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| CNP > SEC Filings for CNP > Form 8-K on 3-Oct-2008 | All Recent SEC Filings |
3-Oct-2008
Other Events
† 20,000,000 shares of preferred stock, par value $0.01 per share, of which no shares were outstanding.
A series of preferred stock, designated Series A Preferred Stock, has been
reserved for issuance upon exercise of the preferred stock purchase rights
attached to each share of common stock pursuant to the shareholder rights plan
discussed below.
Common Stock
Voting Rights. Holders of CenterPoint Energy's common stock are entitled to
one vote for each share on all matters submitted to a vote of shareholders,
including the election of directors. There are no cumulative voting rights.
Subject to the voting rights expressly conferred under prescribed conditions to
the holders of preferred stock, the holders of common stock possess exclusive
full voting power for the election of directors and for all other purposes.
CenterPoint Energy's bylaws provide that director nominees are elected by the
vote of a majority of the votes cast with respect to the director by
shareholders entitled to vote at the meeting in an uncontested election. An
election is contested if, at a specified time before CenterPoint Energy files
its definitive proxy statement with the SEC, the number of nominees exceeds the
number of directors to be elected, in which case directors will be elected by
the vote of a plurality of the votes cast by shareholders entitled to vote at
the meeting.
Dividends. Subject to preferences that may be applicable to any outstanding
preferred stock, the holders of common stock are entitled to dividends when, as
and if declared by the board of directors out of funds legally available for
that purpose.
Liquidation Rights. If CenterPoint Energy is liquidated, dissolved or wound
up, the holders of its common stock will be entitled to a pro rata share in any
distribution to shareholders, but only after satisfaction of all of CenterPoint
Energy's liabilities and of the prior rights of any outstanding class of
preferred stock, which may include the right to participate further with the
holders of common stock in the distribution of any of CenterPoint Energy's
remaining assets.
Preemptive Rights. Holders of common stock are not entitled to any
preemptive or conversion rights or other subscription rights.
Transfer Agent and Registrar. CenterPoint Energy's shareholder services
division serves as transfer agent and registrar for its common stock.
Other Provisions. There are no redemption or sinking fund provisions
applicable to CenterPoint Energy's common stock. No personal liability will
attach to holders of such shares under the laws of the State of Texas. Subject
to the provisions of CenterPoint Energy's articles of incorporation and bylaws
imposing certain supermajority voting provisions, the rights of the holders of
shares of common stock may not be modified except by a vote of at least a
majority of the shares outstanding, voting together as a single class.
Preferred Stock
The CenterPoint Energy board of directors may cause CenterPoint Energy to
issue preferred stock from time to time in one or more series and may fix the
number of shares and the terms of each series without the approval of
CenterPoint Energy's shareholders. CenterPoint Energy's board of directors may
determine the terms of each series, including:
† the designation of the series,
† dividend rates and payment dates,
† whether dividends will be cumulative, non-cumulative or partially cumulative, and related terms,
† redemption rights,
† liquidation rights,
† sinking fund provisions,
† conversion rights,
† voting rights, and
† any other terms.
The issuance of preferred stock, while providing desired flexibility in
connection with possible acquisitions and other corporate purposes, could
adversely affect the voting power of holders of CenterPoint Energy's common
stock. It could also affect the likelihood that holders of common stock will
receive dividend payments and payments upon liquidation. The issuance of shares
of preferred stock, or the issuance of rights to purchase shares of preferred
stock, could be used to discourage an attempt to obtain control of CenterPoint
Energy. For example, if, in the exercise of its fiduciary obligations,
CenterPoint Energy's board were to determine that a takeover proposal was not in
CenterPoint Energy's best interest, the board could authorize the issuance of a
series of preferred stock containing class voting rights that would enable the
holder or holders of the series to prevent or make the change of control
transaction more difficult. Alternatively, a change of control transaction
deemed by the board to be in CenterPoint Energy's best interest could be
facilitated by issuing a series of preferred stock having sufficient voting
rights to provide a required percentage vote of the shareholders.
For purposes of the rights plan described below, CenterPoint Energy's board
of directors has designated a series of preferred stock to constitute the
Series A Preferred Stock. For a description of the rights plan, see "Shareholder
Rights Plan."
Anti-Takeover Effects of Texas Laws and CenterPoint Energy's Charter and Bylaw
Provisions
Some provisions of Texas law and CenterPoint Energy's articles of
incorporation and bylaws could make the following actions more difficult:
† acquisition of CenterPoint Energy by means of a tender offer,
† acquisition of control of CenterPoint Energy by means of a proxy contest or otherwise, or
† removal of CenterPoint Energy's incumbent officers and directors.
These provisions, as well as CenterPoint Energy's shareholder rights plan, are designed to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of CenterPoint Energy to first negotiate with its board of directors. CenterPoint Energy believes that the benefits of this increased protection gives it the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure CenterPoint Energy, and that the benefits of this
increased protection outweigh the disadvantages of discouraging those proposals,
because negotiation of those proposals could result in an improvement of their
terms.
Charter and Bylaw Provisions
Election and Removal of Directors. The number of members of CenterPoint
Energy's board of directors will be fixed from time to time by resolution of the
board of directors. Members of CenterPoint Energy's board of directors who were
elected at or prior to the 2008 annual meeting of shareholders are assigned to
one of three classes, with directors in each class serving for staggered
three-year terms. However, this classified structure is being phased out.
Beginning at CenterPoint Energy's 2009 annual meeting of shareholders, all
directors will be elected to one-year terms. Any director elected for a longer
term before the 2009 annual meeting of shareholders, including the directors
elected at CenterPoint Energy's 2008 annual meeting to serve for terms expiring
at its 2011 annual meeting, will hold office for his or her entire term.
Accordingly, all of CenterPoint Energy's directors will be elected annually
beginning at its 2011 annual meeting of shareholders.
No director may be removed except for cause, and, subject to the voting
rights expressly conferred under prescribed conditions to the holders of
preferred stock, directors may be removed for cause only by the holders of a
majority of the shares of capital stock entitled to vote at an election of
directors. Subject to the voting rights expressly conferred under prescribed
conditions to the holders of preferred stock, any vacancy occurring on the board
of directors and any newly created directorship may be filled by a majority of
the remaining directors in office or by election by the shareholders.
Shareholder Meetings. CenterPoint Energy's articles of incorporation and
bylaws provide that special meetings of holders of common stock may be called
only by the chairman of its board of directors, its chief executive officer, the
president, the secretary, a majority of its board of directors or the holders of
at least 50% of the shares outstanding and entitled to vote.
Modification of Articles of Incorporation. In general, amendments to
CenterPoint Energy's articles of incorporation that are recommended by the board
of directors require the affirmative vote of holders of at least a majority of
the voting power of all outstanding shares of capital stock entitled to vote in
the election of directors. The provisions described above under "- Election and
Removal of Directors" and "- Shareholder Meetings" may be amended only by the
affirmative vote of holders of at least 66-2/3% of the voting power of all
outstanding shares of capital stock entitled to vote in the election of
directors. The provisions described below under "- Modification of Bylaws" may
be amended only by the affirmative vote of holders of at least 80% of the voting
power of all outstanding shares of capital stock entitled to vote in the
election of directors.
Modification of Bylaws. CenterPoint Energy's board of directors has the
power to alter, amend or repeal the bylaws or adopt new bylaws by the
affirmative vote of at least 80% of all directors then in office at any regular
or special meeting of the board of directors called for that purpose. The
shareholders also have the power to alter, amend or repeal the bylaws or adopt
new bylaws by the affirmative vote of holders of at least 80% of the voting
power of all outstanding shares of capital stock entitled to vote in the
election of directors, voting together as a single class.
Other Limitations on Shareholder Actions. CenterPoint Energy's bylaws also
impose some procedural requirements on shareholders who wish to:
† make nominations in the election of directors,
† propose that a director be removed,
† propose any repeal or change in the bylaws, or
† propose any other business to be brought before an annual or special meeting of shareholders.
Under these procedural requirements, a shareholder must deliver timely
notice to CenterPoint Energy's corporate secretary of the nomination or proposal
along with evidence of:
† the shareholder's status as a shareholder,
† the number of shares beneficially owned by the shareholder,
† a list of the persons with whom the shareholder is acting in concert, and
† the number of shares such persons beneficially own.
To be timely, a shareholder must deliver notice:
† in connection with an annual meeting of shareholders, not less than 90
nor more than 180 days prior to the date on which the immediately
preceding year's annual meeting of shareholders was held; provided that
if the date of the annual meeting is advanced by more than 30 days
prior to or delayed by more than 60 days after the date on which the
immediately preceding year's annual meeting of shareholders was held,
not less than 180 days prior to the annual meeting and not later than
the last to occur of (i) the 90th day prior to the annual meeting or
(ii) the 10th day following the day on which CenterPoint Energy first
makes public announcement of the date of the annual meeting, or
† in connection with the nomination of director candidates at a special meeting of shareholders, generally not less than 40 nor more than 60 days prior to the date of the special meeting.
In order to submit a nomination for the board of directors, a shareholder
must also submit information with respect to the nominee that CenterPoint Energy
would be required to include in a proxy statement, as well as some other
information. If a shareholder fails to follow the required procedures, the
shareholder's nominee or proposal will be ineligible and will not be voted on by
CenterPoint Energy's shareholders.
In connection with a special meeting of shareholders, the only business
that will be conducted is that stated in the notice of special meeting, or
otherwise promptly brought before the meeting by or at the direction of the
Chairman of the Meeting or the board of directors. Shareholders requesting a
special meeting are permitted to make proposals for matters to be brought before
the meeting in their request.
Limitation on Liability of Directors. CenterPoint Energy's articles of
incorporation provide that no director will be personally liable to CenterPoint
Energy or its shareholders for monetary damages for breach of fiduciary duty as
a director, except as required by law as in effect from time to time. Currently,
Texas law requires that liability be imposed for the following actions:
† any breach of the director's duty of loyalty to CenterPoint Energy or
its shareholders,
† any act or omission not in good faith that constitutes a breach of duty of the director to the corporation or an act or omission that involves intentional misconduct or a knowing violation of law,
† a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of a director's office, and
† an act or omission for which the liability of a director is expressly provided for by statute.
CenterPoint Energy's bylaws provide that it will indemnify its officers and
directors and advance expenses to them in connection with proceedings and
claims, to the fullest extent permitted by the Texas Business Corporation Act
("TBCA"). The bylaws authorize CenterPoint Energy's board of directors to
indemnify and advance expenses to people other than its officers and directors
in certain circumstances.
Texas Anti-Takeover Law
CenterPoint Energy is subject to Article 13.03 of the TBCA. That section
prohibits Texas corporations from engaging in a wide range of specified
transactions with any affiliated shareholder during the three-year period
immediately following the affiliated shareholder's acquisition of shares in the
absence of certain board of director or shareholder approvals. An affiliated
shareholder of a corporation is any person, other than the corporation and any
of its wholly owned subsidiaries, that is or was within the preceding three-year
period the beneficial owner of 20%
or more of the outstanding shares of stock entitled to vote generally in the
election of directors. Article 13.03 may deter any potential unfriendly offers
or other efforts to obtain control of CenterPoint Energy that are not approved
by its board. This may deprive CenterPoint Energy's shareholders of
opportunities to sell shares of its common stock at a premium to the prevailing
market price.
Shareholder Rights Plan
Each share of common stock includes one right to purchase from CenterPoint
Energy a unit consisting of one one-thousandth of a share of its Series A
Preferred Stock at a purchase price of $42.50 per unit, subject to adjustment.
The rights are issued pursuant the Rights Agreement dated as of January 1, 2002
between CenterPoint Energy and JPMorgan Chase Bank (the "Rights Agreement").
Selected portions of the Rights Agreement and the rights are summarized below.
This summary is qualified by reference to the Rights Agreement, a copy of which
is incorporated as an exhibit to this report and is incorporated by reference
herein.
Detachment of Rights; Exercisability. The rights will attach to all
certificates representing common stock issued prior to the "release date." That
date will occur, except in some cases, on the earlier of:
† ten days following a public announcement that a person or group of
affiliated or associated persons, an "acquiring person," has acquired,
or obtained the right to acquire, beneficial ownership of 20% or more
of the outstanding shares of CenterPoint Energy's common stock, or
† ten business days following the start of a tender offer or exchange offer that would result in a person's becoming an acquiring person.
CenterPoint Energy's board of directors may defer the release date in some
circumstances. Also, some inadvertent acquisitions of CenterPoint Energy's
common stock will not result in a person's becoming an acquiring person if the
person promptly divests itself of sufficient common stock.
Until the release date:
† common stock certificates will evidence the rights,
† the rights will be transferable only with those certificates,
† new common stock certificates will contain a notation incorporating the Rights Agreement by reference, and
† the surrender for transfer of any common stock certificate will also constitute the transfer of the rights associated with the common stock represented by the certificate.
The rights are not exercisable until the release date and will expire at
the close of business on December 31, 2011, unless CenterPoint Energy redeems or
exchanges them at an earlier date as described below.
As soon as practicable after the release date, the rights agent will mail
certificates representing the rights to holders of record of common stock as of
the close of business on the release date. From that date on, only separate
rights certificates will represent the rights. CenterPoint Energy will also
issue rights with all shares of common stock issued prior to the release date.
CenterPoint Energy will also issue rights with shares of common stock issued
after the release date in connection with some employee benefit plans or upon
conversion of some securities. Except as otherwise determined by its board of
directors, CenterPoint Energy will not issue rights with any other shares of
common stock issued after the release date.
Flip-in Event. A "flip-in event" will occur under the Rights Agreement when
a person becomes an acquiring person other than pursuant to a "permitted offer"
or a flip-over event (as defined below). The Rights Agreement defines "permitted
offer" as a tender or exchange offer for all outstanding shares of CenterPoint
Energy's common stock at a price and on terms that a majority of the independent
directors of its board of directors determines to be fair to and otherwise in
the best interests of CenterPoint Energy and the best interests of its
shareholders.
If a flip-in event occurs, each right, other than any right that has become
null and void as described below, will become exercisable to receive (in lieu of
the shares of Series A Preferred Stock otherwise purchasable) the number of
shares of common stock, or in certain circumstances, cash, property or other
securities, which has a "current market price" equal to two times the exercise
price of the right. Please refer to the Rights Agreement for the definition of
"current market price."
Flip-Over Event. A "flip-over event" will occur under the Rights Agreement
when, at any time from and after the time a person becomes an acquiring person:
† CenterPoint Energy is acquired or it acquires any person in a merger or
other business combination transaction, other than specified mergers
that follow a permitted offer, or
† 50% or more of CenterPoint Energy's assets, cash flow or earning power is sold or transferred.
If a flip-over event occurs, each holder of a right, except rights that are
voided as described below, will thereafter have the right to receive, on
exercise of the right, a number of shares of common stock of the acquiring
company that has a current market price equal to two times the exercise price of
the right.
When a flip-in event or a flip-over event occurs, all rights that then are,
or under the circumstances the Rights Agreement specifies previously were,
beneficially owned by an acquiring person or specified related parties will
become null and void in the circumstances the Rights Agreement specifies.
Series A Preferred Stock. After the release date, each right will entitle
the holder to purchase a one one-thousandth share of CenterPoint Energy's
Series A Preferred Stock, which fraction will be essentially the economic
equivalent of one share of common stock.
Anti-Dilution. The number of outstanding rights associated with a share of
common stock, the number of fractional shares of Series A Preferred Stock
issuable upon exercise of a right and the exercise price of the right are
subject to adjustment in the event of certain stock dividends on, or a
subdivision, combination or reclassification of, CenterPoint Energy's common
stock occurring prior to the release date. The exercise price of the rights and
the number of fractional shares of Series A Preferred Stock or other securities
or property issuable on exercise of the rights are subject to adjustment from
time to time to prevent dilution in the event of certain transactions affecting
the Series A Preferred Stock.
With some exceptions, CenterPoint Energy will not be required to adjust the
exercise price of the rights until cumulative adjustments amount to at least 1%
of the exercise price. The Rights Agreement also will not require CenterPoint
Energy to issue fractional shares of Series A Preferred Stock that are not
integral multiples of the specified fractional share and, in lieu thereof, it
will make a cash adjustment based on the market price of the Series A Preferred
Stock on the last trading date prior to the date of exercise. Pursuant to the
Rights Agreement, CenterPoint Energy reserves the right to require prior to the
occurrence of any flip-in event or flip-over event that, on any exercise of
rights, a number of rights must be exercised so that it will issue only whole
shares of Series A Preferred Stock.
Redemption of Rights. At any time until the time a person becomes an
acquiring person, CenterPoint Energy may redeem the rights in whole, but not in
part, at a price of $.005 per right, subject to adjustment, payable, at its
option, in cash, shares of common stock or such other consideration as its board
of directors may determine. Upon such redemption, the rights will terminate and
the only right of the holders of rights will be to receive the $.005 redemption
price.
Exchange of Rights. At any time after the occurrence of a flip-in event,
and prior to a person's becoming the beneficial owner of 50% or more of
CenterPoint Energy's outstanding common stock or the occurrence of a flip-over
event, it may exchange the rights (other than rights owned by an acquiring
person or an affiliate or an associate of an acquiring person, which will have
become void, in whole or in part), at an exchange ratio of one share of common
stock, and/or other equity securities deemed to have the same value as one share
of common stock, per right, subject to adjustment.
Substitution. If CenterPoint Energy has an insufficient number of
authorized but unissued shares of common stock available to permit an exercise
or exchange of rights upon the occurrence of a flip-in event, it may substitute
certain other types of property for common stock so long as the total value
received by the holder of the rights is equivalent to the value of the common
stock that the shareholder would otherwise have received.
CenterPoint Energy may substitute cash, property, equity securities or debt,
reduce the exercise price of the rights or use any combination of the foregoing.
No Rights as a Shareholder. Until a right is exercised, a holder of rights
will have no rights to vote or receive dividends or any other rights as a holder
of CenterPoint Energy's preferred or common stock.
Amendment of Terms of Rights. CenterPoint Energy's board of directors may
amend any of the provisions of the Rights Agreement, other than the redemption
price, at any time prior to the time a person becomes an acquiring person.
Thereafter, the board of directors may only amend the Rights Agreement in order
to cure any ambiguity, defect or inconsistency or to make changes that do not
materially and adversely affect the interests of holders of the rights,
excluding the interests of any acquiring person.
Rights Agent. JPMorgan Chase Bank will serve as rights agent with regard to
the rights.
Anti-Takeover Effects. The rights will have anti-takeover effects. They will
cause substantial dilution to any person or group that attempts to acquire
CenterPoint Energy without the approval of its board of directors. As a result,
the overall effect of the rights may be to make more difficult or discourage any
attempt to acquire CenterPoint Energy even if such acquisition may be favorable
to the interests of its shareholders. Because CenterPoint Energy's board of
directors can redeem the rights or approve a permitted offer, the rights should
not interfere with a merger or other business combination approved by the board
of directors.
Item 9.01 Financial Statements and Exhibits.
The exhibits listed below are filed herewith.
(d) Exhibits.
99.1 Restated Articles of Incorporation of CenterPoint Energy (incorporated by reference to Exhibit 3.1 to CenterPoint Energy's Current Report on Form 8-K dated July 24, 2008).
99.2 Amended and Restated Bylaws of CenterPoint Energy (incorporated by reference to Exhibit 3.2 to CenterPoint Energy's Current Report on Form 8-K dated July 24, 2008).
99.3 Rights Agreement dated as of January 1, 2002 between CenterPoint Energy and JPMorgan Chase Bank, as Rights Agent (incorporated by reference to Exhibit 4.2 to CenterPoint Energy's Annual Report on Form 10-K for the fiscal year ended December 31, 2001).
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