offering price of
the total number of Common Shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such current market price and
the denominator of which shall be the number of Common Shares
outstanding on such record date plus the number of additional
Common Shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent. Common
Shares owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a record date for
the making of a distribution to all holders of the Common Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets
(other than a regular quarterly cash dividend or a dividend
payable in Common Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date shall be determined
by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be
the then current per share market price of the Common Shares (as
defined in Section 11(d)) on such record date, less the fair
market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to one Common
Share and the denominator of which shall be such current per
share market price of the Common Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares
of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such
a record date is fixed; and in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current per share market price" of the Common Shares on any date
shall be deemed to be the average of the daily closing prices per
Common Share for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided,
however, that in the event that the current per share market
price of the Common Shares is determined during a period
following the announcement by the issuer of such Common Shares of
(i) a dividend or distribution on such Common Shares payable in
Common Shares or securities convertible into Common Shares, or
(ii) any subdivision, combination or reclassification of Common
Shares and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
and in each such case, the current per share market price shall
be appropriately adjusted to reflect the current market price per
Common Share. The closing price for each Trading Day shall be
the last sale price, regular way, or, in case no such sale takes
place on such 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 Common Shares 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 Common Shares are listed or admitted to
trading or, if the Common Shares 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
Quotations System ("Nasdaq") or such other system then in use,
or, if on any such date the Common Shares 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 Shares selected by the Board of Directors of
the Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the Common
Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a
Business Day.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest ten-thousandth of a share as the case may be.
Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of
the expiration of the right to exercise any Rights.
(f) If, as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the
Company other than Common Shares, thereafter the number of such
other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with
respect to the Common Shares contained in Section 11(a) through
(c), inclusive, and the provisions of Sections 7, 9, 10 and 13
with respect to the Common Shares 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 Common Shares purchasable from time to time
hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Section 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
Common Shares (calculated to the nearest ten-thousandth of a
Common Share) obtained by (i) multiplying (x) the number of
Common Shares covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of Common Shares
purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall
be exercisable for the number of Common Shares 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 Right Certificates have been issued,
shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Common Shares issuable upon the
exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and
the number of Common Shares which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the par value, if
any, of the Common Shares 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
(except as otherwise provided by any corporation law applicable
to the Company) Common Shares 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 issuing to the
holder of any Right exercised after such record date of the
Common Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the
number of Common Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the
Common Shares, issuance wholly for cash of any Common Shares at
less than the current market price, issuance wholly for cash of
Common Shares or securities which by their terms are convertible
into or exchangeable for Common Shares, dividends on Common
Shares payable in Common Shares or issuance of rights, options or
warrants referred to in Section 11(b), hereafter made by the
Company to holders of its Common Shares shall not be taxable to
such shareowners.
(n) The Company covenants and agrees that it shall
not, at any time after the earlier of the Distribution Date or
the Shares Acquisition 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), (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) or (iv) consummate a
share exchange with any other Person, if at the time of or
immediately after such consolidation, merger, sale or share
exchange (A) 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, (B) prior to,
simultaneously with or immediately after such consolidation,
merger, sale or share exchange the shareowners of the Person who
constitute, 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 or (C) the form or nature of
organization of the Principal Party would preclude or limit the
exercisability of the Rights.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by
Section 23, Section 24 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE
--------------------------------------
OR NUMBER OF SHARES. Whenever an adjustment is made as provided
-------------------
in Sections 11 and 13 hereof, the Company shall promptly (a)
prepare a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common
Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with
Section 25 hereof.
SECTION 13. CONSOLIDATION, MERGER, SHARE EXCHANGE OR
----------------------------------------
SALE OR TRANSFER OF ASSETS OR EARNING POWER.
-------------------------------------------
(a) In the event that, following the Shares
Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies
with Section 11(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, or any Person or Persons (other than a
Subsidiary of the Company in a transaction that complies with
Section 11(o) hereof) shall consummate a share exchange with the
Company, and, in connection with such consolidation, merger or
share exchange, all or part of the outstanding Common Shares
shall be changed into or exchanged for stock or other securities
of any other Person (or the Company) or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related
transactions, assets 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 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, proper provision shall be made so
that: (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase
Price per full Common Share multiplied by the number of Common
Shares for which a Right is then exercisable (or, if a
Section 11(a)(ii) Event has occurred prior to the first
occurrence of any of the events described in clauses (x), (y) or
(z) above (a "Section 13 Event"), the Purchase Price per full
Common Share in effect immediately prior to the first occurrence
of a Section 11(a)(ii) Event multiplied by the number of Common
Shares for which a Right was exercisable immediately prior to
such first occurrence), in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully
paid, nonassessable (except as otherwise required by any
corporation law applicable to the Principal Party (as such term
is hereinafter defined)) and freely tradeable Common Shares of
the Principal Party, not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be
equal to the result obtained by (1) multiplying the then current
Purchase Price per full Common Share by the number of Common
Shares 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
shares for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase
Price per full Common Share in effect immediately prior to such
first occurrence), and dividing that product (which, following
the first occurrence of a Section 13 Event, shall be referred to
as the "Purchase Price" for each Right and for all purposes of
this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d) hereof) per Common Share 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 its Common Shares) 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 Common Shares 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
(i) 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 Common Shares of the Company are
converted in such merger, consolidation or share
exchange, and if no securities are so issued, (A) the
Person that is the other party to the merger,
consolidation or share exchange and that survives such
merger or consolidation, or, if there is more than one
such Person, the Person the Common Shares of which have
the greatest aggregate market value of shares
outstanding or (B) if the Person that is the other
party to the merger or consolidation does not survive
the merger or consolidation, the Person that does
survive the merger or consolidation (including the
Company if it survives); and
(ii) 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
Shares of such Person are not at such time and have 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
Shares of which are and have 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 Shares 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 Shares having the
greatest aggregate market value.
(c) The Company shall not consummate any such
consolidation, merger, share exchange, sale or transfer unless
the Principal Party shall have a sufficient number of authorized
Common Shares 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, share exchange or sale of assets mentioned
in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration
statement under the Securities Act of 1933, as amended
(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 Final
Expiration Date; and
(ii) 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, consolidations, share exchanges, 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).
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
---------------------------------------
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not
listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted
to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by
Nasdaq or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no
such market maker is making a market in the Rights the fair value
of the Rights on such date as determined in good faith by the
Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue
fractions of Common Shares upon exercise of the Rights or to
distribute certificates which evidence fractional Common Shares.
In lieu of fractional Common Shares, equal to one-half of a
Common Share or less, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Common Share. Any
exercise of Rights that would entitle the holder thereof to
receive any fraction of a Common Share greater than one-half of a
Common Share shall be governed by Section 7(a) hereof. For
purposes of this Section 14(b), the current market value of a
Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)
hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise of a Right (except as
provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action
----------------
in respect of this Agreement, excepting the rights of action
given to the Rights Agent under Section 18 hereof, are vested in
the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common
Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise
act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this
Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every
--------------------------
holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other holder
of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common
Shares;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of the
Rights Agent if surrendered at the principal office of the Rights
Agent, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or, prior
to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of
the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated
Common Shares certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to
the contrary.
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court or competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A
-------------------------------------
SHAREOWNER. No holder, as such, of any Right Certificate shall
----------
be entitled to vote, receive dividends or other distributions or
be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as
such, any of the rights of a shareowner of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareowners at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareowners (except as
provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
---------------------------
(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 other disbursements
incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense,
incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration
of this Agreement, including the costs and expenses of defending
against any claim of liability in the premises.
(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 Right Certificate or
certificate for the Common Shares 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, or
otherwise upon the advice of counsel as set forth in Section 20
hereof.
SECTION 19. 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
stock transfer or corporate trust business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any
of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Right Certificates
shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights
----------------------
Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of
which the Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such
fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the
Corporate Secretary or any Assistant Corporate Secretary of the
Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due authorization,
execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in
this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including
the manner, method or amount thereof) provided for in Section 3,
11, 13, 23 or 24, or the ascertaining of the existence of facts
that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates
after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any Common Shares or other securities to be issued pursuant to
this Agreement or any Right Certificate or as to whether any
Common Shares or other securities will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder from any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the
Corporate Secretary, any Assistant Corporate 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 or
suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for
those instructions.
(h) The Rights Agent and any shareowner, director,
officer or employee of the Rights Agent may buy, sell or deal in,
or act as the transfer agent for, any of the Rights, Common
Shares or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights
----------------------
Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice in
writing mailed to the Company and to each transfer agent of the
Common Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30
days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of
the Common Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then
the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States
or of the State of New York or the State of Wisconsin (or of any
other state of the United States so long as such corporation is
authorized to do business as a banking institution in the State
of New York or the State of Wisconsin), in good standing, having
an office or agency in the State of Wisconsin or the State of New
York, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million, or (b) an Affiliate of a
corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall
file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares, and mail a notice
thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the
case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.
----------------------------------
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement.
SECTION 23. REDEMPTION.
----------
(a) The Rights may be redeemed by action of the Board
of Directors pursuant to subsection (b) of this Section 23 and
shall not be redeemed in any other manner.
(b) The Board of Directors of the Company may, at its
option, at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors
may be made effective at such time on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish. 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.
(c) Immediately upon the effectiveness of the action
of the Board of Directors of the Company ordering the redemption
of the Rights pursuant to subsection (b) of this Section 23, 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. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after the effectiveness of the action
of the Board of Directors ordering the redemption of the Rights
pursuant to subsection (b), the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at
their last addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section 23
or in Section 24 hereof, and other than in connection with the
purchase of Common Shares prior to the Distribution Date.
SECTION 24. EXCHANGE.
--------
(a) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for
Common Shares of the Company at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the
date hereof (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at
any time after any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or any
such Subsidiary, any entity holding Common Shares for or pursuant
to the terms of any such plan, or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute common stock equivalents
(as such term is defined in Section 11(a)(iii) hereof) for some
or all of the Common Shares exchangeable for Rights.
(d) In the event that there shall not be sufficient
Common Shares or common stock equivalents issued but not
outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to
authorize additional Common Shares or common stock equivalents
for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of such fractional
Common Shares, the Company shall pay to the registered holders of
the Right Certificates with regard to which such fractional
Common Shares would otherwise be issued an amount in cash equal
to the same fraction of the current market value of a whole
Common Share. For the purposes of this paragraph (e), the
current market value of a whole Common Share shall be the closing
price of a Common Share (as determined pursuant to the second
sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
------------------------
(a) In case the Company shall propose, after the
Distribution Date, (i) to pay any dividend payable in stock of
any class to the holders of Common Shares or to make any other
distribution to the holders of Common Shares (other than a
regular quarterly cash dividend), (ii) to offer to the holders of
Common Shares rights or warrants to subscribe for or to purchase
any additional Common Shares or shares of stock of any class or
any other securities, rights or options, (iii) to effect any
reclassification of Common Shares (other than a reclassification
involving only the subdivision of outstanding Common Shares),
(iv) to effect any consolidation or merger into or with (other
than a merger of a Subsidiary into or with the Company), to
effect any share exchange with or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of 50%
or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, 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 Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record
date for the purposes of such stock dividend, or distribution of
rights or warrants, or the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer,
liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Common Shares
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 10 days prior to the record date for determining
holders of Common Shares for purposes of such action, and in the
case of any such other action, at least 10 days prior to the date
of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares,
whichever shall be the earlier.
(b) In case any of Section 11(a)(ii) Event or
Section 13 Event shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26
hereof, a notice of the occurrence of such event, which notice
shall include a brief summary of the Section 11(a)(ii) Event or
Section 13 Event, as the case may be, and the consequences
thereof to holders of Rights.
SECTION 26. NOTICES.
-------
(a) Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the
Rights Agent) as follows:
Interstate Energy Corporation
222 West Washington Avenue
Madison, Wisconsin 53703
Attention: Corporate Secretary
(b) Subject to the provisions of Section 21 hereof,
any notice or demand authorized by this Agreement to be given or
made by the Company or by the holder of any Right Certificate to
or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
Firstar Bank Milwaukee, N. A.
1555 RiverCenter Drive, Suite 301
Milwaukee, Wisconsin 53212
Attention: Corporate Trust Department
(c) Notices or demands authorized by this Agreement to
be given or made by the Company or the Rights Agent to the holder
of any Right Certificate shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry
books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to
--------------------------
the Distribution Date and subject to the penultimate sentence of
this Section 27, the Company may 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 Common Shares. Without limiting the foregoing, the
Company may at any time prior to such time as any Person becomes
an Acquiring Person amend this Agreement to lower the thresholds
set forth in Sections 1(a) and 3(a) hereof from 15% to not less
than 10%, with appropriate exceptions for persons then
beneficially owning Common Shares of the Company constituting a
percentage of the number of Common Shares then outstanding equal
to or in excess of the new threshold. From and after the
Distribution Date and subject to the penultimate sentence of this
Section 27, the Company and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without
the approval of any holders of Right Certificates in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any
other provision herein, (iii) to shorten or lengthen any time
period hereunder, or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of
the holders of Right Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person); provided,
that from and after the Distribution Date this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii)
of this sentence, (A) a time period relating to when the Rights
may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such lengthening
is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which reduces the then
effective Redemption Price or moves to an earlier date the then
effective Final Expiration Date. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident
with the interests of the holders of Common Shares.
SECTION 28. SUCCESSORS. All the covenants and
----------
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in
--------------------------
this Agreement shall be construed to give to any person or
corporation other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Shares).
SECTION 30. SEVERABILITY. If any term, provision,
------------
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
SECTION 31. GOVERNING LAW. This Agreement and each
-------------
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Wisconsin and for
all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made
and performed entirely within such State.
SECTION 32. 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 33. 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.
SECTION 34. DETERMINATIONS AND ACTIONS BY THE BOARD
---------------------------------------
OF DIRECTORS. For all purposes of this Agreement, any
------------
calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares 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 of
Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board 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
(a) interpret the provisions of this Agreement, and (b) 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 and any
determination as to whether actions or any Person shall be such
as to cause such Person to beneficially own shares held by
another Person). All such actions, calculations, interpretations
and determinations (including, for purposes of clause (ii) below,
all omissions with respect to the foregoing) which are done or
made by the Board of the Company in good faith, shall (i) be
final, conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties, and (ii) not
subject the Board of the Company to any liability to the holders
of the Rights.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the day and
year first above written.
INTERSTATE ENERGY CORPORATION
Attest:
By: By:
----------------------- -----------------------
Title: Title:
-------------------- --------------------
FIRSTAR BANK MILWAUKEE, N. A.
Attest:
By: By:
----------------------- -----------------------
Title: Title:
-------------------- --------------------
<PAGE>
---------
EXHIBIT A
---------
[FORM OF RIGHT CERTIFICATE]
CERTIFICATE NO. R- RIGHTS
-------
NOT EXERCISABLE AFTER , 2009 (SUBJECT TO
----------
EXTENSION) OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
Right Certificate
INTERSTATE ENERGY 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 , 1999, and as such agreement may be
-----------
amended (the "Rights Agreement"), between Interstate Energy
Corporation, a Wisconsin corporation (the "Company"), and Firstar
Bank Milwaukee, N. A., a Wisconsin corporation (the "Rights
Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., Madison, Wisconsin time, on
, 2009, subject to extension, at the principal office of
--------
the Rights Agent, or at the office of its successor as Rights
Agent, one-half of one fully paid nonassessable (except as
otherwise provided by any corporation law applicable to the
Company) share of common stock, par value $.01 ("Common Shares"),
of the Company, at a purchase price of $95.00 per Common Share
(the "Purchase Price") (equivalent to $47.50 for each one-half of
a Common Share), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of Common Shares which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of , , based
---------- ----
on the Common Shares as constituted at such date. Rights may
only be exercised in integral multiples of two. As provided in
the Rights Agreement, the Purchase Price and the number of Common
Shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification
and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file
at the principal executive offices of the Company and the
above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Common Shares as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part,
the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by the
Company at a redemption price of $.001 per Right or (ii) may be
exchanged in whole or in part for Common Shares. The Board of
Directors of the Company may, at its option, at any time after
any Person becomes an Acquiring Person, but prior to such
Person's acquisition of 50% or more of the outstanding Common
Shares, exchange the Rights evidenced by the Certificate for
Common Shares, at an exchange ratio of one Common Share per
Right, subject to adjustment, as provided in the Rights
Agreement.
No fractional Common Shares will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu
thereof a cash payment will be made, as provided in the Rights
Agreement. No Rights may be exercised that would entitle the
holder to any fraction of a Common Share greater than one-half of
a Common Share unless concurrently therewith such holder
purchases an additional fraction of a Common Share which, when
added to the number of Common Shares to be received upon such
exercise, equals an integral number of Common Shares, as provided
in the Rights Agreement.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the
holder of the Common Shares 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 shareowner of the Company or any right to vote for
the election of directors or upon any matter submitted to
shareowners at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting shareowners (except as provided in the
Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal. Dated as of ,
------------
.
----
ATTEST: INTERSTATE ENERGY CORPORATION
By:
--------------------------- ------------------------
Title:
-----------------
Countersigned:
FIRSTAR BANK MILWAUKEE, N. A.
By:
-------------------------------
Authorized Signature
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED hereby
----------------------------
sells, assigns and transfers unto
-----------------------------
-----------------------------------------------------------------
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within
-------------------
Right Certificate on the books of the within-named Company, with
full power of substitution.
Dated: ,
------------ ----
------------------------------
Signature
Signature Guaranteed:
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by
an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To INTERSTATE ENERGY CORPORATION:
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate
------------------
to purchase the Common Shares issuable upon the exercise of such
Rights and requests that certificates for such Common Shares be
issued in the name of:
Please insert social security
or other identifying number
---------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
---------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------
Dated: ,
------------ ----
---------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United
States.
<PAGE>
[Form of Reverse Side of Right Certificate -- continued]
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned by
an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).
------------------------------
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NOTICE
------
The signature in the foregoing Forms of Assignment and
Election must conform to the name as written upon the face of
this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as the
case may be, is not completed, the Company and the Rights Agent
will deem the beneficial owner of the Rights evidenced by this
Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
<PAGE>
---------
EXHIBIT B
---------
INTERSTATE ENERGY CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On , 1999, the Board of Directors of Interstate
--------
Energy Corporation (the "Company") declared a dividend of one
common share purchase right (a "Right") for each outstanding
share of common stock, $.01 par value (the "Common Shares"), of
the Company. The dividend is payable upon the close of business
on , 1999 to the shareowners of record on that date
-----------
(the "Record Date"). Each Right entitles the registered holder
to purchase from the Company one-half of one Common Share, at a
price of $95.00 per Common Share (equivalent to $47.50 for each
one-half of a Common Share), subject to adjustment (the "Purchase
Price"). The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the
Company and Firstar Bank Milwaukee, N. A., as Rights Agent (the
"Rights Agent").
Until the earlier to occur of (i) 10 days following a
public announcement that a person or group of affiliated or
associated persons (other than the Company, a subsidiary of the
Company or an employee benefit plan of the Company or a
subsidiary) (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding Common Shares (the
"Shares Acquisition Date") or (ii) 10 business days (or such
later date as may be determined by action of the Company's Board
of Directors prior to such time as any person becomes an
Acquiring Person) following the commencement of, or announcement
of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by
a person or group (other than the Company, a subsidiary of the
Company or an employee benefit plan of the Company or a
subsidiary) of 15% or more of such outstanding Common Shares (the
earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common
Share certificate.
The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date, upon transfer or new
issuance of Common Shares, will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares,
outstanding as of the Record Date, even without such notation,
will also constitute the transfer of the Rights associated with
the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares as of the close
of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. No less than two Rights, and only integral multiples of
two Rights, may be exercised at any one time by any holder of
Rights. The Rights will expire on , 2009 (the "Final
---------
Expiration Date"), unless the Rights are earlier redeemed or
exchanged by the Company, or the Rights Agreement is amended, in
each case as described below.
The Purchase Price payable, and the number of Common
Shares or other securities or property issuable, upon exercise of
the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common
Shares, (ii) upon the grant to holders of the Common Shares of
certain rights or warrants to subscribe for or purchase Common
Shares at a price, or securities convertible into Common Shares
with a conversion price, less than the then current market price
of the Common Shares or (iii) upon the distribution to holders of
the Common Shares of evidences of indebtedness or assets
(excluding regular quarterly cash dividends or dividends payable
in Common Shares) or of subscription rights or warrants (other
than those referred to above).
In the event that any person becomes an Acquiring
Person (a "Flip-In Event"), each holder of a Right (except as
otherwise provided in the Rights Agreement) will thereafter have
the right to receive upon exercise that number of Common Shares
(or, in certain circumstances cash, property or other securities
of the Company or a reduction in the Purchase Price) having a
market value of two times the then current Purchase Price.
Notwithstanding any of the foregoing, following the occurrence of
a Flip-In Event all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, or
subsequently become beneficially owned by an Acquiring Person,
related persons and transferees will be null and void.
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or
other business combination transaction or (ii) 50% or more of its
consolidated assets or earning power are sold (the events
described in clauses (i) and (ii) are herein referred to as
"Flip-Over Events"), proper provision will be made so that
holders of Rights (except as otherwise provided in the Rights
Agreement) will thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, that number
of shares of common stock of the acquiring company which at the
time of such transaction will have a market value of two times
the then current Purchase Price.
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
Common Shares will be issued. In lieu of fractional Common
Shares equal to one-half of a Common Share or less, an adjustment
in cash will be made based on the market price of the Common
Shares on the last trading day prior to the date of exercise. No
Rights may be exercised that would entitle the holder thereof to
any fractional Common Share greater than one-half of a Common
Share unless concurrently therewith such holder purchases an
additional fraction of a Common Share which when added to the
number of Common Shares to be received upon such exercise, equals
an integral number of Common Shares.
The Purchase Price is payable by certified check,
cashier's check, bank draft or money order or, if so provided by
the Company, the Purchase Price following the occurrence of a
Flip-In Event and until the first occurrence of a Flip-Over Event
may be paid in Common Shares having an equivalent value.
At any time after a person becomes an Acquiring Person
and prior to the acquisition by such Acquiring Person of 50% or
more of the outstanding Common Shares, the Board of Directors of
the Company may exchange the Rights (other than Rights owned by
any Acquiring Person which have become void), in whole or in
part, at an exchange ratio of one Common Share (or of a share of
a class or series of the Company's preferred stock, if any,
having equivalent rights, preferences and privileges) per Right
(subject to adjustment).
At any time prior to a person becoming an Acquiring
Person, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.001 per Right
(the "Redemption Price"). The redemption of the Rights may be
made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
Other than provisions relating to certain principal
economic terms of the Rights, the terms of the Rights may be
amended by the Board of Directors of the Company without the
consent of the holders of the Rights, including an amendment to
lower the threshold for exercisability of the Rights from 15% to
not less than 10%, with appropriate exceptions for any person
then beneficially owning a percentage of the number of Common
Shares then outstanding equal to or in excess of the new
threshold, except that from and after the Distribution Date no
such amendment may adversely affect the interests of the holders
of the Rights. The Rights may also be amended to extend the
expiration date thereof.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareowner of the Company,
including, without limitation, the right to vote or to receive
dividends.
The Company has filed a copy of the Rights Agreement
with the Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A filed with respect to the
Rights. A copy of the Rights Agreement is also available free of
charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
EXHIBIT H
FORM OF NOTICE OF PROPOSED TRANSACTIONS
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- ; 70 )
Filings Under the Public Utility Holding Company Act of 1935
("Act").
Interstate Energy Corporation ("Interstate" or the "Company")
October __, 1998
Notice is hereby given that the following filing(s)
has/have been made with the Securities and Exchange Commission
(the "Commission") pursuant to provisions of the Act and rules
promulgated thereunder. All interested persons are referred to
the application(s) and/or declaration(s) for complete statements
of the proposed transaction(s) summarized below. The
application(s) and/or declaration(s) and any amendments thereto
is/are available for public inspection through the Commission's
Office of Public Reference.
Interested persons wishing to comment or request a
hearing on the application(s) and/or declaration(s) should submit
their views in writing by __________, 1998 to the Secretary,
Securities and Exchange Commission, Washington, D.C. 20549, and
serve a copy on the relevant applicant(s) and/or declarant(s) at
the address(es) specified below. Proof of service (by affidavit
or, in case of an attorney at law, by certificate) should be
filed with the request. Any request for hearing shall identify
specifically the issues of fact or law that are disputed. A
person who so requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or order issued in
the matter. After said date, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or
permitted to become effective.
* * * * *
Interstate, 222 West Washington Avenue, Madison, Wisconsin,
53703-0192, a registered holding company under the Act, has filed
a declaration under sections 6(a), 7, 9(a), 10 and 12(c) of the
Act and rules 42 and 54 thereunder.
Interstate seeks authorization to implement a shareowner
rights plan and to enter into a related Rights Agreement (the
"Rights Agreement") with Firstar Bank Milwaukee, N.A. as Rights
Agent. The Board of Directors of Interstate (the "Board")
proposes to declare a dividend distribution of one common share
purchase right (a "Right") for each share of Interstate's common
stock, $.01 par value per share (the "Common Shares"),
outstanding. The distribution will be payable on a record date
(the "Record Date") yet to be established. Each Right would
entitle the registered holder to purchase from the Company one-
half of one Common Share at an initial price of $95.00 per full
Common Share (equivalent to $47.50 for each one-half of one
Common Share) (the "Purchase Price"), subject to adjustment.
Until the earlier of (i) the tenth day following the date of
a public announcement that any individual, firm, corporation or
other entity, including any successor (by merger or otherwise) of
such entity (each, a "Person") (not including the Company, any
subsidiary of the Company, any employee benefit plan of the
Company or of a subsidiary of the Company, any entity holding
Common Shares for or pursuant to the terms of any such plan, or
any trustee, administrator or fiduciary of such a plan) (an
"Acquiring Person") acquired, or obtained the right to acquire or
to vote, beneficial ownership of Common Shares aggregating 15% or
more of the Common Shares then outstanding or (ii) the tenth
business day (or such later date as may be determined by action
of the Board prior to such time as any Person becomes an
Acquiring Person) after the date of commencement or announcement
of an intention of any Person to commence a tender or exchange
offer the consummation of which would result in any Person (not
including the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of a subsidiary of the
Company, any entity holding Common Shares for or pursuant to the
terms of any such plan, or any trustee, administrator or
fiduciary of such a plan) acquiring, or obtaining the right to
acquire or to vote, beneficial ownership of Common Shares
aggregating 15% or more of the then outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"),
the Rights will be evidenced by the certificates for Common
Shares registered in the names of the holders thereof. On the
Record Date, or as soon as practicable thereafter, the Company
will send a copy of the Summary of Rights to Purchase Common
Shares (the "Rights Summary") to each record holder of Common
Shares as of the close of business on the Record Date. Until the
Distribution Date (or earlier redemption or expiration of the
Rights), new Common Shares certificates which become outstanding
after the Record Date will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender
for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Rights Summary,
shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby. As soon as practicable
after the Distribution Date, the Company will send or cause to be
sent to each record holder of Common Shares as of the close of
business on the Distribution Date, a separate certificate
evidencing the Rights ("Rights Certificate") evidencing one Right
for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
The Rights are not exercisable until the Distribution Date.
No less than two Rights and only integral multiples of two
Rights, may be exercised at any one time by any holder of Rights.
The Rights will expire at the close of business on the tenth
anniversary of the Record Date (the "Expiration Date"), unless
earlier redeemed or exchanged, or the Rights Agreement is
amended, by the Company as described below.
In the event that any Person becomes an Acquiring Person
(other than in certain situations), each holder of a Right shall
thereafter have the right to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the
number of Common Shares for which a Right is then exercisable,
such number of Common Shares (or, in certain circumstances, cash,
property or other securities of the Company or a reduction in the
Purchase Price) equal to the result obtained by (i) multiplying
the then current Purchase Price per full share by the number of
Common Shares for which a Right is then exercisable and dividing
that product by (ii) 50% of the then current market price of the
Common Shares. From and after such time as a Person becomes an
Acquiring Person, any Rights that are (or, in certain
circumstances, were) acquired or beneficially owned by an
Acquiring Person shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights.
In the event, directly or indirectly, at any time after a
Person has become an Acquiring Person, (i) the Company shall
consolidate with, or merge with and into, any other Person (other
than a subsidiary of the Company in certain situations) and the
Company shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) any Person (other than a
subsidiary of the Company in certain situations) shall
consolidate with, or merge with and into, the Company and the
Company shall be the continuing or surviving corporation of such
consolidation or merger, or any Person or Persons (other than a
subsidiary of the Company in certain situations) shall consummate
a share exchange with the Company, and, in connection with such
consolidation, merger or share exchange, all or part of the
outstanding Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or
cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one of its subsidiaries shall sell or
otherwise transfer), in one 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 Person or Persons (other than the Company or a
subsidiary of the Company in certain situations), then proper
provision shall be made so that holders of Rights (except Rights
which previously have been voided as set forth above) shall
thereafter have the right to receive, upon the exercise thereof
at a price equal to the then current Purchase Price multiplied by
the number of Common Shares for which a Right is then
exercisable, such number of common shares of the acquiring person
equal to the result obtained by (i) multiplying the then current
Purchase Price per full share by the number of common shares for
which a Right is then exercisable and dividing that product by
(ii) 50% of the then current market price of the common shares of
the acquiring person.
The Purchase Price, the number of Common Shares covered by
each Right and the number of Rights outstanding are subject to
adjustment from time to time to prevent dilution in the event the
Company shall (i) declare a dividend on the Common Shares payable
in Common Shares, (ii) subdivide the outstanding Common Shares,
(iii) combine the outstanding Common Shares into a smaller number
of Common Shares or (iv) issue any shares of its capital stock in
a reclassification of the Common Shares (including any
reclassification in connection with a consolidation or merger in
which the Company is the continuing or surviving corporation),
except as otherwise provided.
With certain exceptions, no adjustment in the Purchase Price
shall be required until cumulative adjustments require an
adjustment of at least 1% in the Purchase Price. The Company
shall not be required to issue fractions of Common Shares and, in
lieu thereof, an adjustment in cash will be made based on the
market price of the Common Shares on the last trading date prior
to the date of exercise. No Rights may be exercised that would
entitle the holder thereof to any fractional Common Share greater
than one-half of a Common Share unless concurrently therewith
such holder purchases an additional fraction of a Common Share
which when added to the numbers of Common Shares to be received
upon such exercise, equals an integral number of Common Shares.
At any time after any Person becomes an Acquiring Person and
before any Person (not including the Company, any subsidiary of
the Company, any employee benefit plan of the Company or of a
subsidiary of the Company, any entity holding Common Shares for
or pursuant to the terms of any such plan, or any trustee,
administrator or fiduciary of such a plan) acquired, or obtained
the right to acquire or to vote, beneficial ownership of 50% or
more of the outstanding Common Shares of the Company, the Board
may, at its option, exchange the Rights (other than Rights owned
by an Acquiring Person which shall have become void), in whole or
in part, at an exchange ratio of one Common Share per Right,
subject to adjustment.
At any time prior to a Person becoming an Acquiring Person,
the Board may, at its option, redeem the Rights in whole, but not
in part, at a redemption price of $.001 per Right, subject to
adjustment (the "Redemption Price"). Immediately upon the
effectiveness of the action of the Board ordering the redemption
of the Rights or the exchange of any Rights, respectively, the
Company shall promptly give public notice of any such redemption
or exchange, and upon such action, the right to exercise such
Rights will terminate and the only right thereafter of a holder
of such Rights will be to receive the Redemption Price or
exchanged shares, respectively.
Until a Right is exercised or exchanged, the holder thereof,
as such, will have no rights as a shareowner of the Company,
including, without limitation, the right to vote or to receive
dividends.
Prior to the Distribution Date, the Company may supplement
or amend any provision of the Rights Agreement without the
approval of the holders of Common Shares, including, without
limiting the foregoing, amending the Rights Agreement to lower
the 15% thresholds for triggering a "Distribution Date" to not
less than 10% with appropriate exceptions for persons then
beneficially owning Common Shares constituting a percentage equal
to or in excess of the new threshold. From and after the
Distribution Date, the Company may supplement or amend the Rights
Agreement in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision which may be defective or inconsistent
with any other provision in the Rights Agreement, (iii) to
shorten or lengthen any time period in the Rights Agreement, or
(iv) to change or supplement the provisions of the Rights
Agreement which the Company deems necessary or desirable and
which shall not adversely affect the holders of Right
Certificates (other than an Acquiring Person); provided that the
Rights Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to,
the holders of Rights. Notwithstanding any of the foregoing in
this paragraph, no supplement or amendment shall be made which
reduces the then effective Redemption Price or moves to an
earlier date the then effective final Expiration Date.
* * * * *
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
Jonathan G. Katz
Secretary
