SHAREHOLDERS RIGHTS AGREEMENT
Dated as of December 18, 1996
between
MIDAMERICAN ENERGY HOLDINGS COMPANY
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
as Rights Agent
Page
TABLE OF CONTENTS
Section 1. Certain Definitions............................................. 1
Section 2. Appointment of Rights Agent..................................... 7
Section 3. Issuance of Rights Certificates................................. 7
Section 4. Form of Rights Certificates...................................... 9
Section 5. Countersignature and Registration............................... 11
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates............................... 11
Section 7. Exercise of Rights; Exercise Price;
Expiration Date of Rights......................... 12
Section 8. Cancellation and Destruction of Rights
Certificates...................................... 15
Section 9. Reservation and Availability of Preferred
Shares............................................ 15
Section 10. Record Date of Preferred Share Ownership........................ 17
Section 11. Adjustment of Exercise Price, Number and
Kind of Shares and Number of Rights............... 18
Section 12. Certificate of Adjusted Exercise Price or
Number of Shares.................................. 27
Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power........................ 28
Section 14. Fractional Rights and Fractional Shares......................... 32
Section 15. Rights of Action................................................ 33
Section 16. Agreements of Holders of Rights................................. 33
Section 17. Rights Certificate Holder Not Deemed a
Shareholder....................................... 34
Section 18. Concerning the Rights Agent..................................... 35
Section 19. Merger or Consolidation of the Rights
Agent............................................. 35
Section 20. Duties of the Rights Agent...................................... 36
Section 21. Resignation or Removal of the Rights
Agent............................................. 39
Section 22. Issuance of New Rights Certificates............................. 40
Section 23. Redemption...................................................... 40
Section 24. Exchange........................................................ 42
Section 25. Notice to Holders of Rights Certificates
of Certain Events................................ 43
Section 26. Other Notices................................................... 44
Section 27. Supplements and Amendments...................................... 45
Section 28. Successors...................................................... 46
Section 29. Certain Determinations and Actions by the
Board. ........................................ 46
Section 30. Benefits of this Agreement...................................... 46
Section 31. Severability.................................................... 46
Section 32. Governing Law................................................... 47
Section 33. Counterparts.................................................... 47
Section 34. Descriptive Headings............................................ 47
-i-
Page
Exhibit A - Form of Articles of Amendment for the
Series A Junior Participating Preferred
Stock.............................................. A-1
Exhibit B - Form of Rights Certificate......................... B-1
Exhibit C - Summary of Rights to Purchase Shares of
Series A Junior Participating Preferred
Stock.............................................. C-1
-ii-
SHAREHOLDERS RIGHTS AGREEMENT
Shareholders Rights Agreement dated as of December 18, 1996
(this "Agreement") between MidAmerican Energy Holdings Company, an Iowa
corporation (the "Company"), and Continental Stock Transfer & Trust Company,
(the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company desires to
provide all shareholders of the Company with the opportunity to benefit from the
long-term prospects and value of the Company and to ensure that all such
shareholders receive fair and equal treatment in the event of any proposed
takeover of the Company; and
WHEREAS, on December 18, 1996, the Board of Directors of the
Company authorized and declared a dividend of one preferred stock purchase right
(individually a "Right" and collectively the "Rights") for each share of Common
Stock (as hereinafter defined) of the Company outstanding at the Close of
Business on December 30, 1996 (the "Record Date"), each Right representing the
right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined) upon the terms and subject to the conditions herein after set forth,
and contemplates that one Right will be issued with respect to each share of
Common Stock which shall become outstanding after the Record Date and prior to
the earlier of the Redemption Date and the Final Expiration Date (as such terms
are hereinafter defined), including any shares of Common Stock issued by reason
of the exercise of any option, warrant, right (other than the Rights) or
conversion or exchange privilege contained in any option, warrant, right (other
than the Rights) or convertible or exchangeable security issued by the Company
prior to the Dis tribution Date, unless the Board (as hereinafter defined) shall
expressly provide to the contrary at the time of issuance of any such option,
warrant, right or convertible or exchangeable secu rity.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
Section 1. Certain Definitions. For all purposes of this
Agreement, unless the context otherwise requires, the following terms shall have
the respective meanings set forth below:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the shares of Common Stock of the Company
then outstanding, but shall
-1-
not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan or other compensation program or arrangement of the
Company or of any such Subsidiary or (iv) any Person holding such shares of
Common Stock for or pursuant to the terms of any such plan, program or
arrangement (the Persons specified in clauses (i) through (iv) being hereinafter
collectively called "Exempt Persons"). Notwithstanding the preceding sentence,
no Person shall become an "Acquiring Person" as the result of an acquisition by
the Company of shares of its Common Stock which, by reason of reducing the
number of its then outstanding shares of Common Stock, increases the percentage
of its then outstanding shares of Common Stock Beneficially Owned by such Person
to 15% or more; provided, however, that if such Person shall, after such
purchase by the Company, become the Beneficial Owner of any additional shares of
Common Stock of the Company, 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 shares of Common Stock so that
such Person would no longer be an "Acquiring Person" (as defined pursuant to the
foregoing provisions of this paragraph (a)), then such Person shall not be
deemed to be an "Acquiring Person" for any purposes of the Agreement.
(b) "Adverse Person" shall mean any Person declared by at
least a majority of the members of the Board who are not officers of the Company
to be an Adverse Person upon a determination that the criteria set forth in
Section 11(a)(ii)(B) apply to such Person.
(c) "Affiliate" and "Associate" shall have the respec tive
meanings ascribed to such terms in Rule 12b-2, as in effect on the date of this
Agreement, under the Exchange Act; provided, however, that no director or
officer of the Company shall be deemed an Affiliate or Associate of any other
director or officer of the Company solely as a result of his or her being a
director or officer of the Company.
(d) "Beneficial Owner" (including the terms "Beneficially Own"
and "Beneficial Ownership"), when used with respect to any Person, shall be
deemed to include any securities which:
(i) such Person or any of such Person's Affili ates or
Associates beneficially owns, directly or indi rectly (determined as
provided in Rule 13d-3, as in
-2-
effect on the date of this Agreement, under the Exchange Act);
(ii) such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has:
(A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or
upon the satisfaction of any conditions, or both) pursuant to
any written or oral agreement, arrangement or understanding
(other than customary agreements with and among underwriters
and selling group members with respect to a bona fide public
offering of securities), upon the exercise of any options,
warrants, rights (other than the Rights) or conversion or
exchange privileges or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own: (I) 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 (II)
securities issuable upon exercise of the Rights at any time
prior to the Distribution Date; or
(B) the right to vote pursuant to any written or oral
agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security otherwise subject to this
item (B) if such agreement, arrangement or understanding to
vote (I) arises solely from a revocable proxy or consent given
to such Person or any of such Person's Affiliates or
Associates in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations under the Exchange Act and
(II) is not also then reportable by such Person on Schedule
13D (or any comparable or successor report then in effect)
under the Exchange Act; or
(C) the right to dispose of pursuant to any written
or oral agreement, arrangement or understanding (other than
customary agreements with and among underwriters and selling
group members with respect to a bona fide public offering of
securities); or
(iii) are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has
-3-
any written or oral agreement, arrangement or understanding (other than
customary agreements with and among underwriters and selling group
members with respect to a bona fide public offering of securities) for
the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso to item (B) of subparagraph (ii) of the
first paragraph of this definition) or disposing of any securities of
the Company.
Notwithstanding the first paragraph of this definition, no
director or officer of the Company shall be deemed to be the "Beneficial Owner"
of, or to "Beneficially Own," shares of Common Stock or other securities of the
Company beneficially owned by any other director or officer of the Company
solely as a result of his or her being a director or officer of the Company.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00
P.M., Eastern time, on such date or, if such date is not a Business Day, then
5:00 P.M., Eastern time, on the next succeeding Business Day.
(h) "Common Stock," when used with reference to the Company,
shall mean the Common Stock, no par value, of the Company. "Common Stock," when
used with reference to any Person other than the Company, shall mean the capital
stock with the greatest voting power (or the other equity securities or equity
interests having the power to control or direct management) of such Person or,
if such Person is a Subsidiary of another Person, of the Person which ultimately
controls such first-mentioned Person and which has issued and outstanding such
capital stock, equity securities or equity interests.
(i) "Distribution Date" shall have the meaning set forth in
Section 3(a).
(j) "Equivalent Preferred Shares" shall have the meaning set
forth in Section 11(b).
(k) "Exchange Act" shall mean the Securities Exchange Act of
1934, as in effect on the date of this Agreement.
-4-
(l) "Exchange Rate" shall have the meaning set forth in
Section 24(a).
(m) "Exempt Persons" shall have the meaning set forth in the
definition of "Acquiring Person."
(n) "Exercise Price" shall have the meaning set forth in
Section 7(b).
(o) "Fair Market Value" shall have the meaning and be
determined as set forth in Section 11(d).
(p) "Final Expiration Date" shall have the meaning set forth
in Section 7(a).
(q) "Interested Shareholder" shall mean any Restricted Person
or any Affiliate or Associate of any other Person in which such Restricted
Person has an interest, or any Person acting, directly or indirectly, on behalf
of or in concert with any such Restricted Person.
(r) "NASDAQ" shall have the meaning set forth in Section 9(c).
(s) "Person" shall mean any individual, firm, corpora tion,
partnership or other entity, and shall include any succes sor (by merger or
otherwise) of any of the foregoing.
(t) "Preferred Shares" shall mean the Series A Junior
Participating Preferred Stock of the Preferred Stock, which series shall have
the powers, preferences and other rights set forth in the Articles of Amendment
to the Company's Restated Articles of Incorporation attached to this Agreement
as Exhibit A.
(u) "Preferred Stock," when used with reference to the
Company, shall mean the Preferred Stock, no par value, of the Company.
(v) "Principal Party" shall have the meaning set forth in
Section 13(d).
(w) "Record Date" shall have the meaning set forth in the second
recital clause of this Agreement.
(x) "Redemption Date" shall have the meaning set forth
in Section 7(a).
(y) "Redemption Price" shall have the meaning set forth
in Section 23(a).
-5-
(z) "Restricted Person" shall mean an Acquiring Person, an
Adverse Person or any Affiliate or Associate of an Acquiring Person or an
Adverse Person.
(aa) "Rights" shall have the meaning set forth in the second
recital clause of this Agreement.
(bb) "Rights Certificates" shall mean the certificates
evidencing the Rights after the Distribution Date.
(cc) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii).
(dd) "Section 13 Event" shall mean any transaction described
in Section 13(a).
(ee) "Securities Act" shall mean the Securities Act of 1933,
as amended from time to time.
(ff) "Security" shall have the meaning set forth in
Section 11(d).
(gg) "Share Acquisition Date" shall mean the first date on
which there shall be a public announcement (which shall include, without
limitation, any press release or publicly available filing with the Securities
and Exchange Commission or any other federal or state governmental authority or
agency) by the Company or an Acquiring Person that an Acquiring Person has
become such.
(hh) "Stock" shall have the meaning set forth in
Section 11(d).
(ii) "Subsidiary" of any Person shall mean any corporation or
other entity of which securities having a majority of the voting power (or other
equity securities or equity interests having the power to control or direct
management) are owned, directly or indirectly, by such Person.
(jj) "Summary of Rights" shall mean the Summary of Rights to
Purchase shares of Series A Junior Participating Preferred Stock in
substantially the form attached hereto as Exhibit C.
(kk) "Trading Day" shall have the meaning set forth in Section
11(d)(i).
(ll) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
-6-
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 (which holders, as provided in Section 3, shall, prior to the
Distribution Date, also be the holders of the Common Stock of the Company) in
accordance with the terms and conditions of this Agreement. 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. In the event the Company
appoints one or more Co- Rights Agents, the respective obligations and duties of
the Rights Agent and of any Co-Rights Agent shall be as the Company shall
specify in writing.
Section 3. Issuance of Rights Certificates. (a) Until the
earliest of (i) the Close of Business on the 10th Business Day after the Share
Acquisition Date (or, if the Share Acquisition Date shall have occurred prior to
the Record Date, the Close of Business on the 10th Business Day after the Record
Date), (ii) the Close of Business on the 10th Business Day (or, anything in
Section 27 to the contrary notwithstanding, such other Business Day as may be
determined by action of the Board prior to the occurrence of any Section
11(a)(ii) Event) after the date of the commencement by any Person (other than an
Exempt Person) of, or the first public announcement of the intention of any
Person (other than an Exempt Person) to commence, a tender or exchange offer if,
upon the consummation thereof, such Person would be the Beneficial Owner of 15%
or more of the shares of Common Stock of the Company then outstanding or (iii)
the Close of Business on the 10th Business Day after at least a majority of the
members of the Board who are not officers of the Company shall have determined,
pursuant to the criteria set forth in Section 11(a)(ii)(B), that any Person is
an Adverse Person, including any such date which is after the date of this
Agreement and prior to the date of issuance of the Rights (the earliest of the
dates specified clauses (i), (ii) and (iii) being hereinafter called the
"Distribution Date"), the Rights shall be evidenced and be transferable only as
provided in Section 3(b). As soon as practicable after the Distribution Date or,
in the case of any shares of Common Stock of the Company which are issued or
otherwise become outstanding after the Distribution Date and prior to the
earlier of the Redemption Date and the Final Expiration Date, including any
shares of Common Stock issued by reason of the exercise of any option, warrant,
right (other than the Rights) or conversion or exchange privilege contained in
any option, warrant, right (other than the Rights) or convertible or
exchangeable security issued by the Company prior to the Distri bution Date,
unless the Board shall have expressly provided to the contrary at the time of
issuance of any such option, warrant, right or convertible or exchangeable
security, simultaneously
-7-
with the issuance of stock certificates for such shares of Common Stock, the
Company shall prepare and execute, the Rights Agent shall countersign and the
Company shall deliver or cause to be delivered (or the Rights Agent shall, if
requested, deliver), by first-class mail, postage prepaid, to each record holder
of shares of Common Stock of the Company as of the Close of Business on the
Distribution Date or, in the case of shares of Common Stock issued or otherwise
becoming outstanding after the Distribution Date (unless otherwise provided with
respect thereto as aforesaid), to each record holder of the shares of Common
Stock so being issued or becoming outstanding at the time of such occurrence, at
its last address shown on the registry books of the transfer agent for the
Common Stock of the Company, one or more Rights Certificates evidencing one
Right for each share of Common Stock of the Company so held, issued or becoming
outstanding. As of and after the Distribution Date, the Rights shall be
evidenced solely by the Rights Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company shall send a copy of the Summary of Rights, by first-class mail,
postage prepaid, to each record holder of shares of Common Stock of the Company
as of the Close of Business on the Record Date, at its last address shown on the
registry books of the transfer agent for the Common Stock of the Company. Until
the Distribution Date: no Rights Certificates shall be issued; each stock
certificate for shares of Common Stock of the Company outstanding as of the
Record Date, until the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date, shall be deemed also to constitute a certificate
for the Rights associated with the shares represented thereby, together with a
copy of the Summary of Rights attached thereto; and the registered holder of
such shares shall also be the registered holder of the associated Rights. Until
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, the surrender for transfer of any such stock certificate, with
or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the shares of Common Stock
represented thereby.
(c) Any stock certificate for shares of Common Stock of the
Company which shall be delivered by or on behalf of the Company (including,
without limitation, stock certificates for shares of Common Stock which are
reacquired by the Company and then transferred) after the Record Date and prior
to the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date shall have impressed, printed or written thereon, or otherwise
affixed thereto, the following legend:
-8-
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Shareholders Rights
Agreement dated as of December 18, 1996 (the "Rights Agreement")
between MidAmerican Energy Holdings Company (the "Company") and
Continental Stock Transfer & Trust Company, as Rights Agent, the terms,
provisions and conditions of which are incorporated herein by reference
and made a part hereof. The Rights Agreement is on file at the
principal office of the Company and the principal office of such Rights
Agent, and the Company will mail to the holder of this certificate a
copy thereof without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Rights (i) may be
redeemed at a redemption price (subject to adjustment) of $.01 per
Right or (ii) under certain circumstances, may be exchanged, in whole
or in part, for shares of Common Stock of the Company at an exchange
rate (subject to adjustment) of one share of Common Stock per Right,
all as set forth in the Rights Agreement. Under certain circumstances,
as set forth in the Rights Agreement, Rights Beneficially Owned by a
Restricted Person (as such terms are defined in the Rights Agreement),
or by specified transferees from a Restricted Person, shall be or
become void."
Each stock certificate containing the foregoing legend, until the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date, shall
be deemed also to constitute a certificate for the Rights associated with the
shares represented thereby, and the registered holder of such shares shall also
be the registered holder of the associated Rights. Until the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date, the
surrender for transfer of any such stock certificate shall also constitute the
transfer of the Rights associated with the shares of Common Stock represented
thereby. The omission of the foregoing legend shall not in any manner whatsoever
affect the application or interpretation of Section 7(d).
(d) In the event that the Company shall reacquire any shares
of its Common Stock after the Record Date and prior to the Distribution Date,
the Rights associated with such shares shall be deemed cancelled and retired,
the Company not being entitled to exercise any Rights associated with shares of
its Common Stock which are no longer outstanding.
-9-
Section 4. Form of Rights Certificates. (a) The Rights
Certificates (including the Form of Election to Purchase and Certification of
Status and the Form of Assignment and Cer tification of Status to be set forth
on the reverse side thereof) shall be in substantially the form attached hereto
as Exhibit B and may have such marks of identification or designation and such
legends, summaries or endorsements set forth thereon as the Company may deem
appropriate and are not inconsistent with the provisions of this Agreement, or
as may be required to conform to customary practice or to comply with any
applicable law or 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. Subject to Sections 11 and 22, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date (or, in the case of Rights
with respect to shares of Common Stock issued or becoming outstanding after the
Record Date, the same date as the stock certificate evidencing such shares),
shall (if the Company shall so require) indicate the date of countersignature by
the Rights Agent and shall entitle the holders thereof to purchase such number
of one one-hundredths of a Preferred Share at the Exercise Price as shall be set
forth therein, but the number of such one one-hundredths of a Preferred Share
and the Exercise Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 that represents Rights Beneficially Owned by: (i) a Restricted
Person, (ii) a transferee from a Restricted Person who becomes a transferee
after the Acquiring Person or Adverse Person becomes such or (iii) a transferee
from a Restricted Person who becomes a transferee prior to or concurrently with
the Acquiring Person or Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from such
Acquiring Person or Adverse Person (or any Affiliate or Associate thereof) to
holders of equity interests in such Acquiring Person or Adverse Person (or any
such Affiliate or Associate) or to any Person with whom such Acquiring Person or
Adverse Person (or any such Affiliate or Associate) has any continuing written
or oral agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Board has determined is part of a plan, arrangement
or understanding which has as a primary purpose or effect the avoidance of
Section 7(d), and any Rights Certificate issued pursuant to Section 6, 11 or 22
upon the transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall have deleted therefrom the
second sentence of the legend on the Form of Rights Certificate attached hereto
as Exhibit B and, in lieu thereof, shall contain the following two sentences:
-10-
"The Rights represented by this Rights Certificate are or were
Beneficially Owned by a Restricted Person (as such term is defined in
such Agreement). This Rights Certificate and the Rights represented
hereby shall be or become void under the circumstances specified in
Section 7(d) of such Agreement."
The Company shall give prompt written notice to the Rights Agent after becoming
aware of the existence and identity of any Restricted Person. The failure to
insert the foregoing sentences on any such Rights Certificate or any defect
therein shall not in any manner whatsoever affect the application or
interpretation of Section 7(d). The Company shall specify to the Rights Agent in
writing which Rights Certificates are to be so legended.
Section 5. Countersignature and Registration. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President, any of its Vice Presi dents, its Treasurer or its
Secretary, either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by an authorized signatory of the Rights Agent
and shall not be valid or obligatory for any purpose unless so coun tersigned.
In case any officer of the Company who shall have executed any Rights
Certificate shall cease to be such officer of the Company before such Rights
Certificate shall have been countersigned by an authorized signatory of the
Rights Agent and issued and delivered by or on behalf of the Company, such
Rights Certificate, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by or on behalf of the Company with the same force and
effect as though the individual who executed such Rights Certificate had not
ceased to be such officer; and any Rights Certificate may be executed on behalf
of the Company may be attested by any individual who, at the actual date of such
execution or attestation, shall be a proper officer of the Company, although at
the date of execution of this Rights Agreement such person was not such an
officer.
(b) After the Distribution Date, the Rights Agent shall keep
or cause to be kept, at its principal office, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each Rights Certificate, the date of
each Rights Certificate and (if required by the Company) the date of
countersignature by the Rights Agent.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to Sections 4(b), 7(d)
-11-
and 14, at any time after the Close of Business on the Distribu tion Date and
prior to the Close of Business on the earlier of the Redemption Date and the
Final Expiration Date, any Rights Certificate (other than any Rights Certificate
which shall have been exchanged pursuant to Section 24) may be transferred,
split up, combined or exchanged for one or more other Rights Certificates,
entitling the registered holder to purchase the same number of one
one-hundredths of a Preferred Share (or after a Triggering Event, the
securities, cash and other property purchasable in lieu thereof) as the Rights
Certificate or Rights Certificates surrendered entitled such registered holder
to purchase. Any registered holder desiring to transfer, split up, combine or
exchange one or more Rights Certificates shall make such request in a writing
delivered to the Rights Agent, and shall surrender the Rights Certificates to be
transferred, split up, combined or exchanged, with the Form of Assignment and
Certification of Status on the reverse side thereof duly executed, together with
such signature guarantees and other documentation as the Rights Agent may
reasonably request, at the principal office of the Rights Agent. Thereupon the
Company shall prepare and execute, the Rights Agent shall countersign and the
Company shall deliver or cause to be delivered (or the Rights Agent shall, if
requested, deliver) to the Person entitled thereto one or more Rights
Certificates as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights Certif
icates and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them or, in the
case of mutilation, upon surrender to the Rights Agent of the mutilated Rights
Certificate, and, at the Company's request, reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, the Company shall
prepare and execute, the Rights Agent shall countersign and the Company shall
deliver or cause to be delivered (or the Rights Agent shall, if requested,
deliver) to the registered holder thereof a new Rights Certificate of like tenor
in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expira tion
Date of Rights. (a) Subject to Section 7(d), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein),
-12-
in whole or in part, at any time after the Distribution Date and prior to the
earliest of (i) the Close of Business on December 30, 2006 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 (the "Redemption Date") and (iii) the time at which such Rights are
exchanged as provided in Section 24, upon surrender of such Rights Certificate,
with the Form of Election to Purchase and Certification of Status on the reverse
side thereof duly executed, together with such signature guarantees and other
documentation as the Rights Agent may reasonably request, to the Rights Agent at
its principal office, accompanied by payment (as provided in subsection (c) of
this Section 7) of the Exercise Price for each one one-hundredth of a Preferred
Share (or after a Triggering Event, the securities, cash and other property
purchasable in lieu thereof) as to which the surrendered Rights are then being
exercised.
(b) The price (the "Exercise Price") for each one
one-hundredth of a Preferred Share purchased upon exercise of the Rights shall
initially be $50.00, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 and shall be payable in lawful money of the
United States of America in accordance with subsection (c) of this Section 7.
(c) Upon receipt of a Rights Certificate representing then
exercisable Rights, with the Form of Election to Purchase and Certification of
Status on the reverse side thereof duly executed, together with such signature
guarantees and other documentation as the Rights Agent may reasonably request,
accom panied by payment of the Exercise Price for the number of one
one-hundredths of a Preferred Share (or after a Triggering Event, the
securities, cash and other property purchasable in lieu thereof) being
purchased, plus the amount of any applicable transfer tax (as determined by the
Rights Agent) required to be paid by the holder of such Rights Certificate in
accordance with Section 9, by certified or cashier's check or money order
payable to the order of the Company, the Rights Agent shall, subject to the
terms and conditions of this Agreement, thereupon promptly (i) requisition from
any transfer agent for the Preferred Shares (or, if the Rights Agent is such a
transfer agent, make available) stock certificates for the number of one
one-hundredths of a Preferred Share being purchased, the Company hereby
irrevocably authorizing any such transfer agent to comply with all such
requests, (ii) if the Company shall have elected that the Preferred Shares
issuable upon exercise of the Rights shall be held by a depository agent,
requisition from the depository agent depository receipts for the number of one
one-hundredths of a Preferred Share being purchased (in which case stock
certificates for the Preferred Shares represented by such depository receipts
shall be deposited by the transfer agent for
-13-
the Preferred Shares with the depository agent), the Company hereby irrevocably
authorizing any such depository agent to comply with all such requests, (iii)
after a Triggering Event, requisition or obtain from the appropriate Person or
Persons such securities, cash and other property as may then be purchasable in
lieu of Preferred Shares, the Company hereby irrevocably authorizing all such
requests, (iv) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of the issuance of any fractional share in accordance with
Section 14 and (v) promptly after receipt of such stock certificates, depository
receipts, securities, cash and/or other property, cause the same to be delivered
to or upon the order of the registered holder of such Rights Certificate,
registered (when appropriate) in such name or names as may be designated by such
registered holder.
(d) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of any Section 11(a)(ii) Event,
any Rights Beneficially Owned by: (i) a Restricted Person, (ii) a transferee
from a Restricted Person who becomes a transferee after the Acquiring Person or
Adverse Person becomes such or (iii) a transferee from a Restricted Person who
becomes a transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from such Acquiring Person or
Adverse Person (or any Affiliate or Associate thereof) to holders of equity
interests in such Acquiring Person or Adverse Person (or any such Associate or
Affiliate) or to any Person with whom such Acquiring Person or Adverse Person
(or any such Associate or Affiliate) has any continuing written or oral
agreement, arrangement or understanding regarding the transferred Rights or (B)
a transfer which the Board has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(d) shall be or become void without any further action; and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise, from and after such
first occurrence. The Company shall use all reasonable efforts to ensure that
the provisions of this Section 7(d) and Section 4(b) are complied with, but
shall have no liability to any holder of a Rights Certificate or to any other
Person as a result of the Company's failure to make any applicable finding or
determination with respect to any Restricted Person, or any transferee
therefrom.
(e) Notwithstanding subsection (a) of this Section 7, a Right
may be exercised by the holder thereof on or after the Distribution Date and
prior to the receipt of the associated Rights Certificate by notifying the
Rights Agent in writing and
-14-
furnishing to the Rights Agent such information and evidence as to such election
as the Rights Agent may reasonably request; pro vided, however, that the Rights
Agent shall not be required to take any of the actions specified in subsection
(c) of this Sec tion 7 until such holder shall have fully satisfied the
applicable requirements specified therein.
(f) Neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to any Rights or Rights
Certificate upon the purported exercise or transfer there of unless the
registered holder thereof shall have (i) completed and signed the Certification
of Status following the Form of Election to Purchase or the Form of Assignment,
as the case may be, set forth on the reverse side of the Rights Certificate
surrendered for such exercise or transfer and (ii) provided such additional
evidence as to the identity of the Beneficial Owner (or former Beneficial Owner)
thereof or the Affiliates or Associates thereof as the Company shall reasonably
request.
(g) In case the registered holder of any Rights Certi ficate
shall exercise less than all of the Rights evidenced thereby, then, subject to
the provisions of Section 14, a new Rights Certificate evidencing the Rights
remaining unexercised shall be prepared and executed by the Company and
countersigned and delivered by the Rights Agent to the registered holder of such
surrendered Rights Certificate or to such registered holder's duly authorized
assigns.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the pur pose 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 Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation, and the Rights Agent shall cancel, any other Rights Certificate
purchased or reacquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates and de liver a certificate of the destruction thereof to the
Company.
Section 9. Reservation and Availability of Preferred Shares.
(a) The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares, or any authorized
and issued Preferred Shares held in its treasury, the number of Preferred Shares
-15-
required to permit the exercise in full of all outstanding Rights.
(b) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares delivered
upon exercise of the Rights shall, at the time of delivery of the stock
certificates therefor in accordance with Section 7(c) (including the receipt of
payment of the Exercise Price), be duly and validly authorized and issued and
fully paid and nonassessable.
(c) The Company covenants and agrees that it will use its best
efforts to cause, from and after such time as the Rights shall become
exercisable, all Preferred Shares issued or reserved for issuance to be listed,
upon official notice of issuance, on the principal national securities exchange,
if any, on which its Common Stock is listed or, if the principal market for
Common Stock is not on any national securities exchange, to be eligible for
quotation on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or any successor thereto or other comparable quotation system.
(d) The Company covenants and agrees that it will use its best
efforts to (i) file, as soon as practicable after the occurrence of any Section
11(a)(ii) Event for which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iv),
or as soon as required by law after the Distribution Date, as the case may be, a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (ii) cause
such registration statement to become effective as soon as practicable after
such filing and (iii) cause such registration statement to remain effective
(with a prospectus which at all times meets the requirements of the Securities
Act) until the earliest of (A) the date as of which the Rights are no longer
exercisable for such securities, (B) the Redemption Date and (C) the Final
Expiration Date. The Company further covenants and agrees that it will take such
action as may be appropriate under, and which will ensure compliance with, the
securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate in connection with the exercisability of the Rights. The Company may
temporarily suspend, for not more than 90 days after the applicable date
specified in the first sentence of this subsection (d), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective and to complete such securities or "blue sky" law action.
Upon such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, and the Company
shall also issue
-16-
a public announcement at such time as the suspension shall no longer be in
effect. Failure of the Company to notify the Rights Agent of any such suspension
shall not affect the effectiveness thereof. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification or exemption in such
jurisdiction shall have been effected. Until otherwise notified in writing by
the Company, the Rights Agent may assume that each purported exercise of the
Rights is permitted by this Agreement and by applicable law, and the Rights
Agent shall not be liable for acting in reliance upon such assumption.
(e) The Company covenants and agrees that, subject to Section
6, it will pay when due and payable any and all federal and state original issue
or transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights or the Rights Certificates or of any stock certificate
for Preferred Shares issued upon exercise of the 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 any Rights Certificate to a Person other than, or
the issuance of any stock certificate for Preferred Shares upon exercise of any
of the Rights represented by such Rights Certificate in a name other than, the
registered holder of such Rights Certificate or to issue or deliver any Rights
Certificate or stock certificate for Preferred Shares upon such transfer or
exercise until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender thereof) or until
it has been established to the Company's reasonable satisfaction that no such
tax is due.
(f) After a Triggering Event, the provisions of this Section 9
shall apply, to the extent applicable and appropriate, to all shares of capital
stock and other securities then purchasable upon exercise of the Rights.
Section 10. Record Date of Preferred Share Ownership. The
Person in whose name any stock certificate for Preferred Shares (or Common Stock
and/or other securities, as the case may be) is issued upon exercise of any of
the Rights shall for all purposes be deemed to have become the holder of record
of the Preferred Shares (or Common Stock and/or other securities, as the case
may be) represented thereby on, and such stock certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered to the Rights Agent with proper payment of the Exercise Price (and
all applicable transfer taxes, if any); provided, however, that if the date of
such surrender and payment shall be a date upon which the registry books of the
transfer agent for the Preferred Shares (or
-17-
Common Stock and/or other securities, as the case may be) are closed, such
Person shall be deemed to have become the record holder of such Preferred Shares
(or Common Stock and/or other securities, as the case may be) on, and such stock
certificate shall be dated, the next succeeding Business Day on which such
registry books are open.
Section 11. Adjustment of Exercise Price, Number and Kind of
Shares and Number of Rights. The Exercise Price, the number and kind of shares
of capital stock for which each Right is exercisable 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 that the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares into
a greater number of Preferred Shares, (C) combine or consolidate the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D) issue any
shares of capital stock of any class in a reclassification of the Preferred
Shares (including any such reclassification in connection with a combination or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and in Section 7(d), the Exercise
Price in effect at the Close of Business on the record date for such dividend or
at the effective time of such subdivision, combination, consolidation or
reclassification, and the number and kind of shares of capital stock issuable
upon exercise of the Rights at such date or time, shall be proportionately
adjusted so that the registered holder of each Right exercised after such date
or 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 or time and at a time when the registry books of the transfer agent for the
Preferred Shares were open, such registered holder would have been entitled to
receive by reason of such dividend, subdivision, combination, consolidation 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 the exercise thereof.
If an event shall occur which would require an adjustment under both this
paragraph (i) and paragraph (ii) of this subsection (a), the adjustment provided
for in this paragraph (i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to such paragraph (ii).
(ii) Subject to Section 24, in the event that:
-18-
(A) any Person, either alone or together with its
Affiliates and Associates, shall become an Acquiring Person; or
(B) at least a majority of the members of the Board
who are not officers of the Company shall declare any Person to be an
Adverse Person after (I) a determination by such directors that such
Person, either alone or together with its Affiliates and Associates,
has become the Beneficial Owner of 10% or more of the outstanding
shares of Common Stock of the Company and (II) a determination by such
directors, after reasonable inquiry and investigation, including such
consultation, if any, with such Person as such directors shall deem
appropriate, that (x) such Beneficial Ownership by such Person is
intended to cause, is reasonably likely to cause or will cause the
Company to repurchase the shares of Common Stock Beneficially Owned by
such Person (and/or its Affiliates and Associates) or the Company to
take other action or enter into one or a series of related transactions
which would provide such Person (and/or its Affiliates and Associates)
with short-term financial gain under circumstances which, at the time
of taking such other action or entering into any such transaction,
would not, in the judgment of such directors, be in the best long-term
interests of the Company and its shareholders, but for the actions and
possible actions of such Person, (and/or its Affiliates and Associates)
or (y) such Beneficial Ownership is having or reasonably likely to have
a material adverse effect (including, but not limited to, impairment of
the Company's relationships with customers or its ability to maintain
its competitive position) on the business or prospects of the Company;
provided, however, that such directors may determine not to declare a
Person to be an Adverse Person if, prior to the time that such Person
acquired 10% or more of the then outstanding shares of Common Stock of
the Company, such Person provides a written statement of its purposes
and intentions in connection with its proposed acquisition of such
shares of Common Stock, together with any other information reasonably
requested of such Person by such directors, and such directors, based
on such written statement and information and such further inquiry and
investigation as such directors shall deem necessary or appropriate,
notify such Person in writing that such Person will not then be
declared to be an Adverse Person; and provided, further, that such
directors may expressly condition in any manner their determination not
to declare a Person to be an Adverse Person in such respects as they
deem appropriate, including, without limitation, such Person's not
acquiring more than a specified amount or percentage of the Company's
then outstanding capital stock or other securities and/or such Person's
not taking actions
-19-
inconsistent with the purposes and intentions disclosed in its written
statement provided to the Board; then, in each such case and promptly
following such occurrence, proper provision shall be made so that the
registered holder of each Right, except as otherwise provided in
Section 7(d), shall thereafter have the right to receive, upon exercise
thereof and payment of an amount equal to the product determined by
multiplying the then current Exercise Price by the number of one
one-hundredths of a Preferred Share for which such Right was
exercisable immediately prior to such occurrence, in accordance with
this Agreement, in lieu of Preferred Shares, the number of shares of
Common Stock determined dividing such product by 50% of the Fair Market
Value (determined as provided in subsection (d) of this Section 11) of
one share of Common Stock on the date of such occurrence.
(iii) No delay or failure by at least a majority of the
members of the Board who are not officers of the Company to declare any Person
to be an Adverse Person shall in any way waive or otherwise affect the power of
such directors thereafter to declare such Person to be an Adverse Person. In the
event that at least a majority of such directors should at any time determine,
after reasonable inquiry and investigation, including such consultation, if any,
with such Person as such directors shall deem necessary or appropriate, that
such Person has not met or complied with any condition specified by such
directors, such directors may at any time thereafter declare such Person to be
an Adverse Person.
(iv) In the event that there shall not be sufficient
authorized and unissued or treasury shares of Common Stock to permit the
exercise in full of the Rights in accordance with paragraph (ii) of this
subsection (a), the Company shall take all necessary action to authorize and
reserve for issuance such number of additional shares of Common Stock as may
from time to time be required to be issued upon the exercise in full of all
outstanding Rights and, if necessary, shall use its best efforts to obtain
shareholder approval thereof. Notwithstanding the preceding sentence, if at
least a majority of the members of the Board shall determine that such action is
necessary or appropriate and is not contrary to the best interests of the
holders of the Rights, such directors may cause the Company, in lieu of issuing
shares of Common Stock in accordance with such paragraph (ii), to distribute, or
if a sufficient number of shares of Common Stock cannot be issued for such
purpose in accordance with the provisions hereof, the Company shall distribute,
upon the exercise of each Right, cash, debt securities, Preferred Shares, other
shares of Preferred Stock, other property or any combination thereof having an
aggregate
-ββ-
ββββ ββββββ Value (determined as provided in subsection (d) of this Section 11)
equal to the Fair Market Value (as so determined) of the number of shares of
Common Stock which otherwise would have been issuable pursuant to such paragraph
(ii). Any such decision by a majority of the members of the Board must be made
and publicly announced within 30 days after the occurrence of any Section
11(a)(ii) Event.
(b) In the event that the Company shall fix a record date for
the making of any distribution to all registered holders of Preferred Shares of
options, warrants or rights entitling them (for a period expiring not later than
45 calendar days after such record date) to subscribe for or purchase Preferred
Shares (or shares of capital stock of any class of the Company having the same
(or more favorable) powers, preferences and rights as the Preferred Shares
("Equivalent Preferred Shares"), or securities convertible into or exchangeable
for Preferred Shares or Equivalent Preferred Shares, at a price per Preferred
Share or per Equivalent Preferred Share (or having a conversion or exchange
price per share, in the case of securities convertible into or exchangeable for
Preferred Shares or Equivalent Preferred Shares) less than the Fair Market Value
(determined as provided in subsection (d) of this Section 11) of one Preferred
Share on such record date, the Exercise Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Preferred Shares outstanding on such record date, plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or Equivalent Preferred Shares so to be offered (and/or the
aggregate initial conversion or exchange price, in the case of convertible or
exchangeable securities so to be offered) would purchase at such Fair Market
Value, and the denominator of which shall be the number of Preferred Shares
outstanding on such record date, plus the total number of Preferred Shares
and/or Equivalent Preferred Shares so to be offered (and/or into or for which
the convertible or exchangeable securities so to be offered are initially
convertible or exchangeable); provided, however, that in no event shall the con
sideration 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 the
exercise thereof. In case all or part of such subscription price may be paid in
a form other than cash, the value of such non-cash consideration shall be its
Fair Market Value (determined as provided in such subsection (d)). Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any computation provided for in this subsection
(b). The adjustment required by this subsection (b) shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so
-21-
made, the Exercise Price shall be adjusted to the Exercise Price which would
have been in effect if such record date had not been fixed.
(c) In the event that the Company shall fix a record date for
the making of any distribution to all registered holders of Preferred Shares
(including any such distribution made in connection with a combination or merger
in which the Company is the continuing or surviving corporation) of cash (other
than a regular quarterly cash dividend), options, warrants, rights (other than
those referred to in subsection (b) of this Section 11), securities, evidences
of indebtedness or other property (excluding any dividend payable in Preferred
Shares, but including any dividend payable in other shares of capital stock),
the Exercise Price to be in effect after such record date shall be determined by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Fair Market Value (determined
as provided in subsection (d) of this Section 11) of one one-hundredth of a
Preferred Share on such record date, less the Fair Market Value (as so
determined) of the cash, options, warrants, rights, securities, evidences of
indebtedness or other property so to be distributed and properly attributable to
one one-hundredth of a Preferred Share, and the denominator of which shall be
such Fair Market Value of one one-hundredth of a Preferred Share; 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 the exercise thereof. The adjustment required by
this subsection (c) shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Exercise
Price shall be adjusted to the Exercise Price which would have been in effect if
such record date had not been fixed.
(d) For the purpose of any computation required under this
Agreement, "Fair Market Value," when used with respect to Preferred Shares or
shares of Common Stock or other capital stock of any class (collectively, a
"Stock"), to any option, warrant, right or other security or evidence of
indebtedness (collectively, a "Security") or to any other property, shall be
determined as provided in this subsection (d):
(i) In the case of any Stock or Security which is publicly
traded, the Fair Market Value on any date shall be deemed to be the
average of the daily closing prices per share of such Stock or per unit
of such Security for the 30 consecutive Trading Days immediately prior
to such date; provided, however, that in the event that the Fair Market
Value per share of any Stock is determined during a period
-22-
commencing after the public announcement by its issuer of (A) a
dividend or distribution on such Stock payable in shares of such Stock
or securities convertible into or exchangeable for shares of such Stock
or (B) a subdivision, combination, consolidation or reclassification of
such Stock, and ending prior to the expiration of the 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination, consolidation or
reclassification, then, in each such case, the Fair Market Value of
such Stock shall be properly adjusted to take into account
"ex-dividend" trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale shall take 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 such Stock or Security is
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 or admitted to trading on the
principal national securities exchange on which such Stock or Security
is listed or admitted to trading; or if such Stock or Security is not
listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the last quoted
high bid and low asked prices in the over-the-counter market, as
reported by NASDAQ or any other similar system then in use; or if on
any such day no bid for such Stock or Security is 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 such Stock
or Security selected by the Board. If during any relevant period no
market maker is making a market in such Stock or Security, its Fair
Market Value on a specified date shall be determined reasonably and
with utmost good faith to the holders of the Rights by the Board;
provided, however, that if at the time of such determination there
shall be an Acquiring Person or an Adverse Person, the Fair Market
Value of such Stock or Security on such date shall be determined by a
nationally recognized investment banking firm selected by the Board,
which determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Company, the Rights Agent and
the holders of the Rights. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which such Stock or
Security is listed or admitted to trading is open for the transaction
of business or, if such Stock or Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
-23-
(ii) In the case of any Stock or Security which is not
publicly traded, the Fair Market Value on any date shall be the fair
value per share of such Stock or per unit of such Security as
determined reasonably and with utmost good faith to the holders of the
Rights by the Board; provided, however, that if at the time of such
determination there shall be an Acquiring Person or an Adverse Person,
the Fair Market Value of such Stock or Security on such date shall be
determined by a nationally recognized investment banking firm selected
by the Board, which determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Company, the
Rights Agent and the holders of the Rights.
(iii) In the case of any property which is not a Stock or a
Security, the Fair Market Value on any date shall be determined
reasonably and with utmost good faith to the holders of Rights by the
Board; provided, however, that if at the time of such determination
there shall be an Acquiring Person or an Adverse Person, the Fair
Market Value of such property on such date shall be determined by a
nationally recognized investment banking firm selected by the Board,
which determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Company, the Rights Agent and
the holders of the Rights.
(e) No adjustment in the Exercise Price shall be re quired
unless such adjustment would require an increase or de crease of at least 1% in
the Exercise Price then in effect; provided, however, that any adjustments which
by reason of this subsection (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 whole cent, to the nearest
one ten-thousandth of a share of Common Stock or other capital stock of any
class (other than Preferred Shares) or to the nearest one one-millionth of a
Preferred Share, as the case may be. Notwithstanding the first sentence of this
subsection (e), any adjustment required by this Section 11 shall be made no
later than the earliest of (i) three years after the date of the occurrence
requiring such adjustment, (ii) the Redemption Date and (iii) the Final
Expiration Date.
(f) If as a result of an adjustment required by any Triggering
Event the holder of any Rights thereafter exercised shall become entitled to
receive any shares of capital stock of any class of the Company (other than
Preferred Shares), the number of such other shares so receivable upon exercise
of any Rights shall be subject to adjustment from time to time in a man ner and
on terms as nearly equivalent as reasonably possible to
-24-
the provisions with respect to the Preferred Shares contained in this Section
11, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subse quent to
any adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-hundredths of a
Preferred Share 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 the option
provided in subsection (i) of this Section 11, upon each adjustment of the
Exercise Price as a result of the calculations required by subsection (b) or (c)
of this Section 11, each Right outstanding immediately prior to the making of
such Exercise Price adjustment shall thereafter evidence the right to purchase,
at the adjusted Exercise Price, the number of one one-hundredths of a Preferred
Share (calculated to the nearest one one- millionth) determined by (i)
multiplying the number of one one-hundredths of a Preferred Share purchasable
upon exercise of such Right immediately prior to such adjustment by the Exercise
Price in effect immediately prior to such adjustment and (ii) dividing the
product so obtained by the Exercise Price in effect immediately after such
adjustment.
(i) The Company may elect, on or after the date on which any
adjustment of the Exercise Price is required to be made hereunder, to adjust the
number of Rights outstanding in substitution for making an adjustment in the
number of one one-hundredths of a Preferred Share purchasable upon exercise of
each Right. Each Right outstanding after such an adjustment in the number of
Rights shall be exercisable for the same number of one one-hundredths of a
Preferred Share as such Right was exercisable for immediately prior to such
adjustment; but each Right held of record prior to such adjustment shall become
the number of Rights (calculated to the nearest one ten-thousandth) determined
by dividing the Exercise Price in effect immediately prior to the occurrence
requiring the adjustment of the Exercise Price by the Exercise Price in effect
immediately after such adjustment of the Exercise Price. The Company shall make
a prompt public announcement of its election to adjust the number of Rights
outstanding, indicating the record date for the adjustment and, if known at the
time of such announcement, the amount of the adjustment to be made. Such record
date may be the date on which the Exercise Price is required to be adjusted or
any day there after, unless the Rights Certificates shall have been issued, in
which case such record date shall be at least 10 days after the date of such
public announcement. If the Rights Certificates
-25-
shall have been issued, upon each adjustment of the number of Rights outstanding
pursuant to this subsection (i), the Company shall, as promptly as practicable,
cause to be distributed to each registered holder of the Rights Certificates on
such record date Rights Certificates evidencing, subject to Section 14, the
additional Rights to which such registered holder shall be entitled as a result
of such adjustment; or, at its option, the Company shall cause to be distributed
to each such registered holder, in substitution and replacement for the Rights
Certif icates held by such registered holder prior to the date of such
adjustment, but only upon surrender thereof (if so required by the Company), new
Rights Certificates evidencing all the Rights to which such registered holder
shall be entitled after such adjustment. Rights Certificates so distributed
shall be executed and countersigned in the manner provided in Section 5 (and may
designate, at the option of the Company, the adjusted Exercise Price) and shall
be registered in the names of the registered holders of the Rights Certificates
on the record date specified in the aforesaid public announcement.
(j) Irrespective of any adjustment or change in the Exercise
Price or the number of one one-hundredths of a Preferred Share issuable upon
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to designate the Exercise Price and the number of one
one-hundredths of a Preferred Share which were designated in the Rights
Certificates originally issued hereunder.
(k) Before taking any action which would cause an ad justment
reducing the Exercise Price below one one-hundredth of the then par value, if
any, of the Preferred 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 Preferred Shares at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require an
adjustment of the Exercise Price effective as of the record date for a
particular event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Rights exercised after such record date
of the Preferred Shares (and/or the other shares of capital stock, securities or
other property of the Company, if any) issuable upon such exercise in excess of
the Preferred Shares (and/or the other shares of capital stock, securities or
other property of the Company, if any) issuable upon such exercise on the basis
of the Exercise Price in effect immediately prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due ββββ
-26-
or other appropriate instrument evidencing such holder's right to receive such
excess upon the occurrence of such event.
(m) Anything in this Section 11 to the contrary not
withstanding, the Board shall be entitled to make reductions in the Exercise
Price, in addition to the adjustments expressly required by this Section 11, as
and to the extent that the Board, in its sole discretion, shall determine to be
advisable in order that any dividend on the Preferred Shares payable in
Preferred Shares, any subdivision, combination or consolidation of the Preferred
Shares (by reclassification or otherwise than by payment of dividends in
Preferred Shares) into a greater or lesser number of Preferred Shares, any
issuance of Preferred Shares solely for cash at less than the Fair Market Value
thereof, any issuance solely for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares or any
issuance of options, warrants, rights, securities, evidences of indebtedness or
other property subject to subsection (b) or (c) of this Section 11, hereafter
made by the Company to the holders of the Preferred Shares, shall not be taxable
to such holders.
(n) In the event that the Company shall at any time after the
date of this Agreement and prior to the Distribution Date (i) declare a dividend
on its outstanding shares of Common Stock payable in shares of Common Stock or
(ii) effect a subdivision, combination or consolidation of its outstanding
shares of Common Stock (by reclassification or otherwise than by payment of
dividends in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then, in each such case: (i) the number of one one-hundredths
of a Preferred Share purchasable after such event upon proper exercise of each
Right shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event; and (ii)
each share of Common Stock outstanding immediately after such event shall have
issued with respect to it the same number of Rights which each share of Common
Stock outstanding immediately prior to such event had issued with respect to it.
The adjustment required by this subsection (n) shall be made successively
whenever such a dividend is declared or such a subdivision, combination or
consolidation is effected.
(o) Except as permitted by Sections 23 and 27, the Company
covenants and agrees that, after the Distribution Date, it will not take, or
permit any of its Subsidiaries to take, any action if at the time such action
would be taken it is reasonably
-27-
foreseeable that such action would eliminate or substantially diminish the
benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Exercise Price or Number
of Shares. Whenever any adjustment shall be required by Sections 11 or 13, the
Company shall promptly (i) prepare a cer tificate setting forth such adjustment
and a brief statement of the facts requiring such adjustment, (ii) file with the
Rights Agent and with each transfer agent for the Preferred Shares or the Common
Stock of the Company a copy of such certificate and (iii) mail a brief summary
thereof to each registered holder of the Rights in accordance with Section 26.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment described therein and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) In the event that, on or after the occurrence of
any Section 11(a)(ii) Event, directly or indi rectly: (i) the Company shall
consolidate with, or merge with and into, any Interested Shareholder or, if in
such consolidation or merger all holders of the Common Stock of the Company are
not treated the same, any other Person (other than a wholly-owned Subsidiary of
the Company in a transaction not prohibited by Section 11(o)), so that the
Company shall not be the continuing or surviving corporation, (ii) any
Interested Shareholder or, if in such merger all holders of the Common Stock of
the Company are not treated the same, any other Person (other than a
wholly-owned Subsidiary of the Company in a transaction not prohibited by
Section 11(o)) shall merge with and into the Company, so that the Company shall
be the continuing or surviving corporation, and in connection with such merger
either (A) all or part of the outstanding shares of Common Stock of the Company
shall be converted or changed into or exchanged for capital stock or other
securities of any other Person (or the Company), cash and/or other property or
(B) such shares of Common Stock shall remain outstanding, unconverted and
unchanged, or (iii) the Company shall sell or otherwise transfer (or one or more
of its Subsid iaries shall sell or otherwise transfer), in one or a series of
related transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any Interested Shareholder or, if in such transaction or transactions the
holders of the Common Stock of the Company are not treated the same, any other
Person or Persons (other than the Company or one or more of its wholly-owned
Subsidiaries in one or more transactions, each of which is not prohibited by
Section 11(o)), then, in each such case, proper provision shall be made so that
(w) the registered holder of each
-28-
Right, except as otherwise provided in Section 7(d), shall thereafter have the
right to receive, upon exercise thereof and payment of an amount equal to the
product determined by multiplying the then current Exercise Price by the number
of one one-hundredths of a Preferred Share for which such Right is then
exercisable, in accordance with this Agreement, in lieu of Preferred Shares, the
number of freely tradable shares (which shall be duly authorized, validly
issued, fully paid and non-assessable) of Common Stock of the Principal Party
or, in the case of a merger described in clause (ii) of this sentence in which
the Common Stock of the Company shall remain outstanding, unconverted and
unchanged, of the Company, free and clear of all rights of call or first
refusal, liens, encumbrances or other adverse claims, determined by dividing
such product by 50% of the Fair Market Value (determined as provided in Section
11(d)) of the shares of Common Stock of such Principal Party (or, if
appropriate, the Company) on the date of consummation of such Section 13 Event;
(x) such Principal Party shall thereafter be liable for, and shall assume, by
reason of the consummation of such Section 13 Event, all the obligations and
duties of the Company under this Agreement; (y) the term "Company" shall there
after be deemed to refer to such Principal Party, it being spe cifically
intended that the provisions of Section 11 shall apply to such Principal Party;
and (z) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its shares of Common Stock to
permit exercise of all outstanding Rights in accordance with this subsection (a)
and the distribution of cash, debt securities, shares and other property in
accordance with Section 11(a)(iv))in connection with the consummation of such
Section 13 Event as may be necessary to assure that the provisions hereof shall
there after be applicable, as nearly as reasonably possible, in rela tion to the
shares of Common Stock thereafter deliverable upon exercise of the Rights.
(b) After the Distribution Date, the Company shall not
consolidate or merge with any other Person (other than a wholly-owned Subsidiary
of the Company in a transaction not prohibited by Section 11(o)), or sell or
otherwise transfer (or permit one or more of its Subsidiaries to sell or
otherwise transfer), in one or a series of related transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company or one or more of its wholly-owned Subsidiaries in one
or more transactions, each of which is not prohibited by Section 11(o)), if (i)
at the time of or immediately after the consummation of such transaction there
are any options, warrants, rights, conversion or exchange privileges or
securities outstanding or any written or oral agreements, arrangements or
understandings (including provisions
-29-
contained in the Company's Restated Articles of Incorporation or By-laws) in
effect which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights, or (ii) prior to, at the time of or immediately after the consummation
of such transaction the shareholders of the Person who constitutes, or would
constitute, the Principal Party for the purpose of subsection (a) of this
Section 13 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates or Associates.
(c) The Company shall not consummate any Section 13 Event
unless prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and (ii) the Company, the Principal Party and each other Person who
may become the Principal Party as a result of the consummation of such Section
13 Event shall have executed and delivered to the Rights Agent a supplemental
agreement providing (x) for the implementation of all the terms and conditions
set forth in this Section 13 and (y) that, as soon as practicable after the date
of such Section 13 Event, the Principal Party, at its own expense, shall:
(A) prepare and file a registration statement on an
appropriate form under the Securities Act with respect to the Rights
and the securities purchasable upon exercise thereof, and use its best
efforts to cause such registration statement to become effective as
soon as practicable after such filing and to remain effective (with a
prospectus which at all times meets the requirements of the Securities
Act) until the earliest of the date as of which the Rights are no
longer exercisable for such securities, the Redemption Date and the
Final Expiration Date;
(B) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise thereof under the
securities or "blue sky" laws of such jurisdictions as may be necessary
or appropriate in connection with the exercisability of the Rights;
(C) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise thereof on a
national securities exchange or to meet the eligibility requirements
for quotation on NASDAQ; and
(D) deliver to the registered holders of the Rights
historical financial statements for the Principal Party and
-30-
each of its Affiliates complying in all material respects with the
requirements for registration of securities on Form 10 under the
Exchange Act.
(d) "Principal Party" shall mean: in the case of any
transaction described in clause (i) or (ii) of subsection (a) of this Section
13, the Person which is the issuer of the securities into which shares of Common
Stock of the Company are being converted or changed in such transaction or, if
there shall be more than one such issuer, the issuer having shares of Common
Stock with the greatest aggregate market value; or if no securities are being
issued in such transaction for shares of Common Stock of the Company, the Person
which is the other party to such transaction or, if there shall be more than one
such Person, the Person having shares of Common Stock with the greatest
aggregate market value; and in the case of any transaction described in clause
(iii) of such subsection (a), the Person which is the party receiving the
greatest portion of the assets or earning power sold or otherwise transferred
pursuant to such transaction or transactions; provided, however, that in any
such case (i) if the shares of Common Stock of such Person shall not at the time
of the consummation of such transaction have been continuously registered under
Section 12 of the Exchange Act during the immediately preceding 12-month period,
and such Person shall be a direct or indirect Subsidiary or Affiliate of another
Person the shares of Common Stock of which shall have been so registered,
"Principal Party" shall mean such other Person; and (ii) if such Person shall be
a direct or indirect Subsidiary or Affiliate of more than one other Person, the
shares of Common Stock of two or more of which shall have been so registered,
"Principal Party" shall mean whichever of such other Persons shall have Common
Stock with the greatest aggregate market value; and (iii) if such Person shall
be owned, directly or indirectly, by a joint venture formed by two or more
Persons which are not owned, directly or indirectly, by the same Person, the
rules set forth in clauses (i) and (ii) of this proviso shall apply to each
chain of ownership of any joint venturer as though such joint venture were a
"Subsidiary" of all of such joint venturers, and the Principal Party in each
such chain shall bear the obligations and duties set forth in this Section 13 in
the same proportion as their direct or indirect ownership interest in such
Person bears to the total of such ownership interests.
(e) If, in the case of any transaction described in clause
(iii) of subsection (a) of this Section 13, the Person or Persons to whom assets
or earning power are sold or otherwise transferred are individuals, then, in
lieu of any other payment or distribution required by this Section 13, and the
Company shall require as a condition to such transaction that, such Person or
Persons shall pay to each holder of a Rights Certi ficate, upon its surrender to
the Rights Agent and in exchange therefor (without requiring any payment by such
holder), cash in the amount determined by multiplying the then current Exercise
Price by the number of one one-hundredths of a Preferred Share for which a Right
is then exercisable.
(f) In no event shall the Rights Agent have any obligations or
duties in respect of any Section 13 Event, except as expressly set forth in this
Agreement. The Rights Agent may rely, and shall be fully protected in relying
upon, a certificate of the Company stating that the provisions of this Section
13 have been fulfilled. The prior written consent of the Rights Agent shall be
required in connection with any supplemental agreement which alters or impairs
the rights, obligations, duties or immunities of the Rights Agent hereunder.
(g) The provisions of this Section 13 shall similarly apply to
successive consolidations, mergers, sales or other transfers. In the event that
any Section 13 Event shall occur at any time after the occurrence of any Section
11(a)(ii) Event, the Rights which have not been theretofore exercised shall
thereafter be exercisable in the manner described in this Section 13.
Section 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractional Rights or to distribute Rights
Certificates which evidence fractional Rights. If the Company shall determine
not to issue fractional Rights, the Company shall pay, in lieu of issuing
fractional Rights, to the registered holders of the Rights with respect to which
fractional Rights would otherwise be issuable an amount in cash equal to the
same fraction of the Fair Market Value (determined as provided in Section 11(d)
for the Trading Day immediately prior to the date on which such fractional
Rights would otherwise have been issued) of one Right.
(b) The Company shall not be required to issue frac tional
Preferred Shares (other than fractions which are multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute stock
certificates which evidence fractional Preferred Shares (other than fractions
which are multiples of one one-hundredth of a Preferred Share). If the Company
shall determine not to issue fractional Preferred Shares that are not multiples
of one one-hundredth of a Preferred Share, the Company shall pay to the
registered holders of the Rights Certificates at the time Rights represented
thereby are exercised, in lieu of such fractional Preferred Shares, an amount in
cash equal to the same fraction of the Fair Market Value (determined as provided
in Section 11(d) for the Trading Day
-31-
immediately prior to the date of such exercise) of one one-
hundredth of a Preferred Share.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company shall pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one (1) share of Common Stock. For
purposes of this Section 14(c), the current market value of one share of Common
Stock shall be the closing price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) Each holder of a Right, by accepting the same, expressly
waives such holder's right to receive or exercise any fractional Right or to
receive any fractional Preferred Share upon the exercise of such Right (except
as provided in this Section 14).
Section 15. Rights of Action. All rights of action in respect
of this Agreement, other than rights of action which the Rights Agent may have
under Sections 18 and 20, are vested in the registered holders of the Rights
Certificates (or, prior to the Distribution Date, the registered holders of the
Common Stock of the Company); and the registered holder of any Rights
Certificate (or, prior to the Distribution Date, of any stock certificate for
shares of such Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
any other stock certificate for shares of Common Stock), may, on such registered
holder's own behalf and for such registered holder's own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such registered holder's right to
exercise the Rights evidenced by such Rights Certificate (or, prior to the
Distribution Date, such stock certificate) in the manner provided in such Rights
Certif icate and in this Agreement. Without limiting the generality of the
foregoing or any remedies available to the holders of the Rights, it is
specifically acknowledged that the registered holders of the 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 and duties under, and
injunctive relief against any actual or threatened violations of the obliga
tions and duties of any Person subject to, this Agreement.
-32-
Section 16. Agreements of Holders of Rights. Each 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:
(i) prior to the Distribution Date, the Rights shall be
transferable only simultaneously and together with the transfer of
shares of Common Stock of the Company;
(ii) after the Distribution Date, the Rights Certificates
shall be transferable on the registry books of the Rights Agent only if
surrendered at the principal office of the Rights Agent, with the Form
of Assignment and Certification of Status on the reverse side thereof
duly executed, together with such signature guarantees and other
documentation as the Rights Agent may reasonably request;
(iii) subject to Sections 6 and 7(d), the Company and the
Rights Agent may deem and treat the Person in whose name any Rights
Certificate (or, prior to the Distribution Date, any stock certificate
for Common Stock of the Company) is registered as the absolute owner
thereof and of the Rights represented thereby (notwithstanding any
notations of ownership or other writing on such Rights Certificate or
stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary; and
(iv) neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or to any other Person because of
its inability to perform any of its obligations or duties under this
Agreement by reason of any applicable law, any preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission or any rule, regulation or
executive order promulgated or enacted by any such governmental
authority prohibiting or otherwise restraining performance of any such
obligation or duty; provided, however, that the Company shall use its
best efforts to have any such injunction, order, decree or ruling
lifted or otherwise overturned as soon as reasonably possible.
Section 17. Rights Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Rights Certificate shall
-33-
be entitled to vote, to receive dividends or other distributions on or to
exercise any preemptive rights with respect to, or shall be deemed for any other
purpose to be the holder of, the Preferred Shares or other shares of capital
stock of any class of the Company which may at the time be issuable upon
exercise of the Rights represented thereby; nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a shareholder of the Company,
or any right to vote for the election of directors or upon any other matter
submitted to shareholders at any meeting thereof, to give or withhold consent to
any corporate action, to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25) or to receive dividends,
subscription rights or other distributions, until the Rights represented by such
Rights Certificate shall have been exercised, in whole or in part, in accordance
with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company
covenants and agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time on the written request
of the Rights Agent, to reimburse it for all reasonable expenses and counsel
fees incurred in connection with the acceptance and administration of this
Agreement and the performance of its obligations and duties hereunder. The
Company also covenants and 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 its part, for any action taken,
suffered or omitted by it in connection with the acceptance and administration
of this Agreement and the performance of its obligations and duties hereunder,
including the costs and expenses of defending against any claim of liability
arising therefrom, directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of, any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate, stock certificate for Preferred Shares, Common Stock or other
shares of capital stock of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be executed and, where necessary, verified or acknowledged by the proper
Person or Persons.
Section 19. Merger or Consolidation of the Rights
Agent. (a) Any corporation into which the Rights Agent or any
-34-
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 shareholder services 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 successor Rights Agent under Section 21. In
case at the time any successor Rights Agent shall succeed to the agency created
by this Agreement any of the Rights Certificates countersigned by its
predecessor Rights Agent shall not have been delivered, such successor Rights
Agent may adopt the counter signature of its predecessor Rights Agent and
deliver the Rights Certificates so countersigned; or in case at such time any of
the Rights Certificates shall not have been countersigned, such successor Rights
Agent may countersign such Rights Certificates either in the name of its
predecessor Rights Agent or in the name of such successor Rights Agent; and in
all such cases, such Rights Certificates shall have the full force and effect
provided therein and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver the Rights Certificates so countersigned; or in
case at such time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases, such Rights
Certificates shall have the full force and effect provided therein and in this
Agreement.
Section 20. Duties of the Rights Agent. The Rights Agent
undertakes the obligations and duties imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
the Rights Certificates (or, prior to the Distribution Date, the stock
certificates for Common Stock of the Company), by accepting the same, shall be
bound, and no implied obligations or duties shall be read into this Agreement
against the Rights Agent:
(a) The Rights Agent may consult with legal coun sel (who may
be legal counsel for the Company), and the written opinion of such
legal counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken, suffered or omitted by it
in good faith and in accordance with such opinion.
-35-
(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, suffering or omitting any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by
a certificate executed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall
be full and complete authorization and protection to the Rights Agent
as to any action taken, suffered or omitted by it in good faith in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own neg ligence, 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 Rights Certifi βββββ (except its countersignature thereon) or
be re quired 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 responsible for the validity
of this Agreement or the execution and delivery hereof (except for its
due execution hereof) or for the validity or execution of any Rights
Certificate (except for its countersignature thereon); nor shall the
Rights Agent be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights
Certificate; nor shall the Rights Agent be responsible for any change
in the exercisability of the Rights (including Rights becoming void
pursuant to Section 7(d)), for any adjustment or change (or for the
manner or method of determining same) in the terms of the Rights
(including any adjustment or change in the Exercise Price or in the
number or kind of shares, securities or other property issuable upon
the exercise thereof) required by Section 11, 13, 23 or 24 or for
ascertaining the existence of facts which would require any such change
or adjustment (except with respect to the exercise of Rights evidenced
by Rights Certificates after actual notice, in the manner provided in
Section 12, that such change or adjustment is
-36-
required); nor shall the Rights Agent by any act hereunder be deemed to
have made any representation or warranty as to the authorization or
reservation of any Preferred Shares or shares of Common Stock to be
issued pursuant to this Agreement or any Rights Certificate or as to
whether any Preferred Shares or shares of Common Stock will, when
issued, be validly authorized and issued and fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be per formed, executed,
acknowledged and delivered all such further 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 obligations
and duties hereunder from any one of the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the
Company, and to apply to such officers for advice or instructions in
connection with its obligations and duties; and the Rights Agent shall
not be liable for any action taken, suffered or omitted by it in good
faith and in accordance with the written instructions of any such
officer or for any delay in acting while waiting for such instructions.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in the Rights or in
any other securities of the Company (including the Preferred Shares and
its Common Stock) or become pecuniarily interested in any transaction
in which the Company (or any of its Subsidiaries) may be interested, or
contract with or lend money to the Company (or any of its
Subsidiaries), and may otherwise act as fully and freely as though it
were not the Rights Agent under this Agreement; and nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company, any of its Subsidiaries or any other entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any of its obligations
or duties hereunder either directly 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
-37-
attorney or agent or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided the Rights Agent
exercised reasonable care in the selection and continued employment of
such attorney or agent.
(j) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or trans fer, the Form of Certification
of Status attached to the Form of Election to Purchase or the Form of
Assign ment, as the case may be, has either not been completed or
indicates an affirmative response to Question 1 and/or 2 thereof, the
Rights Agent shall not take any further action with respect to the
requested exercise or transfer without first consulting with the
Company.
(k) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its obligations or duties or in
the exercise of its rights or powers hereunder if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured.
Section 21. Resignation or Removal of the Rights Agent. The
Rights Agent or any successor Rights Agent may resign and be discharged from its
obligations and duties under this Agreement upon 30 days' prior notice to the
Company and to each transfer agent for the Preferred Shares and for the Common
Stock of the Company, sent by registered or certified mail, postage prepaid, and
to each registered holder of the Rights Certificates, sent by first-class mail,
postage prepaid. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days' prior notice to the Rights Agent or successor Rights Agent,
as the case may be, and to each transfer agent for the Preferred Shares and for
the Common Stock of the Company, sent by registered or certified mail, postage
prepaid, and to each registered holder of the Rights Certificates, sent by
first-class mail, postage prepaid. If the Rights Agent or any successor Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor Rights Agent. If the Company shall fail to
make such appointment within 30 days after giving notice of such removal or
after receiving notice of such resignation or incapacity, either from the
resigning or incapacitated Rights Agent or from the registered holder of any
Rights Certificate (who shall, with such notice, submit its Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or the
registered
-38-
holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a successor Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States of
America or the State of New York (or of any other state so long as such
corporation is authorized to do business as a banking institution in the State
of New York), be in good standing under the laws of the jurisdiction of its
incorporation, have an office in the State of New York, be authorized under such
laws to exercise corporate trust or stock transfer powers, be subject to
supervision or examination by federal or state authority and have at the time of
its appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After its appointment, the successor Rights Agent shall be vested
with the same rights, powers, obligations, duties and immunities 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 for
the Preferred Shares and for the Common Stock of the Company, and mail notice
thereof to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or any successor Rights Agent or the appointment of any successor
thereto.
Section 22. Issuance of New Rights Certificates. Not
withstanding any provision of this Agreement or of the Rights Certificates to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing the Rights in such form as may be approved by the Board to reflect
any adjustment or change in the Exercise Price or in the number or kind of
shares, securities or other property issuable upon exercise of the Rights in
accordance with the provisions of this Agreement; provided, however, that (i) no
such Rights Certificates shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance could create a significant risk
of material adverse tax consequences to the Company or to the Persons to whom
such Rights Certificates would be issued and (ii) no such Rights Certificates
shall be issued if, and to the extent that, appro priate adjustment shall
otherwise have been made in lieu of the issuance thereof.
-39-
Section 23. Redemption. (a) The Board may, at its option, at
any time prior to the earliest of (i) the Close of Business on the 10th Business
Day after the Share Acquisition Date (or, if the Share Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the 10th
Business Day after the Record Date), (ii) the Close of Business on the 10th
Business Day after the date on which at least a majority of the members of the
Board who are not officers of the Company has declared a Person to be an Adverse
Person, (iii) the occurrence of any Section 13 Event and (iv) the Final
Expiration Date, redeem all, but not less than all, of the then outstanding
Rights at a redemption price of $.01 per Right (such redemption price being
hereinafter called the "Redemption Price").
(b) Notwithstanding any other provision of this Agreement, the
Rights shall not be exercisable after the first occurrence of any Section
11(a)(ii) Event until such time as the Company's right of redemption under this
Section 23 shall have expired.
(c) In considering whether to redeem the Rights, the Board may
consider the best long-term and short-term interests of the Company and its
shareholders, including, without limitation, the effects of the redemption of
the Rights upon employees, creditors, suppliers and customers of the Company or
of its Subsidiaries and upon the communities in which offices or other
establishments of the Company and such Subsidiaries are located and all other
pertinent factors. The redemption of the Rights by the Board may be made
effective at such time, on such basis and with such conditions as the Board, in
its sole discretion, may establish.
(d) Immediately after action by the Board directing the
redemption of the Rights pursuant to subsection (a) of this Section 23, and
without any further action and without any notice, the right to exercise the
Rights shall terminate, and thereafter each registered holder of the Rights
shall only be entitled to receive the Redemption Price therefor. The Company
shall give prompt written notice to the Rights Agent and prompt public notice to
the holders of the Rights of any such redemp tion; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemp tion. Within 10 days after action by the Board directing the
redemption of the Rights, the Company shall mail (or cause the Rights Agent to
mail) a notice of redemption to each registered holder of the then outstanding
Rights, at its last address appearing on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Stock of the Company. Any notice which is mailed in the manner
provided in this subsection (d) shall be
-40-
deemed given, whether or not received by the registered holder to whom sent.
Each notice of redemption shall state the method by which payment of the
Redemption Price is to be made. Neither the Company nor any of its Affiliates or
Associates may at any time redeem, acquire or purchase for value any Rights
other than in the manner set forth in this Section 23 and Section 24 or in
connection with any purchase of outstanding shares of its Common Stock prior to
the Distribution Date.
(e) The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on its Fair Market Value (determined as
provided in Section 11(d)) as of the date of redemption) or any other form of
consideration deemed appropriate by the Board.
Section 24. Exchange. (a) The Board may, at its option, at any
time on or after the occurrence of any Section 11(a)(ii) Event, exchange all or
any part of the then outstanding and exercisable Rights (which shall not include
any Rights which have become void pursuant to Section 7(d)) for shares of Common
Stock of the Company at an exchange rate of one share of Common Stock per Right,
appropriately adjusted to reflect any event specified in clauses (A) through
(D), inclusive, of the first sentence of Section 11(a)(i) or in Section 11(n)
occurring after the date hereof (such exchange rate being hereinafter called the
"Exchange Rate"); provided, however, that the Board shall not be authorized to
effect such an exchange at any time after any Person (other than an Exempt
Person), together with the Affili ates and Associates of such Person, shall have
become the Benefi cial Owner of 50% or more of the then outstanding shares of
Common Stock of the Company.
(b) Immediately after action by the Board directing 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 thereafter each registered holder of such Rights
shall only be entitled to receive the number of shares of Common Stock of the
Company which shall equal the number of such Rights held by such registered
holder multiplied by the Exchange Rate then in effect. The Company shall give
prompt written notice to the Rights Agent and prompt public notice to the
holders of the Rights of any such exchange; provided, however, that the failure
to give, or any defect in, any such notice shall not affect the validity of such
exchange. Within 10 days after action by the Board directing the exchange of any
Rights, the Company shall mail (or cause the Rights Agent to mail) a notice of
exchange to each registered holder of such Rights, at its last address appearing
on the registry books of the Rights Agent or, prior to the Distribution
-41-
Date, on the registry books of the transfer agent for the Common Stock of the
Company. Any notice which is mailed in the manner provided in this subsection
(b) shall be deemed given, whether or not received by the registered holder to
whom sent. Each notice of exchange shall state the method by which the exchange
of shares of Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata among the registered holders of the Rights
based upon the number of Rights held (excluding Rights which shall have become
void pursuant to Section 7(d)); and, in such case, a new Rights Certificate
evidencing the Rights not being exchanged shall be prepared and executed by the
Company and countersigned and delivered by the Rights Agent to the registered
holder of such Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Shares (or Equivalent Preferred Shares)
for shares of Common Stock in effecting an exchange for Rights, at the initial
rate of one one-hundredth of a Preferred Share (or Equivalent Preferred Share)
for each share of Common Stock, appropriately adjusted to reflect any
adjustments in the voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fractional Preferred Share delivered in lieu of each share
of Common Stock shall have the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient authorized
and unissued or treasury shares of Common Stock or Preferred Shares (or
Equivalent Preferred Shares) to permit the exchange of Rights directed by the
Board, the Company shall take all necessary action to authorize and reserve for
issuance such number of additional shares of Common Stock or Preferred Shares
(or Equivalent Preferred Shares) as may be required for issuance upon such
exchange and, if necessary, shall use its best efforts to obtain shareholder
approval thereof.
(e) The Company shall not be required to issue frac tional
shares of Common Stock in exchange for Rights or to distribute stock
certificates which evidence fractional shares of Common Stock. If the Company
shall determine not to issue frac tional shares of Common Stock, the Company
shall pay to the registered holders of the Rights with respect to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the Fair Market Value (determined as provided in Section 11(d)
for the Trading Day immediately prior to the date of such exchange) of one share
of Common Stock.
-42-
Section 25. Notice to Holders of Rights Certificates of
Certain Events. (a) In the event that at any time after the Distribution Date,
the Company shall propose: (i) to pay any dividend payable in shares of capital
stock of any class of the Company to the holders of Preferred Shares or to make
any other cash distribution to the holders of Preferred Shares (other than a
regular quarterly cash dividend); (ii) to effect any reclassification of the
Preferred Shares (other than a reclassification involving only the subdivision
of the outstanding Preferred Shares); (iii) to make any distribution to the
holders of Preferred Shares described in subsection (b) or (c) of Section 11;
(iv) to effect any Section 13 Event; (v) to pay any dividend on its shares of
Common Stock payable in shares of Common Stock or to effect a subdivision,
combination or consolidation of its outstanding shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock); or (vi) to effect the liquidation, dissolution or winding up of the
Company; then, in each such case, the Company shall give to the Rights Agent and
each registered holder of the Rights, in the manner provided in Section 26,
written notice of such proposed action, which shall specify the record date for
such stock dividend or distribution or the date on which such reclassification,
Section 13 Event, liquidation, dissolution or winding up is expected to occur
(and the date for participation therein by the holders of the Common Stock
and/or Preferred Shares if any such date is to be fixed). Such notice shall be
given, in the case of any action described in clause (i) or (iii) of the
preceding sentence, at least 10 days prior to the record date and, in the case
of any other such action, at least 20 days prior to the date of taking of such
pro posed action or the date for participation therein by the holders of
Preferred Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, the
Company shall, as soon as practicable thereafter, give to the Rights Agent and
each registered holder of the Rights, in the manner provided in Section 26,
written notice of the occurrence thereof, which notice shall describe such
occurrence and its consequences in reasonable detail.
Section 26. Other Notices. Except as otherwise provided
herein, notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the registered holder of any Rights, Rights Certificate
or stock certificate for shares of Common Stock of the Company to or on the
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address shall be filed in writing with the
Rights Agent) as follows:
-43-
MidAmerican Energy Holdings Company
βββ βββββ ββββββ
β.β. βββ βββ
βββ ββββββ, ββββ βββββ-ββββ
Attention: Corporate Secretary
Except as otherwise provided herein, notices or demands authorized by this
Agreement to be given or made by the Company or by the registered holder of any
Rights, Rights Certificate or stock certificate for shares of Common Stock of
the Company to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
shall be filed in writing with the Company) as follows:
Continental Stock Transfer & Trust Company
β ββββββββ
βββ ββββ, βββ ββββ βββββ
Attention: Compliance Department
Except as otherwise provided herein, notices or demands authorized by this
Agreement to be given or made by the Company or the Rights Agent to the
registered holder of any Rights, Rights Certificate or stock certificate for
shares of Common Stock of the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at its last
address appearing on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, but subject to the penultimate sentence of this Section 27,
the Company and the Rights Agent, if so directed in writing by the Company,
shall supplement or amend any term, including any amendment which changes the
Final Expiration Date to any earlier date, provision or condition of this
Agreement, without the approval of the registered holders of the stock
certificates representing the Common Stock and the Rights. From and after the
Distribution Date, but subject to the penultimate sentence of this Section 27,
the Company and the Rights Agent, if so directed in writing by the Company,
shall supplement or amend this Agreement, without the approval of the registered
holders of the Rights (however represented), in order: (i) to cure any
ambiguity, (ii) to correct or supplement any term, provision or condition of
this Agreement which may be defective or inconsistent with any other term,
provision or condition hereof, (iii) to shorten or lengthen any time period
specified herein or (iv) to change or supplement one or more of the terms,
provisions
-44-
or conditions hereof in any manner which the Company may deem necessary or
desirable and which shall not adversely affect, as determined by the Board, the
interests (however represented) of the holders (other than any Restricted Person
or the transferees therefrom specified in Section 7(d)) of the Rights. Upon the
delivery of a certificate from an appropriate officer of the Company stating
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;
provided, however, that the Rights Agent shall not be required to execute any
supplement or amendment which affects any of the Rights Agent's rights, powers,
obligations, duties or immunities under this Agreement without its consent. On
and after the Distribution Date, no supplement or amendment shall be made which
changes the Exercise Price, the number of one one-hundredths of a Preferred
Share for which a Right is exercisable or the Redemption Price. Prior to the
Distribution Date, the interests of the holders of the Rights shall be deemed
coincident with the interests of the holders of the Common Stock of the Company.
Section 28. Successors. All of the terms, provisions and
conditions 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.
Section 29. Certain Determinations and Actions by the Board.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including the determination of
the percentage of such outstanding 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), as in effect on the date hereof, under the Exchange Act. The
Board shall have the exclusive power and authority to interpret 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 make all
determinations deemed necessary or advisable for such administration, including,
without limitation, a determination to redeem or not to redeem the Rights, to
exchange or not to exchange the Rights, to declare a Person to be an Adverse
Person or to supplement or amend this Agreement. All such calculations,
determinations, interpretations and exercises (including, for purposes of clause
(ii) below, all omissions with respect to the foregoing) which are done or made
by the Board in good faith shall (i) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other Persons and
(ii) not subject any director to any liability to the holders of the Rights or
to any other Person.
-45-
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the registered holders of the stock certificates for
the Common Stock of the Company) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered holders
of the stock certificates for the Common Stock of the Company).
Section 31. Severability. If any term, provision or condition
of this Agreement shall be held by a court of competent jurisdiction or other
lawful authority to be invalid, void or unenforceable, the remaining terms,
provisions, and conditions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that if any such term, provision or condition is held by such court or
authority to be invalid, void or unenforceable and the Board shall determine in
good faith that severing the same from this Agreement would adversely affect the
purposes or effect of this Agreement, the right of redemption set forth in
Section 23 shall be reinstated and shall not expire until the Close of Business
on the 10th day following the date of such determination by the Board.
Section 32. Governing Law. This Agreement and each Rights
Certificate issued hereunder shall be deemed to be a con tract made under the
laws of the State of Iowa and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be exe
cuted in any number of counterparts, each of which shall for all
purposes be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
-46-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
MIDAMERICAN ENERGY HOLDINGS COMPANY
By /s/ β. β. ββββββ
Name: β. β. ββββββ
Title: President and Chief
Executive Officer
Attest:
By: /s/ ββββ β. ββββββββ
Name: ββββ β. ββββββββ
Title: Corporate Secretary
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By /s/ Authorized Officer
(Corporate Seal) Name:
Title:
Attest:
By:
Name:
Title:
-47-
Exhibit A
FORM
of
ARTICLES OF AMENDMENT
of the
RESTATED ARTICLES OF INCORPORATION
of
MIDAMERICAN ENERGY HOLDINGS COMPANY
ESTABLISHING
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
To the Secretary of State of the State of Iowa:
Pursuant to the provisions of Section 490.602 and Section
409.1006 of the Iowa Business Corporation Act, the undersigned corporation
hereby amends its Restated Articles of Incorporation, and for that purpose,
submits the
following statement:
1. The name of the Company is MidAmerican Energy
Holdings Company (the "Company").
2. On December 18, 1996, the Company adopted an
amendment to its Restated Articles of
Incorporation, the text of which is attached
hereto as Exhibit A.
3. The amendment was duly adopted by the board of
directors without shareholder approval, as
shareholder approval is not required pursuant to
Section 490.602 of the Iowa Business Corporation
Act.
Date: December 19, 1996
MIDAMERICAN ENERGY HOLDINGS COMPANY
By: /s/ β. β. ββββββββ
Name: β. β. ββββββββ
Title: Corporate Secretary
A-1
DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A JUNIOR PARTICIPATING PREFERRED
STOCK OF MIDAMERICAN ENERGY HOLDINGS COMPANY
RESOLVED, that, pursuant to the authority conferred upon the
Board of Directors of the Corporation (the "Board") by the provisions of the
Restated Articles of Incorporation, as amended, of the Corporation, there is
hereby created a series of Preferred Stock, without par value, of the
Corporation, which series shall have the following designation and number of
shares, and fixes the relative rights, preferences, and limitations as follows
thereof:
Section 1. Designation of Series; Number of Shares. The series
of Preferred Stock established hereby shall be designated the "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock") and the
authorized number of shares constituting the Series A Preferred Stock shall be
3,500,000. Such number of authorized shares may be increased or decreased, from
time to time, by resolution of the Board; provided, however, that no such
decrease shall reduce the number of authorized shares of the Series A Preferred
Stock to a number less than the number of shares of the Series A Preferred Stock
then outstanding, plus the number of shares of the Series A Preferred Stock then
reserved for issuance upon the exercise of any outstanding options, warrants or
rights or the exercise of any conversion or exchange privilege contained in any
outstanding security issued by the Corporation.
Section 2. Dividends and Distributions. (A) Subject to the
rights of the holders of shares of any other series of the Preferred Stock (or
shares of any other class of capital stock of the Corporation) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the holders
of shares of the Series A Preferred Stock, in preference to the holders of
shares of Common Stock and of any other class of capital stock of the
Corporation ranking junior to the Series A Preferred Stock with respect to
dividends, shall be entitled to receive, when, as and if declared by the Board
out of funds legally available therefor, quarterly dividends payable in cash on
the first day of March, June, September and December in each year (each such
date being a "Dividend Payment Date"), commencing on the first Dividend Payment
Date after the initial issuance of a share or fractional share of the Series A
Preferred Stock, in an amount per share (rounded to the nearest whole cent)
equal to the greater of (a) $.01 and (b) 100 times the aggregate per share
amount of all cash dividends, plus 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock or a distribution in connection with
the subdivision of the outstanding shares of Common Stock, by reclassification
or
A-2
otherwise), declared on the Common Stock since the immediately preceding
Dividend Payment Date or, with respect to the first Dividend Payment Date, since
the initial issuance of a share or fractional share of the Series A Preferred
Stock. The multiple of 100 (the "Dividend Multiple") set forth in the preceding
sentence shall be adjusted from time to time as hereinafter provided in this
paragraph (A). In the event that the Corporation shall at any time after the
effective date of this Articles of Amendment (i) declare or pay any dividend on
the Common Stock payable in shares of Common Stock or (ii) effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then, in each
such case, the Dividend Multiple thereafter applicable to the determination of
the amount of dividends per share which the holders of shares of the Series A
Preferred Stock shall be entitled to receive shall be the Dividend Multiple in
effect immediately prior to such event multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
after such event and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Board shall declare, out of funds legally available
therefor, a dividend or distribution on the Series A Preferred Stock, as
provided in paragraph (A) of this Section 2, immediately after it has declared a
dividend or distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided, however, that, in the event that no dividend
or distribution shall have been declared on the Common Stock during the period
between any Dividend Payment Date and the next subsequent Dividend Payment Date,
a dividend of $.01 per share on the Series A Preferred Stock shall nevertheless
be payable on such subsequent Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on the
outstanding shares of the Series A Preferred Stock from the Dividend Payment
Date next preceding the date of issuance of such shares, unless such date of
issuance shall be prior to the record date for the first Dividend Payment Date,
in which case dividends on such shares shall begin to accrue and be cumulative
from the date of issuance of such shares, or unless such date of issuance shall
be after the close of business on the record date with respect to any Dividend
Payment Date and on or prior to such Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be cumulative from such
Dividend Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on shares of the Series A Preferred Stock in an amount less than
the total amount of dividends then
A-3
accrued shall be allocated pro rata among such shares. The Board may fix a
record date for the determination of the holders of shares of the Series A
Preferred Stock entitled to receive payment of any dividend or distribution
declared thereon, which record date shall be not more than the number of days
prior to the date fixed for such payment permitted by applicable law.
Section 3. Voting Rights. In addition to any other voting
rights required by applicable law, the holders of shares of the Series A
Preferred Stock shall have the following voting rights:
(A) Each share of the Series A Preferred Stock shall entitle
the holder thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Corporation. The multiple of 100 (the "Voting Multiple") set
forth in the preceding sentence shall be adjusted from time to time as
hereinafter provided in this paragraph (A). In the event that the Corporation
shall at any time after the effective date of this Articles of Amendment (i)
declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consol idation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the Voting Multiple
thereafter applicable to the determination of the number of votes per share to
which the holders of shares of the Series A Preferred Stock shall be entitled
shall be the Voting Multiple in effect immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided in this Articles of
Amendment, in any other Articles of Amendment establishing another series of the
Preferred Stock (or any series of any other class of capital stock of the
Corporation) or by applicable law, the holders of the Series A Preferred Stock,
the holders of the Common Stock and the holders of any other class of capital
stock of the Corporation having general voting rights shall vote together as a
single class on all matters submitted to a vote of the shareholders of the
Corporation.
(C) Except as otherwise provided in this Articles of Amendment
or by applicable law, the holders of the Series A Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent provided
A-4
in paragraph (B) of this Section 3) for the taking of any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or other distributions payable on the
Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on outstanding shares of the Series A Preferred Stock shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of any class of capital stock of
the Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up of the Corporation) to
the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of any class of capital stock of
the Corporation ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up of the
Corporation) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are accrued and unpaid in
proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for
consideration any shares of any class of capital stock of the
Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up of the Corporation) to
the Series A Preferred Stock, except that the Corporation may
at any time redeem, purchase or otherwise acquire any shares
of such junior stock in exchange for other shares of any class
of capital stock of the Corporation ranking junior (both as to
dividends and upon dissolution, liquidation or winding up of
the Corporation) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of the Series A Preferred Stock or any shares of any
class of capital stock of the Corporation ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up of the Corporation) with the Series A Preferred
Stock, or redeem any shares of such parity stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board) to the holders of all
such shares upon such terms and
A-5
conditions as the Board, after taking into consideration the
respective annual dividend rates and the other relative
powers, preferences and rights of the respective series and
classes of such shares, shall determine in good faith will
result in fair and equitable treatment among the respective
holders of shares of all such series and classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of any
class of capital stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such shares at
such time and in such manner.
Section 5. Reacquired Shares. Any shares of the Series A
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after such purchase or
acquisition. All such cancelled shares shall thereupon become authorized and
unissued shares of Preferred Stock and may be reissued as part of any new series
of the Preferred Stock, subject to the conditions and restrictions on issuance
set forth in the Restated Articles of Incorporation of the Corporation, as
amended from time to time, in any other Articles of Amendment establishing
another series of the Preferred Stock (or any series of any other class of
capital stock of the Corporation) or in any applicable law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation (whether voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made (a) to the holders of shares of any
class of capital stock of the Corporation ranking junior (either as to dividends
or upon liquidation, dissolution or winding up of the Corporation) to the Series
A Preferred Stock unless, prior thereto, the holder of each outstanding share of
the Series A Preferred Stock shall have received an amount equal to the accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, plus an amount equal to an aggregate amount, subject to
adjustment as hereinafter provided in this Section 6, equal to the greater of
(i) $1.00 and (ii) 100 times the aggregate per share amount to be distributed to
the holders of the Common Stock or (b) to the holders of shares of any class of
capital stock of the Corporation ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up of the Corporation) with the Series
A Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to which the
holders of all such shares are entitled upon such liquidation, dissolution or
winding up. In the event that the Corporation shall at any time after the
effective date of this
A-6
Articles of Amendment (a) declare or pay any dividend on the Common Stock
payable in shares of Common Stock or (b) effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then, in each such case, the
aggregate amount per share which the holders of shares of the Series A Preferred
Stock shall thereafter be entitled to receive pursuant to clause (a)(ii) of the
preceding sentence shall be the aggregate amount per share in effect pursuant to
such clause immediately prior to such event multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such event and the denominator of which shall be the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the
Corporation shall be a party to any consolidation, merger, combination or other
transaction in which the outstanding shares of Common Stock are converted or
changed into or exchanged for other capital stock, securities, cash or other
property, or any combination thereof, then, in each such case, each share of the
Series A Preferred Stock shall at the same time be similarly converted or
changed into or exchanged for an aggregate amount, subject to adjustment as
hereinafter provided in this Section 7, equal to 100 times the aggregate amount
of capital stock, securities, cash and/or other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is being
converted or changed or exchanged. In the event that the Corporation shall at
any time after the effective date of this Articles of Amendment (a) declare or
pay any dividend on the Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case, the aggregate amount per share which the holders
of shares of the Series A Preferred Stock shall thereafter be entitled to
receive pursuant to the preceding sentence shall be the aggregate amount per
share in effect pursuant to such sentence immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 8. No Redemption. The shares of the Series A Preferred
Stock shall not be redeemable at any time.
Section 9. Rank. Unless otherwise provided in the Articles of
Amendment establishing another series of the Preferred Stock after the effective
date of this Articles of
A-7
Amendment, the Series A Preferred Stock shall rank, as to the payment of
dividends and the making of any other distribution of assets of the Corporation,
senior to the Common Stock, but junior to all other series of the Preferred
Stock.
Section 10. Amendments. The Restated Articles of Incorporation
of the Corporation shall not be amended in any manner which would materially
alter or change the powers, preferences and rights of the Series A Preferred
Stock so as to adversely affect any thereof without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the Series A
Preferred Stock, voting separately as a single class.
Section 11. Fractional Shares. Fractional shares of the Series
A Preferred Stock may be issued, but, unless the Board shall otherwise
determine, only in multiples of one one-hundredth of a share. The holder of any
fractional share of the Series A Preferred Stock shall be entitled to receive
dividends, participate in distributions, exercise voting rights and have the
benefit of all other powers, preferences and rights relating to the Series A
Preferred Stock in the same proportion as such fractional share bears to a whole
share.
A-8
Exhibit B
FORM
of
RIGHTS CERTIFICATE
Certificate No. R-Rights
NOT EXERCISABLE AFTER DECEMBER 30, 2006 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF MIDAMERICAN ENERGY HOLDINGS
COMPANY, AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET
FORTH IN THE SHAREHOLDERS RIGHTS AGREEMENT HEREINAFTER
MENTIONED. UNDER CERTAIN CIRCUMSTANCES DESCRIBED IN SUCH
AGREEMENT, RIGHTS BENEFICIALLY OWNED BY A RESTRICTED PERSON
(AS SUCH TERM IS DEFINED IN SUCH AGREEMENT), OR BY SPECIFIED
TRANSFEREES FROM A RESTRICTED PERSON, SHALL BE OR BECOME VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A RESTRICTED PERSON (AS SUCH TERM IS
DEFINED IN SUCH AGREEMENT). THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY SHALL BE OR BECOME VOID UNDER THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(d) OF SUCH AGREEMENT]*
--------
* The Portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
B-1
RIGHTS CERTIFICATE
MIDAMERICAN ENERGY HOLDINGS INC.
This certifies that _________________________, or reg
istered assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner, subject to the terms, provisions and
conditions of the Shareholders Rights Agreement dated as of December 18, 1996
(the "Rights Agreement") between MidAmerican Energy Holdings Company, an Iowa
corporation (the "Company"), and Continental Stock Transfer & Trust Company,
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date and prior to the Close of Business on December 30, 2006, at
the principal office of the Rights Agent or its successor as Rights Agent, one
one-hundredth of a fully paid and nonassessable share of Series A Junior
Participating Preferred Stock, no par value (the "Preferred Shares"), of the
Company at a price (the "Exercise Price") of $50.00 per one one-hundredth of a
Preferred Share, upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase and the related Form of Certification of Status
duly executed, together with such signature guarantees and other documentation
as the Rights Agent may reasonably request. The number of Rights evidenced by
this Rights Certificate (as well as the number of one one-hundredths of a
Preferred Share which may be purchased upon the exercise of each Right) set
forth above, and the Exercise Price set forth above, are the numbers and the
Exercise Price as of December 18, 1996, based on the Preferred Shares as
constituted on such date. As provided in the Rights Agreement, such number of
Rights (and/or such number of one one-hundredths of a Preferred Share) and such
Exercise Price are subject to change and adjustment upon the happening of
certain events specified in the Rights Agreement. Capitalized terms not defined
herein have the respective meanings specified in the Rights Agreement.
From and after the first occurrence of any Section
11(a)(ii) Event, if the Rights evidenced by this Rights Certificate are
Beneficially Owned by (i) a Restricted Person, (ii) a transferee from a
Restricted Person who becomes a transferee after the Acquiring Person or Adverse
Person becomes such or (iii) under certain circumstances specified in the Rights
Agreement, a transferee from a Restricted Person who becomes a transferee prior
to or concurrently with the Acquiring Person or Adverse Person becoming such,
such Rights shall be or become void, and no holder hereof shall have any rights
whatsoever with respect to such Rights.
B-2
This Rights Certificate is subject to all of the
terms, provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are incorporated herein by reference and made a part
hereof, to which Rights Agreement reference is hereby made for a full
description of the rights, powers, obligations, duties and immunities hereunder
of the Company, the Rights Agent and the holders of the Rights Certifi βββββ.
Under the circumstances set forth in the Rights Agreement, the exercisability of
the Rights represented hereby may be temporarily suspended. The Rights Agreement
is on file at the principal office of the Company and at the principal office of
the Rights Agent, and a copy will be provided upon written request to the
Secretary of the Company.
Upon surrender at the principal office of the Rights
Agent, this Rights Certificate, with or without other Rights Certificates, may
be exchanged for one or more Rights Certifi βββββ of like tenor and date
evidencing Rights entitling the holder to purchase the same aggregate number of
one one-hundredths of a Preferred Share as the Rights evidenced by the Rights
Certificates so surrendered. If this Rights Certificate shall be exercised in
part, the holder hereof shall be entitled to receive, upon surrender hereof, one
or more Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement,
the Rights evidenced by this Rights Certificate (i) may be redeemed, at the
direction of the Board, at a redemption price (subject to adjustment) of $.01
per Right (payable in cash, shares of Common Stock of the Company or any other
form of consideration deemed appropriate by the Board) or (ii) under certain
circumstances, may be exchanged, in whole or in part, at the direction of the
Board, for shares of Common Stock of the Company or Preferred Shares at an
exchange rate (subject to adjustment) of one share of Common Stock or one
one-hundredth of a Preferred Share per Right.
No fractional Preferred Share will be issued upon the
exercise of any Rights represented hereby (other than fractions which are a
multiple of one one-hundredth of a Preferred Share), but in lieu thereof a cash
payment will be made as provided in the Rights Agreement.
No holder, as such, of this Rights Certificate shall
be entitled to vote, to receive dividends or other distributions on or to
exercise any preemptive rights with respect to, or shall be deemed for any other
purpose to be the holder of, the Preferred Shares or other shares of capital
stock of any class of the Company which may at any time be issuable upon
exercise hereof; nor shall anything contained herein or in the Rights
B-3
Agreement be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company, or any right to vote for the election of
directors or upon any other matter submitted to shareholders at any meeting
thereof, to give or withhold consent to any corporate action, to receive notice
of meetings or other actions affecting shareholders (except as provided in the
Rights Agreement) or to receive dividends, subscription rights or other
distributions, until the Rights evidenced by this Rights Certificate shall have
been exercised, in whole or in part, in accordance with the provisions of the
Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned by the Rights
Agent.
B-4
IN WITNESS WHEREOF, this Rights Certificate has been
executed by the Company by the duly authorized facsimile signa ture of a proper
officer of the Company.
Dated as of _______________, ____.
MIDAMERICAN ENERGY HOLDINGS COMPANY
By___________________________________
Name:
Title:
ATTEST:
------------------------------
Name:
Title:
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Rights Agent
By____________________________
Authorized Officer
B-5
[Reverse Side of Rights Certificate]
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by this Rights Certificate)
To MidAmerican Energy Holdings Company:
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to pur chase the
Preferred Shares (or other securities of the Company or of any other persons
that may be issuable upon the exercise of such Rights) and requests that
certificates for such Preferred Shares (or other such securities) 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 represented by this Rights
Certificate, a new Rights Certificate for the remaining unexercised Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number: ____________________
----------------------------------------------------------------
(Please print name and address)
----------------------------------------------------------------
Dated: _______________, 19__
---------------------------------------
Signature
B-6
Signature Guaranteed: ________________________________
Signatures must be guaranteed by a participant in a
recognized Signature Guaranty Medallion Program.
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate
----
---- is
----
---- is not
being exercised by or on behalf of a Person who is or was a Restricted Person
(as such term is defined in the Rights Agree ment); and
(2) after due inquiry and to the best knowledge of the
undersigned, it
----
---- did
----
---- did not
acquire, directly or indirectly, the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
---------------------------------------
Signature
Date: _______________, 19__
B-7
NOTICE
The signature(s) on the foregoing Form of Election to
Purchase and Certification of Status must correspond to the name written upon
the face of this Rights Certificate in every par ticular, without alteration or
enlargement or any change whatso ever.
In the event the Certification of Status set forth
above is not completed, the Company will deem the Beneficial Owner of the Rights
represented by this Rights Certificate to be a Restricted Person (as such term
is defined in the Rights Agree ment), will not honor the Election to Purchase
and will affix a legend to such effect on this Rights Certificate and on any
Rights Certificates issued in exchange for this Rights Certificate.
B-8
[Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate)
FOR VALUE RECEIVED _________________________ hereby sells,
assigns and transfers unto ______________________________
----------------------------------------------------------------
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and in terest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the with in Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _______________, 19__
---------------------------------------
Signature
Signature Guaranteed: ________________________________
Signatures must be guaranteed by a participant in a recognized
Signature Guaranty Medallion Program.
B-9
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) this Rights Certificate
----
---- is
----
---- is not
being sold, assigned or transferred by or on behalf of a Person who is or was a
Restricted Person (as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of
the undersigned, it
----
---- did
----
---- did not
acquire, directly or indirectly the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became a Restricted Person.
---------------------------------------
Signature
Date: _______________, 19__
B-10
NOTICE
The signature(s) on the foregoing Form of Assignment
and Certification of Status must correspond to the name written upon the face of
this Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the Certification of Status set forth
above is not completed, the Company will deem the Beneficial Owner of the Rights
represented by this Rights Certificate to be a Restricted Person (as such term
is defined in the Rights Agreement), will not honor the Assignment and will
affix a legend to such effect on this Rights Certificate and any Rights
Certificates issued in exchange for this Rights Certificate.
B-11
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On December 18, 1996, the Board of Directors (the
"Board") of MidAmerican Energy Holdings Company, an Iowa corporation (the
"Company"), declared a dividend of one preferred stock purchase right (a
"Right") for each outstanding share of Common Stock, no par value (the "Common
Stock"), of the Company. The dividend is payable on December 30, 1996 (the
"Record Date") to the holders of record of the Common Stock at the Close of
Business on such date. Each Right entitles the holder thereof (except as
described below) to purchase from the Company one one-hundredth of a share of
the Series A Junior Participating Preferred Stock, no par value (the "Preferred
Shares"), of the Company at a price (the "Exercise Price") of $50.00 per one
one-hundredth of a Preferred Share, subject to adjustment. The terms of the
Rights are set forth in the Shareholders Rights Agreement dated as of December
18, 1996 (the "Rights Agreement") between the Company and Continental Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent"). Capitalized
terms not defined herein have the respective meanings specified in the Rights
Agreement.
Distribution Date; Transfer of Rights.
Initially, the Rights associated with the Common
Stock outstanding as of the Record Date will be evidenced solely by the stock
certificates for such Common Stock, with a copy of this Summary of Rights
attached thereto. The Rights will separate from the Common Stock upon the
earliest to occur of (i) 10 Business Days after the first public announcement
that any Person (other than an Exempt Person (as hereinafter defined)) has
become an Acquiring Person (as hereinafter defined), (ii) 10 Business Days (or
such other Business Day as may be determined by action of the Board prior to the
time that any Person shall become an Acquiring Person or declared to be an
Adverse Person (as hereinafter defined) after the commencement by any Person
(other than an Exempt Person) of, or the first public announcement of its
intention to commence, a tender or exchange offer if, upon the consummation
thereof, such Person would be the Beneficial Owner of 15% or more of the
outstanding shares of Common Stock and (iii) 10 Business Days after a
determination by a majority of
C-1
the members of the Board of Directors of the Company who are not officers of the
Company that any Person has become an Adverse Person (the earliest of the dates
specified in clauses (i), (ii) and (iii) being hereinafter called the
"Distribution Date"). After the Distribution Date, the Rights will be evidenced
solely by separate certificates and will trade independently from the Common
Stock.
An "Acquiring Person" is any Person who or which,
together with its Affiliates and Associates, has acquired 15% or more of the
shares of Common Stock then outstanding, but does not include (i) the Company,
(ii) any Subsidiary of the Company, (iii) any employee benefit plan or other
compensation program or arrangement of the Company or of any such Subsidiary or
(iv) any Person holding shares of Common Stock for or pursuant to the terms of
any such plan, program or arrangement (the Persons specified in clauses (i)
through (iv) being herein collectively called "Exempt Persons"). An "Adverse
Person" is any Person who or which, together with its Affiliates and Associates,
has acquired 10% or more of the shares of Common Stock then outstanding and has
been determined, by at least a majority of the members of the Board of Directors
of the Company who are not officers of the Company, to be likely to act in a
manner designed to produce a short-term financial gain for such Person to the
detriment of the best long-term interests of the Company and its shareholders. A
"Restricted Person" is an Acquiring Person, an Adverse Person or any Affiliate
or Associate thereof.
The Rights Agreement provides that, until the
Distribution Date (or the earlier redemption or expiration of the Rights), the
Rights may be transferred only with the associated shares of Common Stock. Until
the Distribution Date (or the earlier redemption or expiration of the Rights),
stock certificates for Common Stock issued after the Record Date, either upon
transfer of outstanding shares or original issuance of additional shares of
Common Stock, will contain a legend incorporating the Rights Agreement by
reference. Until the Distribution Date (or the earlier redemption or expiration
of the Rights), the surrender for transfer of any stock certificate for shares
of Common Stock, with or without such legend and whether or not a copy of this
Summary of Rights is attached thereto, will also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such stock
certificate.
As soon as practicable after the Distribution Date,
separate certificates evidencing the Rights ("Rights Certificates") will be
mailed to the holders of record of the Common Stock as of the Close of Business
on the Distribution Date, which thereafter will constitute the sole evidence of
the Rights. Each share of Common Stock issued by the Company after
C-2
the Record Date and prior to the earlier redemption or expiration of the Rights,
including any shares of Common Stock issued by reason of the exercise of any
option, warrant, right (other than the Rights) or conversion or exchange
privilege (however evidenced) issued by the Company prior to the Distribution
Date, will be accompanied by a Right (unless the Board expressly pro vides to
the contrary at the time of issuance of any such option, warrant, right or
privilege), and Rights Certificates evidencing such Rights will be issued at the
same time as the stock certificates for the associated shares of Common Stock.
The Rights are not exercisable until the Distribution
Date. Moreover, the time when the Rights may be exercised is restricted as
described in the next paragraph. The Rights will expire on December 30, 2006
(the "Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each case
as described below.
Exercise of Rights Under Certain Circumstances.
In the event that any Person becomes an Acquiring
Person or is declared to be an Adverse Person, proper provision will be made so
that the registered holder of each Right (other than Rights Beneficially Owned
as described in the next sentence) will thereafter have the right to receive,
upon exercise thereof, the number of shares of Common Stock which, at the time
of the occurrence of such event, will have a market value equal to two times the
then current Exercise Price. After the first occurrence of either of the events
described in the preceding sentence, all Rights which are, or (under certain
circumstances specified in the Rights Agreement) were, Beneficially Owned by a
Restricted Person or specified transferees therefrom will be or become void.
Under no circumstances may a Right be exercised after the occurrence of either
such event unless the Company's right to redeem the Rights (as described below)
has expired.
If, on or after the date on which any Person has
become an Acquiring Person or been declared to be an Adverse Person, any of the
following transactions occur: (i) the Company merges into or consolidates with
an Interested Shareholder (as hereinafter defined) or, unless all holders of the
Company's outstanding shares of Common Stock are treated the same, another
Person (with limited designated exceptions); (ii) an Interested Shareholder or,
unless all holders of the Company's outstanding shares of Common Stock are
treated the same, another Person (with limited designated exceptions) merges
into the Company and either (A) all or part of the outstanding shares of Common
Stock of the Company are converted into capital stock or other securities of any
other Person (or the Company), cash and/or other property or
C-3
(B) such shares remain outstanding, unconverted and unchanged; or (iii) the
Company sells or transfers 50% or more of its consolidated assets or earning
power to an Interested Shareholder (as hereinafter defined) or, unless all
holders of the Company's outstanding shares of Common Stock are treated the
same, another Person (with limited designated exceptions); proper provision will
be made so that the registered holder of each Right (other than Rights which
have become void) will thereafter have the right (the "Flip-Over Right") to
receive, upon exercise thereof, the number of common shares of the acquiror (or
of another Person affiliated therewith) which, at the time of consummation of
such transaction, will have a market value equal to two times the then current
Exercise Price. An "Interested Shareholder" is any Restricted Person or any
Affiliate or Associate of any other Person in which such Restricted Person has
an interest, or any Person acting, directly or indirectly, on behalf of or in
concert with any such Restricted Person.
Adjustments to Exercise Price and Stock Purchasable
Upon Exercise.
The Exercise Price payable, the number and kind of
shares of capital stock issuable upon exercise of the Rights and the number of
Rights outstanding are subject to adjustment from time to time to prevent
dilution (i) in the event of a dividend payable in Preferred Shares on, or a
subdivision, combination or reclassification of, the Preferred Shares, (ii) upon
the grant to the holders of the Preferred Shares of certain options, warrants or
rights to subscribe for or purchase Preferred Shares at a price, or securities
convertible into or exchangeable for Preferred Shares with a conversion or
exchange price, less than the then Fair Market Value of the Preferred Shares or
(iii) upon the distribution to the holders of the Preferred Shares of cash,
securities, evidences of indebtedness or other property (other than a regular
quarterly cash dividend or a dividend payable in Preferred Shares) or options,
warrants or rights (other than those referred to in clause (ii) above).
The number of outstanding Rights and the number of
one one-hundredths of a Preferred Share issuable upon exercise of each Right are
also subject to adjustment in the event of a dividend on the Common Stock
payable in shares of Common Stock or a subdivision, combination or
reclassification of the Common Stock occurring, in any such case, prior to the
Distribution Date.
With certain specified exceptions, no adjustment in
the Exercise Price will be made until the cumulative adjustments required equal
at least 1% of the Exercise Price. The Company is not required to issue
fractional Preferred Shares (other than
C-4
fractions which are multiples of one one-hundredth of a Preferred Share), but in
lieu thereof the Company would be required to make a cash payment based on the
Fair Market Value of the Preferred Shares on the trading day immediately
preceding the date of exercise.
Terms of Preferred Shares.
The Preferred Shares receivable upon exercise of the
Rights will not be redeemable. Each Preferred Share will entitle the holder
thereof to receive a preferential quarterly dividend equal to the greater of (i)
$0.01 and (ii) 100 times the aggregate per share amount of all cash dividends,
plus 100 times the aggregate per share amount (payable in kind) of all non-cash
dividends and other distributions (other than in shares of Common Stock),
declared on the Common Stock during such quarter, adjusted to give effect to any
dividend on the Common Stock payable in shares of Common Stock or any
subdivision, combination or reclassification of the Common Stock (a "Dilution
Event"). Each Preferred Share will entitle the holder thereof to 100 votes on
all matters submitted to a vote of the shareholders of the Company, voting
together as a single class with the holders of the Common Stock and the holders
of any other class of capital stock having general voting rights, adjusted to
give effect to any Dilution Event. In the event of liquidation of the Company,
the holder of each Preferred Share will be entitled to receive a preferential
liquidation payment equal to the greater of (i) $1.00 and (ii) 100 times the
aggregate per share amount to be distributed to the holders of the Common Stock,
adjusted to give effect to any Dilution Event, plus an amount equal to accrued
and unpaid dividends and distributions on such Preferred Share, whether or not
declared, to the date of such payment. In the event of any merger, consolidation
or other transaction in which the outstanding shares of Common Stock of the
Company are exchanged for or converted into other capital stock, securities,
cash and/or other property, each Preferred Share will be similarly exchanged or
converted into 100 times the per share amount applicable to the Common Stock,
adjusted to give effect to any Dilution Event.
Because of the nature of the dividend, voting, liquidation and
other rights accorded to each Preferred Share, the value of the one
one-hundredth of a Preferred Share receivable upon the exercise of each Right
should approximate the value of one share of Common Stock.
Redemption of Rights.
At any time prior to the earliest of (i) 10 Business
Days after the first public announcement that any Person (other
C-5
than an Exempt Person) has become an Acquiring Person, (ii) 10 Business Days
after any Person has been declared to be an Adverse Person, (iii) the occurrence
of any transaction which permits the exercise of the Flip-Over Right and (iv)
the Final Expiration Date, the Board may redeem the Rights in whole, but not in
part, at the redemption price of $.01 per Right, adjusted to give effect to any
Dilution Event (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, in its sole discretion, may establish. Immediately after action by the
Board directing the redemption of the Rights, the option to exercise the Rights
will terminate, and thereafter each registered holder of the Rights will only be
entitled to receive the Redemption Price therefor.
Exchange of Rights.
At any time after any Person has become an Acquiring
Person or been declared to be an Adverse Person and prior to the time that any
Person (other than an Exempt Person), together with its Affiliates and
Associates, has become the Beneficial Owner of 50% or more of the outstanding
shares of Common Stock, the Board may direct that all or any part of the
outstanding Rights (other than Rights which have become void) be exchanged for
shares of Common Stock at the exchange rate of one share of Common Stock (or one
one-hundredth of a Preferred Share or of another share of capital stock of the
Company having equivalent rights, preferences and privileges) per Right,
adjusted to give effect to any Dilution Event.
Amendment of the Rights and the Rights Agreement.
Prior to the Distribution Date, the terms of the
Rights and the Rights Agreement may be supplemented or amended by the Board in
any manner. From and after the Distribution Date, the Rights may be supplemented
or amended by the Board, provided however, that such supplement or amendment
shall not adversely affect the interests of the holders of the Rights.
Miscellaneous.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a Registra tion
Statement on Form 8-A dated December 19, 1996. A copy of the Rights Agreement is
available free of charge from the
C-6
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.
C-7