Exhibit 4
UNISOURCE ENERGY CORPORATION
and
THE BANK OF NEW YORK
Rights Agent
--------------
RIGHTS AGREEMENT
Dated as of March 5, 1999
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March 5, 1999, between
UNISOURCE ENERGY CORPORATION, an Arizona corporation (the
"Company"), and THE BANK OF NEW YORK, a New York banking
corporation (the "Rights Agent").
WHEREAS, the Board of Directors of the Company has
authorized and declared a dividend distribution of one right (a
"Right") for each share of Common Stock (as hereinafter defined)
of the Company outstanding at the close of business on April 1,
1999 (the "Record Date"), each Right representing the right to
purchase one ten-thousandth of a share of Preferred Stock (as
such term is hereinafter defined), upon the terms and subject to
the conditions herein set forth, and has further authorized and
directed the issuance of one Right (as such number may
hereinafter be adjusted pursuant to the provisions of Section
11(i) hereof) with respect to each share of Common Stock that
shall become outstanding between the Record Date and the earliest
of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
-------------------
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates and Associates (as such terms are hereinafter defined)
of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Shares of Common Stock
of the Company then outstanding, but shall not include the
Company, any Subsidiary (as such term is hereinafter defined) of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, any entity holding shares of Common
Stock for or pursuant to the terms of any such plan, or any
trustee, administrator or fiduciary of such a plan.
Notwithstanding the foregoing,
(i) no Person who or which, at the close of business
on the date hereof, shall be the Beneficial Owner of 15% or
more of the shares of Common Stock of the Company then
outstanding shall be deemed an "Acquiring Person"; provided,
--------
however, that, subject to clause (ii) below, if a Person is,
-------
at the close of business on the date hereof, the Beneficial
Owner of 15% or more of the shares of Common Stock of the
Company then outstanding and shall thereafter become the
Beneficial Owner of additional shares of Common Stock of the
Company at any time that the Person is or thereby becomes
the Beneficial Owner of 15% or more of the shares of Common
Stock of the Company then outstanding (other than shares
-2-
acquired solely as a result of corporate action of the
Company not caused, directly or indirectly, by such Person),
then such Person shall be deemed to be an "Acquiring
Person"; and
(ii) no Person shall become an "Acquiring Person"
solely as a result of an acquisition of shares of Common
Stock of the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the
shares of Common Stock of the Company then outstanding;
provided, however, that if a Person would, but for the
-------- -------
provisions of this clause (ii), become an Acquiring Person
by reason of share purchases by the Company and shall, after
such share purchases by the Company, become the Beneficial
Owner of any additional shares of Common Stock of the
Company at any time that the Person is or thereby becomes
the Beneficial Owner of 15% or more of the shares of Common
Stock of the Company then outstanding (not as a result of
any action or transaction contemplated in this clause (ii)
or in clause (iii) below), then such Person shall be deemed
to be an "Acquiring Person"; and
(iii) no Person shall become an "Acquiring Person"
solely as a result of an action or transaction or series of
related actions or transactions approved by the Board of
Directors of the Company before such Person would otherwise
have become an "Acquiring Person"; provided, however, that
-------- -------
if any Person which, but for the foregoing provisions of
this clause (iii), would have become an "Acquiring Person"
shall thereafter acquire additional shares of Common Stock
(not as a result of any action or transaction contemplated
in clause (ii) or in this clause (iii)), then such person
shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors of the
Company determines in good faith that a Person who would
otherwise be an "Acquiring Person", as defined pursuant to the
foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable
a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for any purposes
of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as in effect on the date of this
Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
-3-
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement
or understanding (whether or not in writing) (other
than customary agreements with and between underwriters
and selling group members with respect to a bona fide
public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of
such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any
agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding
to vote such security (1) arises solely from a
revocable proxy given to such Person in response to a
public proxy solicitation made pursuant to, and in
accordance with, the applicable rules and regulations
of the Exchange Act and (2) is not also then reportable
on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such
Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or
understanding (whether or not in writing) (other
than customary agreements with and between
underwriters and selling group members with
respect to a bona fide public offering of
securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the
provision to Section 1(c)(ii)(B)) or disposing of
any securities of the Company.
(d) "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.
(e) "close of business" on any given date shall mean
5:00 P.M., New York time, on such date; provided, however, that
if such date is not a Business Day it shall mean 5:00 P.M. New
York time, on the next succeeding Business Day.
(f) "Common Stock" when used with reference to the Company
shall mean the common stock, without par value, of the Company.
"Common Stock" when used with reference to any Person other than
the Company shall mean the capital stock (or equity interest)
with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person other than an
individual, the Person or Persons other than an individual which
ultimately control such first-mentioned Person.
-4-
(g) "Company" shall have the meaning set forth in the
preamble hereto.
(h) "Current Per Share Market Price" shall have the meaning
set forth in Section 11(d)(i) hereof.
(i) "Depositary Agent" shall have the meaning set forth in
Section 14(b) hereof. The entity acting as Rights Agent may also
act as Depositary Agent.
(j) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(k) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(l) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(m) "Preferred Stock" shall mean the series of the
Company's Preferred Stock, without par value, having the
preferences, limitations, relative rights and other terms set
forth in the form of the Company's Statement Pursuant to
Section 10-602 relating to Preferred Stock, Series X, attached to
this Agreement as Exhibit A.
(n) "Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.
(o) "Record Date" shall have the meaning set forth in the
recital hereto.
(p) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(q) "Redemption Price" shall have the meaning set forth in
Section 23(b) hereof.
(r) "Right" shall have the meaning set forth in the recital
hereto.
(s) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof, and shall be substantially in the form
attached to this Agreement as Exhibit B.
(t) "Rights Agent" shall have the meaning set forth in the
preamble hereto.
(u) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person that an
Acquiring Person has become such.
(v) "Subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or
indirectly, by such Person.
-5-
Section 2. Appointment of Rights Agent. The Company
---------------------------
hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders
of shares of the Common Stock of the Company) in accordance with
the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time act
as Co-Rights Agent or appoint such Co-Rights Agents as it may
deem necessary or desirable. Any actions which may be taken by
and any deliveries which are to be made to the Rights Agent
pursuant to the terms of this Agreement may be taken by and may
be delivered to any such Co-Rights Agents. To the extent that
any Co-Rights Agent takes any action pursuant to this Agreement,
such Co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and
obligations imposed upon, the Rights Agent pursuant to the terms
of this Agreement.
Section 3. Issue of Right Certificates. (a) Until the
---------------------------
earlier of (i) the close of business on the tenth Business Day
after the Shares Acquisition Date (or, if the Shares Acquisition
Date shall have occurred prior to the Record Date, the close of
business on the tenth Business Day after the Record Date) or
(ii) the close of business on the tenth Business Day after the
date of the commencement of a tender or exchange offer the
consummation of which would result in any Person becoming an
Acquiring Person (or such later date as the Board of Directors
may determine by resolution adopted prior to the Shares
Acquisition Date) (such date being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced by the
certificates for shares of Common Stock of the Company and not by
separate Right Certificates, and (y) the Rights will be
transferable only in connection with, and will automatically be
transferred by, a transfer of the associated shares of Common
Stock of the Company. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the
Rights Agent will countersign, and the Company will send or cause
to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder
of shares of Common Stock of the Company as of the close of
business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Right Certificate in the
form described in Section 4 hereof (a "Right Certificate"),
evidencing one Right for each share of Common Stock so held. On
and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On or prior to the Record Date or as soon as
practicable thereafter, the Company will send a copy of a summary
of the Rights by first-class mail, to each record holder of
shares of Common Stock of the Company as of the close of business
on the Record Date or, if such mailing is made prior to the
Record Date, to each holder of record as of the date of such
mailing, at the address of such holder shown on the records of
the Company.
(c) Rights shall be issued in respect of all shares of
Common Stock of the Company issued after the Record Date but
prior to the earliest of the Distribution Date, the Redemption
-6-
Date or the Final Expiration Date, and certificates evidencing
such shares shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
"This certificate also evidences and entitles the
holder hereof to certain rights as set forth in a
Rights Agreement, dated as of March 5, 1999 (the
"Rights Agreement"), between UniSource Energy
Corporation and The Bank of New York the terms of which
are hereby incorporated herein by reference and a copy
of which is on file at the principal executive offices
of UniSource Energy Corporation. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
UniSource Energy Corporation will mail to the holder of
this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As
described in the Rights Agreement, Rights beneficially
owned by an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) and any Transferee
shall become null and void."
In the event that the Company shall purchase or acquire any
shares of Common Stock of the Company after the Record Date but
prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date any Rights associated with such
shares of Common Stock shall be deemed canceled and retired so
that the Company shall not be entitled to exercise any Rights
associated with shares of Common Stock which are no longer
outstanding.
Section 4. Form of Right Certificates. The Right
--------------------------
Certificates (and the forms of election to purchase shares of
Preferred Stock and of assignment to be printed on the reverse
thereof) may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or
to conform to usage.
Section 5. Countersignature and Registration. The Right
---------------------------------
Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its President, or any of its Vice
Presidents, either manually or by facsimile signature, shall have
affixed thereto the Company's seal or a facsimile thereof, and
shall be attested by the Corporate Secretary or an Assistant
Corporate Secretary, or the Treasurer or an Assistant Treasurer,
of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually or by facsimile signature
countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company
who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the
-7-
Rights Agent and issuance and delivery by the Company, such Right
Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates
had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its shareholder services office, books
for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates
and the date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
-----------------------------------------------
Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
--------------------------------------------------------------
Certificates. Subject to the provisions of Sections 7(e) and 14
------------
hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date or the Final Expiration Date,
any Right Certificate or Right Certificates may be transferred,
split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a
like number of one ten-thousandths of a share of Preferred Stock
as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the shareholder services office of the
Rights Agent designated for such purpose. Neither the Rights
Agent nor the Company shall be obligated to take any such action
whatsoever with respect to the transfer of any such surrendered
Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and
shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliate or
Associate thereof as the Company shall reasonably request.
Thereupon, the Rights Agent shall, subject to Sections 7(e) and
14, countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as
so requested. The Company may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange
of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction
or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory
-8-
to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company
will make and deliver a new Right Certificate of like tenor to
the Rights Agent for delivery to the registered holder in lieu of
the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
----------------------------------------------
Date of Rights. (a) Subject to Section 7(e) hereof, at any time
--------------
after the Distribution Date, and at or prior to the earlier of
(i) the close of business on March 31, 2009 (the "Final
Expiration Date"), or (ii) the time at which the Rights are
redeemed or exchanged as provided in Section 23 hereof (the
"Redemption Date"), the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including without limitation any
restriction on exercisability set forth in or resulting from
Section 9, Section 11(a)(iii), Section 14 and Section 20(j)
hereof) in whole or in part upon surrender of the Right
Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights
Agent designated for such purpose, together with payment of the
Purchase Price for each one ten-thousandth of a share of
Preferred Stock as to which the Rights are exercised.
(b) The purchase price for each one ten-thousandth of a
share of Preferred Stock pursuant to the exercise of a Right (the
"Purchase Price") shall initially be $50.00, shall be subject to
adjustment from time to time as provided in Sections 11 and 13
hereof and shall be payable in accordance with paragraph (c)
below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment of the Purchase
Price for the shares of Preferred Stock (including fractions
thereof) to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer
agent for the shares of Preferred Stock certificates for the
number of whole shares of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes such transfer agent to
comply with all such requests, or (B) requisition from the
Depositary Agent depositary receipts representing such number of
one ten-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by the
transfer agent with the Depositary Agent) and the Company hereby
directs the Depositary Agent to comply with such request, (ii)
when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such certificates
or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate,
registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such
cash to or upon the order of the registered holder of such Right
-9-
Certificate. The payment of the Purchase Price shall be made in
cash or by certified bank check or bank draft payable to the
order of the Company or Rights Agent. The provisions of this
subsection (c) are subject to the provisions of subsections (e)
and (f) of this Section 7 and the provisions of Section 20(j).
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent to the
registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the date upon which any person shall
become an Acquiring Person, any Rights beneficially owned by
(i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become and be null and void
without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. Each of the
Company and the Rights Agent shall use all reasonable efforts to
ensure that (x) no Right Certificate shall be issued pursuant to
Section 3 that represents any such Right, (y) no Right
Certificate shall be issued at any time upon the transfer of any
Rights to or from an Acquiring Person or any Associate or
Affiliate thereof or to or from any nominee of such Acquiring
Person, Associate or Affiliate and (z) any Right Certificate
delivered to the Rights Agent for such a transfer shall be
canceled.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to the exercise of
any Rights unless the registered holder thereof shall have
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Rights Agent or the Company shall reasonably request.
-10-
Section 8. Cancellation and Destruction of Right
-------------------------------------
Certificates. All Right Certificates surrendered for the purpose
------------
of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled
by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the
Company, or shall, at the written request of the Company, destroy
such canceled Right Certificates in accordance with Rule 17Ad-7
under the Exchange Act, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
-----------------------------------------------
The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued
shares of Preferred Stock the number of shares of Preferred Stock
that will be sufficient to permit the exercise in full of all
outstanding Rights.
The Company shall use all reasonable efforts, as soon as
practicable following the Shares Acquisition Date, to obtain such
regulatory approvals and take such other action as may be
required for it to issue and/or sell securities purchasable upon
the exercise of the Right.
Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable pursuant to
Section 7 or pursuant to the provisions contemplated by
Section 11(a)(ii) hereof (a) unless and until any regulatory
approvals required for the issuance and/or sale of securities
upon such exercise have been obtained, (b) if the exercise
thereof, or the issuance and/or sale of the securities to be
purchased upon such exercise, would violate or contravene any
applicable law, regulation or administrative or judicial order or
(c) in any jurisdiction if any requisite filings under any
applicable securities law shall not have been made or become
effective in such jurisdiction.
The Company shall take all such action as may be necessary
to ensure that all securities delivered upon exercise of Rights
shall be duly and validly authorized and issued and, if equity
securities, fully paid and nonassessable.
The Company shall pay when due and payable any and all
federal and state transfer taxes and charges which may be payable
in respect of the issuance or delivery of the Right Certificates
or of any securities upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may
be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery
of certificates or depositary receipts for securities in a name
other than that of, the registered holder of the Right
-11-
Certificate evidencing Rights surrendered for transfer or
exercise or to issue or to deliver any certificates or depositary
receipts for securities upon the exercise of any Rights until any
such tax shall have been paid by the holder of such Right
Certificate or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Issuance Date. Each person in
-----------------------------
whose name any certificate for shares of Preferred Stock is
issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of
Preferred Stock represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made (or
if such day is not a Business Day, the next succeeding Business
Day).
Section 11. Adjustment of Purchase Price, Amount and Type
---------------------------------------------
of Securities or Number of Rights. The Purchase Price, the
---------------------------------
amount and type of securities covered by each Right and the
number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement and prior to the Shares Acquisition Date
(A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding shares of Preferred Stock into
a smaller number of shares of Preferred Stock or (D) issue any
shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be
-------- -------
paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital stock of the Company issuable
upon exercise of one Right.
(ii) Subject to the provisions of Section 7(e), Section 9,
Section 14 and Section 20(j) hereof, in the event any Person
shall become an Acquiring Person, proper provision shall be made
so that each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof at a
price equal to the Purchase Price, (A) in lieu of shares of
Preferred Stock that number of shares of Common Stock of the
Company having an aggregate Current Per Share Market Price on the
Shares Acquisition Date equal to twice the Purchase Price or
-12-
(B) at the election of the Company, that number of shares of
Preferred Stock equal to the number of shares of Common Stock
determined in accordance with clause (A) multiplied by one ten-
thousandth (1/10,000).
(iii) In the event that (x) there shall not be sufficient
shares of Common Stock of the Company and/or Preferred Stock or a
combination thereof authorized but unissued, or there shall not
have been received any regulatory approval required, to permit
the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), or (y) the issuance of Common Stock
of the Company and/or Preferred Stock upon such exercise shall
not then be permitted under the Company's Amended and Restated
Articles of Incorporation or any applicable law or administrative
or judicial regulation or order, the Company may, at its option,
with respect to some of or all of the Rights (as hereinafter
provided), make adequate provision to substitute, upon exercise
of each such Right but subject to Section 9 hereof, (1) cash, (2)
a reduction in the Purchase Price, (3) equity securities of the
Company and/or its Subsidiaries, (4) debt securities of the
Company and/or its Subsidiaries, (5) other assets or securities,
or (6) any combination of the foregoing, having an aggregate
value equal to the aggregate Current Per Share Market Price on
the Shares Acquisition Date of the securities for which each such
Right would otherwise be exercisable pursuant to
Section 11(a)(ii) hereof (such aggregate value to be determined
by the Board of Directors of the Company based upon the advice of
a nationally recognized investment banking firm selected by the
Board of Directors of the Company, which determination shall be
described in a statement filed with the Rights Agent). To the
extent that the Board of Directors of the Company determines that
some action need be taken pursuant to the first sentence of this
Section 11(a)(iii), the Company (x) shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights (or to Rights pro-rata or such other
reasonable method of allocation as shall be determined by the
Board of Directors of the Company, to the extent that such action
applies to less than all the Rights), and (y) may suspend the
exercisability of the Rights in order to seek any authorization
of additional shares, to take any action to obtain any required
regulatory approval, to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof and/or to take any other action
deemed by the Company to be legally required in order to effect
such distribution. In the event of any such suspension, the
Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is
no longer in effect.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of shares
of Preferred Stock prior to the Shares Acquisition Date entitling
them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase shares of Preferred
Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock ("equivalent
preferred shares")) or securities convertible into shares of
Preferred Stock or equivalent preferred shares at a price per
-13-
share of Preferred Stock or equivalent preference share (or
having a conversion price per share, if a security convertible
into shares of Preferred Stock or equivalent preferred shares)
less than the then Current Per Share Market Price of the
Preferred Stock on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date plus
the number of shares of Preferred Stock which the aggregate
offering price of the total number of shares of Preferred Stock
and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities
so to be offered) would purchase at such Current Per Share Market
Price and the denominator of which shall be the number of shares
of Preferred Stock outstanding on such record date plus the
number of additional shares of Preferred Stock and/or equivalent
preference shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are
initially convertible). Shares of Preferred Stock owned by or
held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined
in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of shares of the
Preferred Stock prior to the Shares Acquisition Date (including
any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the then
Current Per Share Market Price of the Preferred Stock on such
record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to one share of Preferred Stock and the
denominator of which shall be such Current Per Share Market Price
of a share of Preferred Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
-14-
(d) (i) For the purpose of any computation hereunder, the
"Current Per Share Market Price" of any security (a "Security"
for the purpose of this Section 11(d)(i)) on any date shall be
deemed to be the average of the daily closing prices per share of
such Security for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to such date; provided,
--------
however, that in the event that the Current Per Share Market
-------
Price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or
distribution on such Security or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration
of 30 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
Current Per Share Market Price shall be appropriately adjusted to
reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
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 on
the principal national securities exchange on which the Security
is listed or admitted to trading or, if the 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 high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is
not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of
Directors of the Company. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a
Business Day.
(ii) For the purpose of any computation hereunder, the
Current Per Share Market Price of shares of the Preferred Stock
on any date shall be determined in accordance with the method set
forth in Section 11(d)(i). If shares of the Preferred Stock are
not publicly traded, the Current Per Share Market Price of shares
of the Preferred Stock shall be conclusively deemed to be the
Current Per Share Market Price of the shares of Common Stock of
the Company as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock
dividend, reclassification or similar transaction occurring after
the Distribution Date), multiplied by ten thousand. If neither
the Common Stock nor the Preferred Stock are publicly held or so
listed or traded, Current Per Share Market Price shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent.
-15-
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of
at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to the
nearest one-millionth of a share of Preferred Stock or one
ten-thousandth of any other share or security, as the case may
be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of
the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13, the holder of any Right thereafter
exercised shall become entitled to receive any securities or
assets other than share of Preferred Stock, the provisions of
this Agreement with respect to the Preferred Stock shall apply as
appropriate to any such other securities or assets in order to
fully realize the benefits intended to be conferred by
Section 11(a) and/or Section 13 hereof.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall
evidence the right to purchase, at the adjusted Purchase Price,
the number of one ten-thousandths of a share of Preferred Stock
purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and
(c), each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to purchase,
at the adjusted Purchase Price, that number of ten-thousandths of
a share of Preferred Stock (calculated to the nearest one
one-millionth of a share of Preferred Stock) obtained by
(i) multiplying (x) the number of ten-thousandths of a share
covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in substitution for any adjustment in the number of ten-
thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the
number of ten-thousandths of a share of Preferred Stock for which
a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the
-16-
nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Right Certificates
have been issued, shall be at least 10 days later than the date
of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to
this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed, subject to the provisions
of Section 7(e) hereof, to holders of record of Right
Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of ten-thousandths of a share of
Preferred Stock issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue
to express the Purchase Price and the number of ten-thousandths
of a share of Preferred Stock which were expressed in the initial
Right Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of
any Right exercised after such record date of the Preferred Stock
and other securities, if any, issuable upon such exercise over
and above the Preferred Stock and other securities, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive
such securities upon the occurrence of the event requiring such
adjustment.
(l) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the
extent that it in its sole discretion shall determine to be
advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any shares of
Preferred Stock at less than the current market price, issuance
-17-
wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of
Preferred Stock, dividends on shares of Preferred Stock payable
in Preferred Stock or issuance of rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to
such shareholders.
(m) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall
(i) declare or pay any dividend on its shares of Common Stock
payable in Common Stock or (ii) effect a subdivision, combination
or consolidation of its Common Stock (by reclassification or
otherwise than by payment of dividends in its Common Stock) into
a greater or lesser number of shares of Common Stock of the
Company, then in any such case (i) the Purchase Price in effect
after such event upon proper exercise of each Right shall be
determined by multiplying the Purchase Price in effect
immediately prior to such event by a fraction, the numerator of
which is the number of such shares of Common Stock outstanding
immediately before such event and the denominator of which is the
number of such shares of Common Stock outstanding immediately
after such event, and (ii) each share of Common Stock of the
Company outstanding immediately after such event shall have
issued with respect to it that number of Rights which each such
share of Common Stock outstanding immediately prior to such event
had issued with respect to it. The adjustments provided for in
this Section 11(m) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination
or consolidation is effected.
(n) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken, it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or
-----------------------------------------
Number of Shares. Whenever an adjustment is made as provided in
----------------
Sections 11 and 13 hereof, the Company shall promptly (a) prepare
a certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common
Stock of the Company or the Preferred Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of
--------------------------------------------
Assets or Earning Power or Certain Other Transactions. In the
-----------------------------------------------------
event that, following the Shares Acquisition Date, directly or
indirectly (a) the Company shall consolidate with, or merge with
and into, any other Person, (other than a subsidiary of the
Company in a transaction which complies with Section 11(n)
hereof), (b) any Person (other than a subsidiary of the Company
in a transaction which complies with Section 11(n) hereof) shall
consolidate with the Company, or merge with and into the Company
-18-
and the Company shall be the continuing or surviving corporation
of such merger and, in connection with such merger, all or part
of the shares of Common Stock of the Company shall be changed
into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property or (c) the
Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person, or to two or more Persons
which are affiliated or otherwise acting in concert, other than
the Company or one or more of its wholly-owned Subsidiaries
(other than a subsidiary of the Company in a transaction which
complies with Section 11(n) hereof), then, and in each such case,
proper provision shall be made so that (i) each holder of a Right
shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the Purchase Price, that number of
shares of Common Stock of such other Person (including the
Company as successor thereto or as the surviving corporation)
having an aggregate Current Per Share Market Price on the date of
consummation of such transaction equal to twice the Purchase
Price, (ii) the issuer of such shares of Common Stock shall
thereafter be liable for, and shall assume, by virtue of such
transaction, all the obligations and duties of the Company
pursuant to this Agreement, (iii) the term "Company" shall
thereafter be deemed to refer to such issuer, and (iv) such
issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its shares of Common Stock
in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to the shares of Common Stock thereafter
deliverable upon the exercise of the Rights. The Company shall
not enter into or permit to occur any such transaction unless
prior thereto (a) the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so
providing and (b) the issuance of shares of Common Stock of such
issuer upon exercise of Rights (as they shall have been modified
pursuant to the immediately preceding sentence) shall have been
approved, to the extent required, by all regulatory authorities
having jurisdiction over such issuance, and all other actions
necessary in order to permit in full, upon exercise of Rights the
issuance of such shares of Common Stock (including, without
limitation, the reservation of sufficient such shares of Common
Stock to enable all outstanding Rights to be exercised in full)
shall have been completed. The Company shall not enter into or
permit to occur any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which would eliminate or materially
diminish the benefits intended to be afforded by the Rights,
including the benefits intended to be conferred by this Section
13 upon consummation of such transaction. The provisions of this
Section 13 shall similarly apply to successive mergers,
consolidations, sales and other transactions referred to in this
Section 13.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence
-19-
fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this
Section 14(a), the current market value of a whole Right shall be
the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors
of the Company shall be used.
(b) The Company shall not be required to issue fractions of
a share of Preferred Stock (other than fractions which are
integral multiples of one ten-thousandth of a share of Preferred
Stock) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one ten-thousandth of a
share of Preferred Stock). Fractions of a share of Preferred
Stock in integral multiples of one ten-thousandth of a share of
Preferred Stock may, at the election of the Company, be evidenced
by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary agent selected by it (the
"Depositary Agent"), provided that such agreement shall provide
that the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred
Stock that are not integral multiples of one ten-thousandth of a
share of Preferred Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Preferred
Stock. For purposes of this Section 14(b), the current market
value of a share of Preferred Stock shall be the closing price of
a share of Preferred Stock (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
-20-
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or
any fractional securities upon exercise of a Right (except as
provided above).
Section 15. Rights of Action. All rights of action in
----------------
respect of this Agreement, excepting the rights of action given
to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates; and any
registered holder of any Right Certificate, without the consent
of the Rights Agent or of the holder of any other Right
Certificate, may, in his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement
and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a
--------------------------
Right, by accepting the same, consents and agrees with the
Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of shares of
Common Stock of the Company;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office or offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied
by a proper instrument of transfer;
(c) subject to Sections 6 and 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e), shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
-21-
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company shall use its
best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a
-------------------------------------
Shareholder. No holder, as such, of any Right Certificate shall
-----------
be entitled to vote, receive dividends or be deemed for any
purpose the holder of a share of Preferred Stock or any other
securities which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer upon
the holder of any Right Certificate, as such, any of the rights
of a shareholder or any right to vote for the election of
directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting shareholders (except as expressly provided herein), or
to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The Company
---------------------------
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel
fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in
the premises.
The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or
omitted by it in connection with, its administration of this
Agreement in reliance upon any Right Certificate or certificate
for a share of Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 19. Merger or Consolidation or Change of Name of
--------------------------------------------
Rights Agent. Any corporation into which the Rights Agent or any
------------
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
-22-
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any
of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates
either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in
its prior name or in its changed name; and in all such cases such
Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
----------------------
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in
good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer, the Secretary, or
any Assistant Treasurer or Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or
-23-
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any adjustment in the terms of
the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11 or 13, or the ascertaining of the
existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such
change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Preferred Stock
to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of Common Stock of the Company or
Preferred Stock will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the
Treasurer, the Secretary, or any Assistant Treasurer or Assistant
Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or
for any delay in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of
the Rights or other securities of the Company or become
-24-
pecuniarily interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company
or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for
any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) If, with respect to any Right Certificate surrendered
to the Rights Agent for exercise or transfer, the certificate
attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof,
the Rights Agent shall not take any further action with respect
to such requested exercise of transfer without first consulting
with the Company.
Section 21. Change of Rights Agent. The Rights Agent or
----------------------
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common
Stock of the Company or Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Stock of the Company or
Preferred Stock by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice,
submit his Right Certificate for inspection by the Company), then
the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States
or the State of New York or the State of Arizona (or of any other
state of the United States so long as such corporation is
authorized to do business as a banking institution in the State
of Arizona or the State of New York), in good standing, having an
office in the State of Arizona or the State of New York, which is
authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at
-25-
least $50 million, or (b) an affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent
any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with
the predecessor Rights Agent and each transfer agent of the
Common Stock of the Company or Preferred Stock, and mail a notice
thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the
case may be.
Section 22. Issuance of New Right Certificates.
----------------------------------
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale
of shares of Common Stock of the Company following the
Distribution Date and prior to the Redemption Date or the Final
Expiration Date, the Company shall, with respect to shares of
Common Stock of the Company so issued or sold pursuant to the
exercise of stock options outstanding prior to the Distribution
Date, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and outstanding prior to the
Distribution Date, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or
sale; provided, however, that (i) no such Right Certificate shall
be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption or Exchange. (a) The Rights may be
----------------------
redeemed or exchanged by action of the Board of Directors
pursuant to this Section 23 and shall not be redeemed in any
other manner.
(b) The Board of Directors of the Company may, at its
option, at any time prior to the close of business on the tenth
Business Day after the Shares Acquisition Date (or, if the Shares
Acquisition Date shall have occurred prior to the Record Date,
the close of business on the tenth Business Day after the Record
Date), elect to redeem all but not less than all the then
outstanding Rights at a redemption price of $0.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"). In the event that the aggregate redemption price
payable to any holder of Rights for all Rights held by such
-26-
holder shall not be evenly divisible by $.01, the fraction of one
cent otherwise payable to such holder shall be increased to one
cent.
(c) The Board of Directors of the Company may, at its
option but subject to receipt of any required regulatory
approvals, at any time after the Shares Acquisition Date and
prior to such time an Acquiring Person becomes the Beneficial
Owner of more than 50% of the outstanding shares of Common Stock
of the Company, elect to exchange all but not less than all the
then outstanding Rights (other than Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for (i) shares
of Common Stock of the Company at an exchange ratio of one share
of Common Stock of the Company per Right, appropriately adjusted
in order to protect the interests of holders of Rights generally
in the event that after the Distribution Date any issuance or
distribution of securities, cash or assets in respect of, in lieu
of or in exchange for a share of Common Stock of the Company
and/or Preferred Stock (whether by dividend, in a
reclassification or recapitalization, or otherwise, including any
such transaction involving a merger or consolidation), shall have
occurred; provided, however, that in the event that insufficient
shares of Common Stock of the Company are authorized but
unissued, or otherwise available for issuance, to permit in full
the exchange provided hereby, then each Right shall be exchanged
for (x) that fraction of a share of Common Stock of the Company,
the numerator of which shall be the total number of shares of
Common Stock of the Company authorized but unissued or otherwise
available for issuance and the denominator of which shall be the
aggregate number of such shares of Common Stock of the Company
which would have been issued pursuant to this subparagraph (c)(i)
had such shares of Common Stock been available for issuance, plus
(y) that fraction of a share of Preferred Stock, also
appropriately adjusted as provided herein, the numerator of which
shall be one minus the fraction of a share of Common Stock of the
Company to be so issued and the denominator of which shall be ten
thousand, or (ii) cash, debt or equity securities of the Company
and/or a Subsidiary thereof or other assets or any combination of
the foregoing having an aggregate value (when paid) equal to the
Current Per Share Market Price of one share of Common Stock of
the Company at the Shares Acquisition Date.
(d) Immediately upon the action of the Board of Directors
of the Company electing to redeem or exchange the Rights pursuant
to subsection (b) or (c) of this Section 23, and without any
further action and without any notice, the right to exercise the
Rights will terminate and each Right will thereafter represent
only the right to receive the Redemption Price or the securities
or assets referred to in subsection (c), as the case may be.
Within 10 days after such action of the Board of Directors
electing to redeem or exchange the Rights pursuant to subsection
(b) or (c), the Company shall give notice thereof to the Rights
Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at their addresses as they appear
upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent
for the Common Stock of the Company. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
-27-
redemption or exchange will state the method by which the payment
of the Redemption Price or the exchange will be made. Neither
the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section 23,
other than in connection with the acquisition or purchase of
shares of Common Stock of the Company prior to the Distribution
Date.
Section 24. Notice of Certain Events. (a) In case the
------------------------
Company shall propose (i) to pay any dividend payable in stock of
any class to the holders of shares of its Preferred Stock or to
make any other distribution to the holders of shares of its
Preferred Stock (other than a regular quarterly cash dividend),
(ii) to offer to the holders of shares of its Preferred Stock
rights or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding
shares of Preferred Stock), (iv) to effect any transaction set
forth in Section 13 hereof, (v) to affect the liquidation,
dissolution or winding up of the Company, or (vi) to declare or
pay any dividend on the Common Stock of the Company payable in
shares of Common Stock of the Company or to effect a subdivision,
combination or consolidation of the Common Stock of the Company
(by reclassification or otherwise than by payment of dividends in
shares of Common Stock of the Company), then, in each such case,
the Company shall give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of
such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger,
sale, transaction, transfer, liquidation, dissolution, or winding
up is to take place and the date of participation therein by the
holders of the Common Stock of the Company and/or Preferred
Stock, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
above at least 20 days prior to the record date for determining
holders of shares of the Preferred Stock for purposes of such
action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of shares of the
Common Stock of the Company and/or Preferred Stock, whichever
shall be the earlier.
(b) In case the Shares Acquisition Date shall occur, then,
in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Right Certificate, to the
extent feasible and in accordance with Section 25 hereof, a
notice of the occurrence of such event, which notice shall
describe the event and the consequences of the event to holders
of Rights under Section 11(a)(ii) hereof.
Section 25. Notices. Notices or demands authorized by this
-------
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
-28-
UNISOURCE ENERGY CORPORATION
220 West Sixth Street
Tucson, Arizona 85701
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the
Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
THE BANK OF NEW YORK
101 Barclay Street
New York, New York 10286
Attention: Steve Myers
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 26. Supplements and Amendments. Prior to the
--------------------------
Distribution Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent may supplement or
amend this Agreement in any respect without the approval of any
holders of shares of Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this
Section 26, the Company and the Rights Agent may supplement or
amend this Agreement without the approval of any holders of
Rights Certificates in order to
(a) cure any ambiguity,
(b) correct or supplement any provision contained
herein which may be defective or inconsistent with any
other provisions herein,
(c) shorten or lengthen any time period hereunder,
or
(d) change or supplement the provisions hereunder
in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person);
provided, however, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (c) of this sentence, (i)
a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or (ii) any other
-29-
time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance
with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment
shall be made which changes the number of ten-thousandths of a
share of Preferred Stock for which a Right is exercisable (other
than to reflect an adjustment effected by the operation of any
provision of this Agreement or which advances the Final
Expiration Date. Prior to the Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the
interests of the holders of shares of Common Stock.
Notwithstanding any other provision hereof, the Rights Agent
shall not be required to consent to any amendment or supplement
pursuant to this Section 26 which alters in any adverse manner
the Rights Agent's rights or duties.
Section 27. Successors. All the covenants and provisions
----------
of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. Benefits of this Agreement. Nothing in this
--------------------------
Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution
Date, the shares of 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 Right
Certificates (and, prior to the Distribution Date, the shares of
Common Stock of the Company).
Section 29. Severability. If any term, provision,
------------
covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 30. Governing Law. This Agreement and each Right
-------------
Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Arizona and for all purposes
shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State except for Sections 18, 19, 20 and 21
hereof which shall be governed by and construed in accordance
with the laws of the State of New York.
Section 31. Counterparts. This Agreement may be executed
------------
in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
-30-
Section 32. Descriptive Headings. Descriptive headings
--------------------
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
UNISOURCE ENERGY CORPORATION
/s/ Ira R. Adler
----------------------------
By: Ira R. Adler
Name:
Title: Executive Vice President,
Chief Financial Officer
and Treasurer
THE BANK OF NEW YORK
/s/ John Sivertsen
----------------------------
By: John Sivertsen
Name:
Title: Vice President
EXHIBIT A
UNISOURCE ENERGY CORPORATION
------------
FORM OF STATEMENT PURSUANT TO S.10-602
RELATING TO
PREFERRED STOCK, SERIES X
-------------------------
In compliance with the requirements of Section 10-602
of the Arizona Business Corporation Act, UniSource Energy
Corporation, an Arizona corporation, certifies as follows:
(1) The name of the corporation is UniSource Energy
Corporation.
(2) At a meeting of the Board of Directors of the
corporation duly called and held on March 5, 1999, at which a
quorum was present and acting throughout, the Board of Directors
duly adopted the following resolutions determining the terms of a
series of Preferred Stock of the corporation designated as
"Preferred Stock, Series X:
RESOLVED, that pursuant to the authority expressly
vested in this Board of Directors by the Amended and
Restated Articles of Incorporation of the Company, this
Board of Directors hereby (i) establishes a series of
Preferred Stock designated "Preferred Stock, Series X" (the
"Series X Preferred Stock") consisting of 10,000 shares and
having the preferences, limitations, relative rights and
other terms presented to this meeting, such preferences,
limitations, relative rights and other terms being
incorporated into this resolution by reference and deemed to
be a part hereof and (ii) directs that such preferences,
limitations, relative rights and other terms be attached as
an exhibit to the statement required by Section 10-602 of
the Arizona Business Corporation Act to be filed with the
Arizona Corporation Commission with respect to the Series X
Preferred Stock; and be it
FURTHER RESOLVED, that the President, any Vice
President or the Treasurer, of the Company be, and he or she
hereby is, authorized and empowered to execute, with such
changes as they deem necessary, and cause to be filed with
the Arizona Corporation Commission a statement with respect
to the Series X Preferred Stock in accordance with Section
10-602 of the Arizona Business Corporation Act; and
(3) The preferences, limitations, relative rights and
other terms of the Preferred Stock, Series X, presented to and
approved at the aforesaid meeting of the Board of Directors of
the corporation are attached hereto as Appendix A.
IN WITNESS WHEREOF, UniSource Energy Corporation has
caused this Statement to be executed by a Vice President this
day of , .
------ ----
UNISOURCE ENERGY CORPORATION
By:
---------------------------
Name:
Title:
A-2
APPENDIX A
UNISOURCE ENERGY CORPORATION
------------
PREFERRED STOCK, SERIES X
(PREFERENCES, LIMITATIONS, RELATIVE RIGHTS AND OTHER TERMS)
------------
(a) DESIGNATION.
-----------
Then thousand (10,000) shares of the authorized Preferred
Stock of the Corporation shall be designated Preferred Stock,
Series X (the "Series X Preferred Stock") and shall have the
preferences, limitations, relative rights and other terms set
forth in paragraphs (a) through (h) hereof.
(b) DIVIDENDS.
---------
(1) General. When, as and if declared by the Board of
Directors and subject to the rights of the holders of any shares
of any series of Preferred Stock or other stock ranking senior to
the Series X Preferred Stock with respect to dividends, the
Corporation shall pay, out of funds legally available therefor,
dividends in cash to the holders of shares of Series X Preferred
Stock at the applicable dividend rate or rates.
(2) Dividend Rate. The dividend rate with respect to
each share of Series X Preferred Stock shall be equal to the
greater of (A) $1.00 and (B) subject to the provision for
adjustment set forth below, 10,000 times the aggregate per share
amount of all dividends or other distributions (other than a
dividend or distribution payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock, by
reclassification or otherwise), paid or declared on the shares of
Common Stock since the immediately preceding Dividend Payment
Date (as hereinafter defined) or, with respect to the first
Dividend Payment Date, since the Date of Issuance. In the event
the Company shall at any time after the Distribution Date (as
defined in the Rights Agreement (as hereinafter defined))
declare or pay any dividend on the shares of Common Stock payable
in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock, by
reclassification or otherwise, into a greater or lesser number of
shares of Common Stock, then, in each such case, the amount to
which holders of shares of the Series X Preferred Stock were
entitled immediately prior to such event under clause (B) of the
preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which 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.
(3) Dividend Payment Dates. Dividends on shares of
the Series A Preferred Stock shall be payable, subject to the
terms and conditions hereof, on each Dividend Payment Date,
beginning on the second Dividend Payment Date following the Date
of Issuance, to the registered holders of such shares as of the
close of business on the Record Date (as hereinafter defined)
with respect to such Dividend Payment Date.
(4) Accrual of Dividends, etc. Dividends shall begin
to accrue on shares of the Series X Preferred Stock from the Date
of Issuance thereto. Dividends shall accrue on a daily basis
whether or not at the time the Corporation shall have funds
legally available for distributions to shareholders. Accrued
dividends for any period less than a full annual period shall be
computed on the basis of a year deemed to consist of (A) 360 days
and (B) twelve calendar months each, itself, deemed to consist of
30 days; provided, however, that, if any part of the period for
which accrued dividends are being computed shall consist of a
portion of a calendar month, accrued dividends for such part of
such period shall be computed on the basis of the actual number
of days elapsed during such calendar month (excluding the date of
payment, if any, in such calendar month) in relation to the full
annual dividend accrued during a deemed 360-day year. Accrued
but unpaid dividends shall accumulate as of the Dividend Payment
Date on which they first become payable, but no interest shall
accrue on accumulated but unpaid dividends.
(5) Parity Stock. So long as any Series X Preferred
Stock shall be outstanding, if (A) at any time the Corporation
shall not have satisfied in full the cumulative dividends accrued
on the Series X Preferred Stock for all Dividend Periods (as
hereinafter defined) ended at or prior to such time and (B) at
such time there shall have accrued and shall remain unpaid, for
Dividend Periods ended at or prior to such time, dividends on
shares of any other series of the Preferred Stock or any other
class of stock in either case ranking as to dividends on a parity
with the Series X Preferred Stock, any funds of the Corporation
legally available for the purpose shall be allocated among all
cumulative dividends accrued and unpaid, for all Dividend Periods
ended at or prior to such time, on all such parity series of the
Preferred Stock and such other parity stock in proportion to the
respective amounts thereof.
(6) Junior Securities. So long as any Series X
Preferred Stock shall be outstanding, the Corporation shall not
(A) declare or pay or set apart for payment any dividends or make
any other distributions on any Junior Securities (as hereinafter
defined) or (B) make any payment on account of the redemption,
purchase or other acquisition or retirement of any Junior
Securities, unless, as of the date of any such declaration,
setting aside or payment, as the case may be, there shall also
have been declared and paid or set aside for payment dividends
accumulated on the Series X Preferred Stock during all Dividend
Periods ended on or prior to such date; provided, however, that
the foregoing restriction shall not prohibit (X) any dividend
payable solely in units of Junior Securities or (Y) the
acquisition of any Junior Securities either (i) pursuant to any
employee or director incentive or benefit plan or arrangement
AA-2
(including any employment, severance or consulting agreement), or
any dividend or interest reinvestment or stock purchase plan, of
the Corporation or any affiliate of the Corporation heretofore or
hereafter adopted or (ii) in exchange solely for any other Junior
Securities; and provided, further, that nothing herein shall
prevent the simultaneous declaration or payment of dividends on
both the Series X Preferred Stock and any Junior Securities if,
at the time of such declaration, there are sufficient funds
legally available to pay all dividends concurrently.
(c) DISSOLUTION.
-----------
(1) General. Subject to the rights of the holders of
any stock of the Corporation ranking senior to or on a parity
with the Series X Preferred Stock in respect of distributions
upon the dissolution of the Corporation, upon any such
dissolution (whether voluntary or involuntary), each holder of
Series X Preferred Stock shall be entitled to be paid, out of the
assets of the Corporation which remain after the payment and
discharge of all liabilities of the Corporation, before any
distribution or payment is made upon any Junior Securities, an
amount in cash equal to the aggregate Dissolution Value (as
hereinafter defined) of the shares of Series X Preferred Stock
held by such holder plus an amount equal to accrued and unpaid
dividends thereon to (but excluding) the date of payment, and the
holders of Series X Preferred Stock shall not be entitled to any
further payment.
The Dissolution Value shall be an amount equal to the
greater of (A) $10 per share and (B) subject to the provision for
adjustment set forth below, above, 10,000 times the aggregate
amount to be distributed per share to the holders of the shares
of Common Stock, plus, in either case an amount equal to accrued
and unpaid dividends to the date of payment. If the Corporation
shall at any time after the Distribution Date declare or pay any
dividend on the shares of Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock, by
reclassification or otherwise, into a greater or lesser number of
shares of Common Stock, then, in each such case, the aggregate
amount to which holders of shares of the Series X Preferred Stock
were entitled immediately prior to such event under clause (B) of
the preceding sentence, shall be adjusted by multiplying such
amount by a fraction the numerator of which 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 outstanding immediately prior to such event.
(2) Parity Stock. If, upon any such dissolution of
the Corporation, the Corporation's assets available to be
distributed among the holders of the Series X Preferred Stock and
any other series of the Preferred Stock and any other stock of
the corporation in either case ranking as to any such
distribution on a parity with the Series X Preferred Stock are
insufficient to permit payment to such holders of the aggregate
amount which they are entitled to be paid, then the entire assets
available to be distributed to the Corporation's shareholders
shall be allocated among all dissolution requirements on all such
parity series of Preferred Stock and such other parity stock in
proportion to the respective amounts then required for the
satisfaction thereof.
AA-3
(3) Notice. Not less than 30 days prior to the
payment date stated therein, the Corporation shall mail written
notice of any such dissolution to each record holder of Series X
Preferred Stock, the payment date or dates when, and the place or
places where, the amounts distributable to holders of Series X
Preferred Stock in such circumstances shall be payable, and
stating that such payment will be made only after the surrender
of certificates representing shares of Series X Preferred Stock;
provided, however, that a failure to give notice as provided
above or any defect therein shall not affect the Corporation's
ability to consummate a dissolution of the Corporation, whether
voluntary or involuntary.
(4) Other Transactions. Neither the consolidation,
merger or other combination of the Corporation with or into any
other entity or entities (whether or not the Corporation is the
surviving entity), nor the sale, transfer or other disposition by
the Corporation of all or any part of its assets, nor the
reduction of the capital stock of the Corporation nor any other
form of recapitalization or reorganization affecting the
Corporation shall be deemed to be a dissolution of the
Corporation within the meaning of this paragraph (b).
(d) REDEMPTION.
----------
(1) General. The outstanding shares of Series X
Preferred Stock may be redeemed, at the option of the
Corporation, in whole at any time or, in part from time to time,
at a price per share equal to (A) 100% of the product of the
Adjustment Number (as hereinafter defined) times the Average
Market Value (as hereinafter defined) of the Common Stock, plus
(B) an amount equal to accrued but unpaid dividends thereon to
(but excluding) the date fixed for redemption. The "Adjustment
Number" shall be 10,000; provided, however, that if the
Corporation shall at any time after the Distribution Date declare
or pay any dividend on the shares of Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock, by
reclassification or otherwise, then in each such case the
Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction,
the numerator of which shall be the number of shares of Common
Stock outstanding immediately after such event, and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event. The "Average
Market Value" shall be the average of the closing sale prices of
a share of the Common Stock during the 30-day period immediately
preceding the date before the redemption date on the Composite
Tape maintained by the Consolidated Tape Association, or, if such
stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on
the principal United States securities exchange registered under
the Securities Exchange Act of 1934, as amended, on which such
stock is listed, or, if such stock is not listed on any such
exchange, the average of the closing sale prices with respect to
a share of Common Stock during such 30-day period, as quoted on
the National Association of Securities Dealers, Inc. Automated
Quotation System or any system then in use, or if no such
quotations are available, the fair market value of a share of the
Common Stock, as determined by the Board of Directors in good
faith.
AA-4
If less than all of the outstanding shares of the
Series X Preferred Stock are to be redeemed, the Corporation
shall select the shares to be redeemed by lot or by any other
method as shall be determined by the Corporation to be equitable.
(2) Notice of Redemption. Unless otherwise required
by applicable law, notice of redemption shall be sent to the
holders of the shares of Series X Preferred Stock to be redeemed
at the addresses shown on the books of the Corporation by first
class mail, postage prepaid, mailed not less than thirty (30)
days nor more than sixty (60) days prior to the redemption date.
Each such notice shall state (A) the redemption date, (B) the
total number of shares of Series X Preferred Stock to be redeemed
and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed, (C) the
redemption price, (D) the place or places where certificates for
such shares are to be surrendered for payment of the redemption
price, (E) that dividends on the shares to be redeemed will cease
to accrue on such redemption date and (F) such other matters as
the Corporation shall deem desirable or appropriate.
Notwithstanding the foregoing, the failure so to mail any such
notice of redemption or any defect therein or in the mailing
thereof shall not affect the validity of the redemption
proceedings with respect to shares as to which there shall have
been no such failure or defect.
With respect to any notice of redemption of shares of
Series X Preferred Stock at the option of the Corporation,
unless, upon the giving of such notice, such shares shall be
deemed to have been redeemed and to be no longer outstanding in
accordance with and subject to subparagraph (4) of this paragraph
(d), such notice may state that such redemption shall be
conditional upon the setting aside by the Corporation or the
delivery to a Redemption Agent (as hereinafter defined), on or
prior to the date fixed for such redemption, of legally available
funds sufficient to pay the redemption price of such shares, and
that if such funds shall not have been so set aside or delivered
such notice shall be of no force or effect and the Corporation
shall not be required to redeem such shares. In the event that
such notice of redemption contains such a condition and such
funds are not so set aside or delivered, the redemption shall not
be made and within a reasonable time thereafter notice shall be
given that such funds were not so set aside or delivered and such
redemption was not required to be made.
Notice of redemption having been given as aforesaid,
and the conditions, if any, set forth in such notice having been
satisfied, (A) the shares of Series X Preferred Stock so to be
redeemed shall, on the date fixed for redemption and upon
surrender of certificates for such shares in accordance with such
notice, be redeemed at the redemption price therein specified,
(B) from and after such date (unless, in the case of an
unconditional notice of redemption, the Corporation shall have
failed to set aside or deliver to a Redemption Agent moneys to
pay the redemption price and accrued and unpaid dividends to the
redemption date) dividends shall cease to accrue on such shares
and (C) no interest shall accrue on the redemption price on or
after the date fixed for redemption.
(3) Redemption Payment. Any shares of Series X
Preferred Stock shall be deemed to have been redeemed and to be
no longer outstanding capital stock of the Corporation, and all
rights of the holders of such shares (except only the right to
AA-5
receive the redemption price thereof and (without duplication)
dividends accrued and to accrue thereon to the date of the
redemption thereof pursuant to this paragraph (d)) shall
terminate, on the earlier of (A) the date on or after the date
fixed for the redemption of such shares on which the Corporation
shall have set aside money sufficient to pay the redemption price
thereof and (B) the date of an irrevocable deposit with a
Redemption Agent, in trust, of money in an amount which shall be
sufficient to pay when due the redemption price of such shares
and (without duplication) dividends accrued and to accrue thereon
to (but excluding) the date fixed for the redemption thereof;
provided, however, that in the case of the provision for
redemption of less than all shares of Series X Preferred Stock
then outstanding, such shares shall have been selected for
redemption as provided herein and the notice of such redemption
shall have been duly given or irrevocable authority shall have
been given by the Corporation to such Redemption Agent to give
such notice, under arrangements satisfactory to such Redemption
Agent; and provided, further, that if such deposit shall have
been made prior to the date fixed for the redemption of such
shares, the Corporation shall have delivered to such Redemption
Agent written instructions stating that the money so deposited
with such Redemption Agent shall be held by such Redemption
Agent, in trust, as hereinafter provided.
The money deposited with a Redemption Agent pursuant to
this subparagraph (4) of paragraph (d) shall not be withdrawn or
used for any purpose other than, and shall be held in trust for,
the payment of the redemption price of the shares of Series X
Preferred Stock in respect of which such deposit was made and
(without duplication) dividends accrued and to accrue thereon to
the date fixed for the redemption thereof; provided, however,
that any of such moneys so held by such Redemption Agent on the
date fixed for the redemption of such shares in excess of the
amount required to pay the redemption price thereof and (without
duplication) dividends accrued and unpaid thereon to (but
excluding) the date fixed for the redemption thereof shall be
paid over to the Corporation free and clear of any trust, lien or
pledge.
Any money remaining set aside by the Corporation or on
deposit with a Redemption Agent and unclaimed by the registered
holders of shares so called for redemption at the end of a period
of one year after the date fixed for redemption shall be paid
over to the Corporation and/or returned to its general funds and
thereafter such holders shall look only to the Corporation for
the satisfaction of such rights, if any, as they may have to the
payment of the redemption price of such shares and (without
duplication) dividends accrued and unpaid to (but excluding) the
date fixed for redemption.
(e) RANKING; PRO RATA SHARING; RETIREMENT.
(1) Ranking. The Series X Preferred Stock shall rank
senior to the Common Stock as to the payment of dividends and as
to the distribution of assets on liquidation, dissolution or
winding-up of the Corporation, and, unless otherwise provided in
the Restated Articles of Incorporation, as the same may be
amended, including one or more amendments relating to one or more
subsequent series of Preferred Stock, the Series X Preferred
AA-6
Stock shall rank on a parity with all other series of Preferred
Stock as to the payment of dividends and as to the distribution
of assets on dissolution.
(2) Pro Rata Sharing. Except to the extent otherwise
provided in the Restated Articles of Incorporation, as the same
may be amended, all payments to be made in respect of the shares
of Series X Preferred Stock and any other stock ranking on a
parity with the Series X Preferred Stock with respect to payments
of such character shall be made pro rata, so that amounts paid
per share on the Series X Preferred Stock and such other stock
shall in all cases bear to each other the same ratio that the
amounts then payable per share on the shares of the Series X
Preferred Stock and such other stock bear to each other.
(3) Retirement. Any shares of Series X Preferred
Stock redeemed or converted as provided hereby shall be retired
as shares of Series X Preferred Stock and be restored to the
status of authorized but unissued shares of Preferred Stock,
undesignated as to series, and may thereafter be reissued as
permitted by applicable law.
(f) VOTING RIGHTS.
(1) General. The holders of Series X Preferred Stock
shall be entitled to vote on all matters submitted to a vote of
the holders of Common Stock, voting together with the holders of
Common Stock as one class. Each share of Series X Preferred
Stock shall be entitled to 10,000 votes; provided, however, that
if the Corporation shall at any time after the Distribution Date
declare or pay any dividend on the shares of Common Stock payable
in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock, by
reclassification or otherwise, into a greater or lesser number of
shares of Common Stock, then, in each such case, the number of
votes to which each share of the Series X Preferred Stock was
entitled immediately prior to such event shall be adjusted by
multiplying such number 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 outstanding immediately
prior to such event.
(2) No Special Rights. Except to the extent otherwise
specifically provided by applicable law or set forth in
subparagraph (1) of this paragraph (f), holders of Series X
Preferred Stock shall have no special voting rights and their
consent shall not be required for the taking of any corporate
action.
(g) NOTICES.
Except as otherwise expressly provided hereunder, all
notices referred to herein shall be in writing and shall be
sufficiently given, and shall be deemed given, if and when
mailed, first class postage prepaid, (1) to the Corporation, at
its principal executive offices and (2) to any shareholder, at
such holder's address as it appears in the stock records of the
Corporation (unless otherwise indicated by such holder).
AA-7
(h) DEFINITIONS.
"Common Stock" means the Corporation's common stock,
without par value.
"Date of Issuance", as to any share of Series X
Preferred Stock, means the date on which the Corporation
initially issues such share, irrespective of the subsequent
delivery of certificates for such share upon registration of
transfer or exchange.
"Dividend Payment Date", as to the Series X Preferred
Stock, means January 1, April 1, July 1 and October 1.
"Dividend Period", as to the shares of the Series X
Preferred Stock or any other series of the Preferred Stock or of
any other class of stock in either case ranking as to dividends
on a parity with the Series X Preferred Stock, means the period
commencing on any dividend payment date prescribed for such
series and ending on the day next preceding the next succeeding
dividend payment date for such series, except that the initial
Dividend Period for any particular shares of any series or class
shall be the period commencing on the date or dates from which
dividends on such shares shall be cumulative and ending on the
day next preceding the first dividend payment date prescribed for
such shares.
"Junior Securities" means the Common Stock and (1) for
purposes of clause (A) in subparagraph (6) of paragraph (b)
above, any other class or series of stock ranking junior to the
Series X Preferred Stock in right of payment of dividends or (2)
for all other purposes, any other class or series of stock
ranking junior to the Series X Preferred Stock in right of
payment of amounts distributable upon dissolution.
"Record Date", as to any Dividend Payment Date, means
the fifteenth day of the calendar month next preceding such
Dividend Payment Date.
"Redemption Agent" means any bank or trust company
having a combined capital and surplus of at least $2,000,000 and
doing business in the continental United States, selected by the
Corporation in connection with the redemption of any shares of
Series X Preferred Stock.
"Rights Agreement" means the rights Agreement, dated as
of March 5, 1999, between the Corporation and , as
--------------
Rights Agent, as such agreement may be amended and supplemented.
---------------------
AA-8
EXHIBIT B
Form of Right Certificate
Certificate No. R- Rights
-----
NOT EXERCISABLE AFTER MARCH 31, 2009, OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT
TO REDEMPTION OR EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY TRANSFEREE OF SUCH RIGHTS
SHALL BECOME NULL AND VOID.
Right Certificate
-----------------
This certifies that , or registered
--------------------
assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to
the terms, provisions and conditions of the Rights Agreement,
dated as of March 5, 1999 (as amended from time to time, the
"Rights Agreement"), between UniSource Energy Corporation, an
Arizona corporation (the "Company"), and The Bank of New York, a
New York banking corporation (the "Rights Agent"), to purchase,
subject to any required regulatory approval, from the Company
at any time after the Distribution Date (as such term is defined
in the Rights Agreement) and prior to 5:00 P.M., New York City
time, on March 31, 2009 (subject to earlier redemption or
exchange of the Rights by the Company, as set forth in the
Rights Agreement), at the shareholders services office of the
Rights Agent, or at the office of its successor as Rights Agent,
one ten-thousandth of a fully paid nonassessable share of
Series A Preferred Stock, without par value, (the "Preferred
Stock"), of the Company, at a purchase price of $50.00 per one
ten-thousandth of a share of Preferred Stock (the "Purchase Price"),
upon presentation and surrender of this Right Certificate with
the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Right
Certificate (and the number of ten-thousandths of a share of
Preferred Stock which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of [ , ], based on the
----------- ---
shares of Preferred Stock as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the
number or amount of securities or other assets which may be
purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file
at the principal executive offices of the Company and the
above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at either the office or offices of
the Rights Agent designated for such purpose, may be exchanged
for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a
like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase.
Notwithstanding any provision of this Right Certificate to
the contrary, the Rights evidenced by this Right Certificate
shall not be exercisable (a) unless and until any regulatory
approvals required for the issuance and/or sale of securities
upon such exercise have been obtained, (b) if the exercise
thereof, or the issuance and/or sale of the securities to be
purchased upon such exercise, would violate or contravene any
applicable law, regulation or administrative or judicial order
or (c) in any jurisdiction if any requisite filings under any
applicable securities laws shall not have been made or become
effective in such jurisdiction.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate may be redeemed or exchanged
by the Company.
If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole
Rights not exercised. No fractional securities will be issued
upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one ten-thousandth
of such security, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of shares of the Preferred Stock or of any other securities of
the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such,
any of the rights of a shareholder of the Company or any right to
vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in
the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the
Rights Agreement.
B-2
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.
Dated as of [ , 19 ].
-------------- ---
ATTEST: UNISOURCE ENERGY CORPORATION
By:
----------------------- ------------------------
Countersigned:
By:
----------------------
Authorized Signature
B-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered
holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED hereby
------------------------------
sells, assigns and transfers unto -
--------------------------
(Please print name and address of transferee) - this Right
Certificate, together with all right, title and interest
therein,and does hereby irrevocably constitute and appoint
Attorney, to transfer the within Right
----------------
Certificate on the books of the within-named Company, with full
power of substitution.
Dated: , 19
--------------------- ---
-------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
B-4
Certificate
-----------
The undersigned hereby certifies, for the benefit of the
Company and other holders of Rights, by checking the appropriate
boxes, that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or
Associate of Acquiring Person.
Dated: , 19
------------- --- ---------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
B-5
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To:
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate
------------------
to purchase shares of the Preferred Stock issuable upon the
exercise of such Rights and requests that certificates for such
shares of Preferred Stock be issued in the name of:
Please insert social security or other identifying number
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by
this Right Certificate, a new Right Certificate for the balance
remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security or other identifying number
-----------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------------
Dated: , 19
------------- ---
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
B-6
Form of Reverse Side of Right Certificate -- continued
Certificate
-----------
The undersigned hereby certifies, for the benefit of the
Company and other holders of Rights, by checking the appropriate
boxes, that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined pursuant to the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced
by this Right Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated: , 19
------------ --- ------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
B-7
Form of Reverse Side of Right Certificate -- continued
NOTICE
------
The signature in the foregoing Forms of Assignment and
Election to Purchase and Certificate must conform to the name as
written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
B-8
Exhibit C
---------
FORM OF SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERRED STOCK
On March 5, 1999, the Board of Directors of UniSource
Energy Corporation (the "Company") authorized, and declared, a
dividend distribution of one Right for each outstanding share of
common stock, without par value, of the Company (the "Common
Stock") to shareholders of record at the close of business on
April 1, 1999. Each Right entitles the registered holder to
purchase from the Company one ten-thousandth of a share of
Preferred Stock, Series X, without par value, of the Company (the
"Series X Preferred Stock"), at a Purchase Price of $50.00 per one
ten-thousandth of a share of Series X Preferred Stock (the
"Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in the Rights Agreement (the
"Rights Agreement"), dated as of March 5, 1999, between the
Company and The Bank of New York, as Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding and no separate
Rights Certificates will be distributed. Until the Distribution
Date, (as hereinafter defined) (i) the Rights will be evidenced
by the Common Stock certificates and will be transferred with and
only with such Common Stock certificates, (ii) new Common Stock
certificates issued after April 1, 1999 will contain a notation
incorporating the Rights Agreement by reference and (iii) the
surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
After the Distribution Date, the Company will mail to each record
holder of shares of Common Stock as of the close of business on
the Distribution Date, a certificate evidencing one Right for
each share of Common Stock so held. The Distribution Date is the
earlier to occur of (i) the tenth business day after public
announcement that a person or group of affiliated or associated
persons has acquired or obtained the right o acquire 15% or more
of the outstanding shares of Common Stock (with such exceptions
as are set forth in the Rights Agreement) (an "Acquiring
Person") or (ii) the tenth business day after the commencement of
a tender or exchange offer which would result in a person or
group of affiliated or associated persons becoming an Acquiring
Person.
The Rights are not exercisable until the Distribution Date.
The Rights will expire at the close of business on March 31,
2009, unless earlier redeemed or exchanged by the Company as
described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common
Stock as of the close of business on the Distribution Date and,
thereafter, the separate Rights Certificates alone will represent
the Rights. Except as otherwise determined by the Board of
Directors, only shares of Common Stock outstanding prior to the
Distribution Date will be issued with Rights.
In the event that a person or a group of associated or
affiliated persons becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon exercise,
Common Stock (or, in certain circumstances, cash, property or
Series X Preferred Stock or other securities of the Company),
having a value equal to two times the Purchase Price of the
Right. The Purchase Price is the Purchase Price times the number
of shares of Common Stock associated with each Right (initially,
one). Notwithstanding any of the foregoing, following the
occurrence of an event set forth in this paragraph, all Rights
that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will
be null and void. However, Rights are not exercisable following
the occurrence of an event set forth in this paragraph until such
time as the Rights are no longer redeemable by the Company as set
forth below.
In the event that, following the Shares Acquisition Date,
(i) the Company is acquired in a merger or consolidation in which
the Company is not the surviving corporation, (ii) the Company
engages in a merger or consolidation in which the Company is the
surviving corporation and the Common Stock of the Company is
changed or exchanged, or (iii) more than 50% of the Company's
assets or earning power is sold or transferred, each holder of a
Right (except Rights which have previously been voided as set
forth above) shall thereafter have the right to receive, upon
exercise of the Right, common stock of the acquiring company
having a value equal to two times the Purchase Price of the
Right.
The Purchase Price, the amount and type of securities
covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights,
options or warrants to subscribe for Preferred Stock or
securities convertible into Preferred Stock or equivalent
preferred shares at less than the current market price of the
Preferred Stock, or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding
regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustments in the Purchase
Price will be required until cumulative adjustments amount to a
least 1% of the Purchase Price. No fractional shares of Series X
Preferred Stock will be issued other than in integral multiples
of one ten-thousandth of a share and, in lieu thereof, an
adjustment in cash will be made based on the market price of the
Series X Preferred Stock on the last trading date prior to the
date of exercise.
At any time until ten Business Days following the Shares
Acquisition Date, the Company may redeem the Rights in whole, but
not in part, at a price of $.001 per Right (subject to
adjustment). Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to
receive the $.001 redemption price.
C-2
At any time after a person or group of affiliated or
associated persons becomes an Acquiring Person and prior to the
acquisition by such person or group of more than 50% of the
outstanding Common Stock, the Board of Directors may exchange the
Rights (other than Rights owned by such person or its affiliates
and associates, which have become void), in whole but not in
part, for shares of Common Stock, at an exchange ratio of one
share of Common Stock per Right (subject to adjustment).
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.
While the distribution of the Rights should not be taxable to
shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other
consideration) of the Company as set forth above or in the event
that the Rights are redeemed.
Prior to the Distribution Date, the Company and the Rights
Agent may supplement or amend the Rights Agreement in any respect
without the approval of any holders of shares of Common Stock.
From and after the Distribution Date the Company and the Rights
Agent may supplement or amend the Rights Agreement without the
approval of any holders of Rights in order to (a) cure any
ambiguity, (b) correct or supplement any defective or
inconsistent provision, (c) shorten or lengthen any time period,
or (d) change or supplement the provisions in any manner which
shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that the
Rights Agreement may not be supplemented or amended to lengthen,
(i) a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (ii) any
other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. No supplement or amendment
may be made which changes the number of ten-thousandths of a
share of Preferred Stock for which a Right is exercisable (other
than to reflect a proper adjustment or which advances the Final
Expiration Date.) Notwithstanding any other provision of the
Rights Agreement, the Rights Agent shall not be required to
consent to any amendment or supplement which alters in any
adverse manner the Rights Agent's rights or duties.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Company. This
Summary Description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
C-3