<PAGE> 1 File Number 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
By
CONSOLIDATED NATURAL GAS COMPANY
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
Names and addresses of agents for service:
D. M. WESTFALL, Senior Vice President,
Financial
Consolidated Natural Gas Company
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
N. F. CHANDLER, General Attorney
Consolidated Natural Gas Service Company, Inc.
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
With a copy to:
GARY W. WOLF, Esq.
Cahill Gordon & Reindel
Eighty Pine Street
New York, NY 10005
<PAGE> 2
File Number 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
DECLARATION UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Item 1. Description of Proposed Transaction
___________________________________
(a) Furnish a reasonably detailed and precise description of the proposed
transaction, including a statement of the reason why it is desired to
consummate the transaction and the anticipated effect thereof. If the
transaction is part of a general program, describe the program and its relation
to the proposed transaction.
I. INTRODUCTION
____________
Consolidated Natural Gas Company (the "Company" or "Consolidated"), is a
public utility holding company registered under the Public Utility Holding
Company Act of 1935 ("Act"), and is in the business of owning and holding all
of the outstanding securities (except for certain indebtedness of a
distribution company acquired in 1990) of sixteen companies principally in the
natural gas business. The said subsidiary companies are engaged in natural gas
exploration, production, purchasing, gathering, transmission, storage,
distribution, marketing and by-product operations.
<PAGE> 3
II. BACKGROUND FOR PROPOSED STOCK RIGHTS DIVIDEND
_____________________________________________
Unsolicited attempts to acquire public companies have required boards of
directors and their stockholders to make difficult decisions affecting the
value, and on occasion the existence, of companies within extremely short time
periods. Such takeover attempts often occur when a company is particularly
vulnerable and when its board has determined that the company's inherent long
term values are inadequately recognized by the marketplace. Many of these
attempts have involved partial or two-tiered offers, the breakup of the
corporate structure and sale of assets, or have taken the form of creeping
acquisitions of stock that deprive stockholders of participation in a control
premium.
The changing regulatory environment (including the possible repeal or
amendment of the Act) suggests that public utility holding companies, such as
the Company, and their stockholders are losing to some degree the regulatory
protection against hostile acquisitions that they formerly had. Recent
significant developments in the utility industry have also resulted in
increased takeover activity, including hostile or other unwanted takeover bids,
further indicating that the Company's stockholders may be at risk of losing the
long-term value of the Company.
Additionally, the natural gas business in which Consolidated and its
subsidiaries engage is of a highly cyclical nature. Earnings from sale of
natural gas and related service will vary from season to season and from year
to year, depending upon such variables as the commodity price of gas, the
average temperature over a given reporting period and the impact of competition
from other energy forms such as electricity, the price and availability of
which is being influenced by emerging new trends in the power industry. These
variations in industry factors can influence the price of Consolidated's common
<PAGE> 4
stock, $2.75 par value per share ("Common Stock"), in publicly traded markets.
During periods when temporarily negative gas industry factors are present,
holders of Common Stock could become vulnerable to takeover attempts at prices
lower than those which would be available following the passage of the downside
cycle.
Shareholder rights plans have become widely accepted means to maximize
shareholder value by reducing the risk of nonrealization of shareholder value
due to opportunistic proposals. Such a plan would encourage potential
acquirers to negotiate with the Board of Directors of Consolidated ("Board")
and assist it in obtaining the highest value for the Company's shareholders,
especially in a hostile or unwanted takeover situation. A shareholder rights
plan may enhance the probability that a competing bid will emerge. Over 1,700
American public companies have adopted rights plans, including more than half
the Fortune 500, more than two-thirds of the Fortune 200 and at least 28 public
utility companies.
The plan may in certain circumstances permit the Board to thwart an
inadequate offer. A shareholder rights plan would also provide the Board with
a role (supplemental to the role of the Commission under the Act) in
discouraging implicitly coercive takeover tactics and would enable the Board to
provide holders of Common Stock adequate time to properly assess a takeover bid
without undue pressure.
A shareholder rights plan would not make Consolidated acquisition-proof
nor preclude a proxy contest. The fiduciary duties of the Board under Delaware
law would still require the Board to consider an offer that gives maximum long-
term value to all holders of Common Stock and could, under appropriate
conditions, require the Board to redeem the rights and allow the transaction to
proceed.
<PAGE> 5
III. DESCRIPTION OF RIGHTS TO PURCHASE COMMON STOCK
______________________________________________
General
_______
The Board proposes to declare a dividend distribution of one right
("Right") for each outstanding share of Common Stock to shareholders of record
at the close of business on a record date ("Record Date") yet to be
established. As of June 30, 1995 there were 93,270,609 shares of Common Stock
outstanding. The detailed description and terms of the Rights will be set
forth in a Rights Agreement ("Agreement") to be between Consolidated and
Society National Bank, as Rights Agent ("Agent"). A draft of the Agreement is
filed as Exhibit A-3. Each Right would entitle the registered holder to
purchase from Consolidated one-half of one share of Common Stock at a price of
$175 per share ("Purchase Price"), being $87.50 per half share, subject to
adjustment.
Distribution Date; Transfer of Rights
_____________________________________
Until the earliest to occur of (i) ten days following the date ("Shares
Acquisition Date") of the public announcement that a person or affiliated group
("Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of Common Stock or other voting securities ("Voting Stock") that have
10% or more of the voting power of the outstanding shares of Voting Stock or
(ii) ten days following the commencement or announcement of an intention to
make a tender offer or exchange offer the consummation of which would result in
such person acquiring, or obtaining the right to acquire, beneficial ownership
<PAGE> 6
of Voting Stock having 10% or more of the voting power of the outstanding
shares of Voting Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate. Until the Distribution Date, the Rights will be transferred
only with the Common Stock, and new Common Stock certificates issued after the
Record Date will contain a notation incorporating the Agreement by reference.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. As in the
case with most right plans which are in place, the Rights will expire at the
close of business on the tenth anniversary of the Record Date, unless earlier
redeemed or exchanged by Consolidated as described further herein.
Exercise of Rights
__________________
In the event that a person becomes an Acquiring Person at any time
following the Distribution Date, each holder of a Right will thereafter have
the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of Consolidated) having a
value equal to two times the Purchase Price of the Right then in effect.
However, all Rights that are, or under certain circumstances were, beneficially
owned by any Acquiring Person will be null and void.
<PAGE> 7
In the event that, at any time following the Shares Acquisition Date, (i)
Consolidated is acquired in a merger or other business combination transaction,
or (ii) 50% or more of Consolidated's assets or earning power is sold or
transferred, each holder of a Right shall thereafter have the right to receive,
upon exercise, common stock of the acquiring company having a value equal to
two times the Purchase Price of the Right then in effect.
Adjustments to Purchase Price
_____________________________
The Purchase Price payable, and the number of shares of Common Stock (or
other securities, as the case may be) issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) upon the grant to holders of the Common Stock of certain
rights or warrants to subscribe for or purchase shares of the Common Stock or
convertible securities at less than the then current market price of the Common
Stock or (iii) upon the distribution to holders of the Common Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
or dividends payable in Common Stock) or of subscription rights or warrants
(other than those referred to above). Prior to the Distribution Date, the
Board may make such equitable adjustments as it deems appropriate in the
circumstances in lieu of any adjustment otherwise required by the foregoing.
<PAGE> 8
With certain exceptions, no adjustment in the Purchase Price will be
required until the earlier of (i) three years from the date of the event giving
rise to such adjustment or (ii) the time at which cumulative adjustments
require an adjustment of at least 1% in such Purchase Price. No fractional
shares of Common Stock will be issued and , in lieu thereof, an adjustment in
cash will be made based on the market price of the Common Stock on the last
trading date prior to the date of exercise.
Redemption and Exchange of Rights
_________________________________
At any time prior to 5:00 P.M. New York City time on the tenth day
following the Shares Acquisition Date, Consolidated may redeem the Rights in
whole, but not in part, at a price of $.01 per Right ("Redemption Price"),
payable in cash or stock. Under certain circumstances set forth in the
Agreement, the decision to redeem shall require the concurrence of a majority
of the Independent Directors. An "Independent Director" means any member of
the Board who was a member of the Board prior to the date of the Agreement, and
any person who is subsequently elected to the Board if such person is
recommended or approved by a majority of the Independent Directors, but shall
not include an Acquiring Person or any representative thereof. Immediately
upon the action of the Board electing to redeem the Rights, Consolidated shall
make announcement thereof and the only right of the holders of Rights will be
to receive the Redemption Price.
<PAGE> 9
At any time after a persons become an Acquiring Person, the Board may
exchange the Rights (other than Rights owned by an Acquiring Person, which
become void), in whole or in part, at an exchange ratio of one share of Common
Stock and/or other securities, cash or other assets deemed to have the same
value as one share of Common Stock, per Right, subject to adjustment.
Until a Right is exercised or exchanged for Common Stock, the holder
thereof, as such, will have no rights as a stockholder of Consolidated. While
the distribution of the Rights will not be taxable to stockholders or to
Consolidated, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common Stock
(or other consideration) of Consolidated or for the stock of the Acquiring
Person.
Amendments
__________
Any of the provisions of the Agreement may be amended by the Board without
the consent of the holders of the Rights prior to the Distribution Date.
Thereafter, the Agreement may be amended by the Board in order to cure any
ambiguity, defect or inconsistency, or to make changes which do not adversely
affect the interests of holders of Rights (excluding the interest of any
Acquiring Person); provided, however, that no supplement or amendment may be
made on or after the Distribution Date which changes those provisions relating
to the principal economic terms of the Rights. The Board may also, with the
concurrence of a majority of the Independent Directors, extend the redemption
period for up to an additional 20 days.
<PAGE> 10
IV. AUTHORIZATIONS SOUGHT
_____________________
Consolidated herein seeks authorization to implement the shareholder
rights plan as described in this application-declaration and embodied in the
Agreement. This would include, among other actions permitted by the Agreement,
the following transactions:
The dividend distribution of the Rights
The making of adjustments to the Purchase Price
The sale and issuance of Common Stock or other
Consolidated securities, or the transfer
of other assets, upon exercise of the Rights
The redemption of Rights and the issuance of Common
Stock in connection therewith, and the issuance
of Common Stock or other Consolidated securities,
or the transfer of other assets, in exchange
for Rights
Amending of the Agreement as permitted by the terms
thereof.
(b) Describe briefly, and where practicable state the approximate amount
of, any material interest in the proposed transaction, direct or indirect, of
any associate company or affiliate of the applicant or any affiliate of any
such associate company.
None.
(c) If the proposed transaction involves the acquisition of securities
not issued by a registered holding company or a subsidiary thereof, describe
briefly the business and property, present or proposed, of the issuer of such
securities.
Not applicable.
<PAGE> 11
(d) If the proposed transaction involves the acquisition or disposition
of assets, describe briefly such assets, setting forth original cost, vendor's
book cost (including the basis of determination) and applicable valuation and
qualifying reserves.
Not applicable.
Item 2. Fees, Commissions and Expenses
______________________________
(a) State (1) the fees, commissions and expenses paid or incurred, or to
be paid or incurred, directly or indirectly, in connection with the proposed
transaction by the applicant or declarant or any associate company thereof, and
(2) if the proposed transaction involves the sale of securities at competitive
bidding, the fees and expenses to be paid to counsel selected by applicant or
declarant to act for the successful bidder.
It is estimated that the fees, commissions and expenses ascertainable at
this time to be incurred by Consolidated in connection with the proposed
transactions will not exceed $150,000, including the $2,000 filing fee, $10,000
payable to Consolidated Natural Gas Service Company, Inc. for services on a
cost basis (including regularly employed counsel) for the preparation of this
declaration and other documents, $10,000 for the Agent's fees, $250 for the
Form 8-A filing fee, $100,000 for outside counsel's fees, $25,000 for printing
and mailing costs and $2,750 for miscellaneous other expenses.
(b) If any person to whom fees or commissions have been or are to be paid
in connection with the proposed transaction is an associate Company or an
affiliate of the applicant or declarant, or is an affiliate of an associate
company, set forth the facts with respect thereto.
<PAGE> 12
The charges of Consolidated Natural Gas Service Company, Inc., a
Subsidiary service company, are for services on a cost basis (including
regularly employed counsel) in connection with the preparation of this
declaration on Form U-1, and other related documents and papers required to
consummate the proposed transactions.
Item 3. Applicable Statutory Provisions
_______________________________
(a) State the sections of the Act and the rules thereunder believed to be
applicable to the proposed transaction. If any section or rule would be
applicable in the absence of a specific exemption, state the basis of
exemption.
Sections 6(a), 7, 9(a), 10 and 12(c) of the Act and Rule 42 under the Act
are deemed to be applicable to the proposed dividend distribution of Rights,
and any subsequent exercise or redemption of the Rights.
While the Rights are technically a dividend on the Common Stock for
corporate law purposes, in and of themselves they have no economic value and,
therefore, are not a "dividend" out of capital or capital surplus for the
purpose of Section 12(c) of the Act.
Because there is no intent that the Rights ever become exercisable, they
are regarded more appropriate as being in the nature of an addition to the
rights of shareholders under Sections 6(a)(2) and 7(e) rather than as an
issuance of securities under Section 6(a)(1) and 7(c) and (d). However, if
such latter sections were to be regarded as applicable, then any issuance of
the share of Common Stock pursuant to the Rights are deemed to meet the
requirements of Section 7(c)(2)(D) and none of the negative findings required
under Section 7(d) can be made.
<PAGE> 13
To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section of
the Act or provision of the rules or regulations other than those specifically
referred to herein, request for such authorization, approval or exemption is
hereby made.
(b) If an applicant is not a registered holding company or a subsidiary
thereof, state the name of each public utility company of which it is an
affiliate, or of which it will become an affiliate as a result of the proposed
transactions, and the reasons why it is or will become such an affiliate.
Not applicable.
Item 4. Regulatory Approval
___________________
(a) State the nature and extent of the jurisdiction of any State
commission or any Federal commission (other than the Securities and Exchange
Commission) over the proposed transaction.
No State commission and no other Federal commission has jurisdiction
over the proposed transactions.
(b) Describe the action taken or proposed to be taken before any
commission named in answer to paragraph (a) of this item in connection with the
proposed transaction.
None.
<PAGE> 14
Item 5. Procedure
_________
(a) State the date when Commission action is requested. If the date is
less than 40 days from the date of the original filing, set forth the reasons
for acceleration.
Consolidated requests that the Commission issue its order with respect to
the proposed transaction by January 15, 1996.
(b) State (i) whether there should be a recommended decision by a hearing
officer, (ii) whether there should be a recommended decision by any other
responsible officer of the Commission, (iii) whether the Division of Corporate
Regulation may assist in the preparation of the Commission's decision, and (iv)
whether there should be a 30-day waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
It is submitted that a recommended decision by a hearing or other
responsible officer of the Commission is not needed with respect to the
proposed transactions. The Office of Public Utility Regulation of the Division
of Investment Management may assist in the preparation of the Commission's
decision. There should be no waiting period between the issuance of the
Commission's order and the date on which it is to become effective.
Item 6. Exhibits and Financial Statements
_________________________________
The following exhibits are made a part of this statement:
(a) Exhibits
________
A-1 Certificate of Incorporation of Consolidated, as restated.
(Incorporated by reference to Exhibit A-1 to Form U-1,
File No. 70-7811)
<PAGE> 15
A-2 Composite copy of Bylaws of Consolidated, as amended March 1,
1993.
(Incorporated by reference to Exhibit B to Form U5S,
File No. 30-203, for the year ended December 31, 1992)
A-3 Draft of Rights Agreement between Consolidated and Society
National Bank
B-1 Legal Memorandum concerning Rights plan.
F-1 Opinion of counsel.
(To be filed by amendment)
G Proposed notice pursuant to Rule 22(f)
(b) Financial Statements
____________________
(Index included in financial statements annexed hereto.)
Item 7. Information as to Environmental Effects
_______________________________________
(a) Describe briefly the environmental effects of the proposed
transaction in terms of the standards set forth in Section 102(2)(C) of the
National Environmental Policy Act (42 U.S.C. 4312(2)(C)). If the response to
this item is a negative statement as to the applicability of Section 102(2)(C)
in connection with the proposed transaction, also briefly state the reasons for
that response.
As more fully described in Item 1(a), the proposed transactions subject to
the jurisdiction of this Commission relate only to solicitation of proxies
pertaining to a proposed stock incentive plan and involve no major federal
action significantly affecting the human environment.
<PAGE> 16
(b) State whether any other federal agency has prepared or is preparing
an environmental impact statement ("EIS") with respect to the proposed
transaction. If any other Federal agency has prepared or is preparing an EIS,
state which agency or agencies and indicate the status of that EIS preparation.
None.
SIGNATURES
__________
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this statement to be signed on
its behalf by the undersigned thereunto duly authorized.
CONSOLIDATED NATURAL GAS COMPANY
By D. M. Westfall
Senior Vice President, Financial
Date: November 14, 1995
<PAGE> 1
Exhibit A-3
___________________________________________________________________________
CONSOLIDATED NATURAL GAS COMPANY
and
SOCIETY NATIONAL BANK, Rights Agent
RIGHTS AGREEMENT
Dated as of , 199
___________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
_________________
Page
RIGHTS AGREEMENT
Section 1. Certain Definitions............................... 1
Section 2. Appointment of Rights Agent....................... 7
Section 3. Issue of Right Certificates....................... 7
Section 4. Form of Right Certificates........................ 10
Section 5. Countersignature and Registration................. 11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates................................ 12
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights......................... 13
Section 8. Cancellation and Destruction of
Right Certificates................................ 15
Section 9. Reservation and Availability of
Shares of Common Stock............................ 16
Section 10. Common Stock Record Date.......................... 18
Section 11. Adjustment of Purchase Price, Number
of Shares or Number of Rights..................... 18
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares......................... 28
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power............... 28
Section 14. Fractional Rights and Fractional
Shares............................................ 31
Section 15. Rights of Action.................................. 32
Section 16. Agreement of Right Holders........................ 33
Section 17. Right Certificate Holder Not Deemed a
Stockholder....................................... 34
<PAGE> 3
Section 18. Concerning the Rights Agent....................... 34
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.............................. 35
Section 20. Duties of Rights Agent............................ 36
Section 21. Change of Rights Agent............................ 39
Section 22. Issuance of New Right Certificates................ 40
Section 23. Redemption and Termination........................ 40
Section 24. Exchange.......................................... 42
Section 25. Notice of Certain Events.......................... 43
Section 26. Notices........................................... 44
Section 27. Supplements and Amendments........................ 45
Section 28. Successors........................................ 46
Section 29. Determinations and Actions by the
Board of Directors................................ 46
Section 30. Benefits of This Agreement........................ 46
Section 31. Severability...................................... 47
Section 32. Governing Law..................................... 47
Section 33. Counterparts...................................... 47
Section 34. Descriptive Headings.............................. 47
<PAGE> 4
Exhibit A - Form of Right Certificate ............................. A-1
Form of Assignment .................................... A-7
Certificate ........................................... A-8
Notice ................................................ A-9
Form of Election to Purchase .......................... A-10
Exhibit B - Summary of Rights to Purchase
Common Stock........................................... B-1
<PAGE> 5
RIGHTS AGREEMENT
________________
Rights Agreement, dated as of , 199_ (the
"Agreement"), between Consolidated Natural Gas Company, a Delaware
corporation (the "Company"), and Society National Bank (the "Rights
Agent").
W I T N E S S E T H :
_ _ _ _ _ _ _ _ _ _
WHEREAS, the Board of Directors of the Company on
, 199_ ("Rights Dividend Declaration Date") authorized and declared a
dividend distribution (the "Distribution") of one Right for each
outstanding share of Common Stock, $2.75 par value, of the Company (the
"Common Stock") outstanding at the close of business on , 199_ (the
"Record Date") and has authorized the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions of Section 11(i)
hereof) for each share of Common Stock issued (whether originally issued or
delivered from the Company's treasury stock) between the Record Date and
the earlier of the Distribution Date or the Expiration Date (as such terms
are hereinafter defined), each Right initially representing the right to
purchase, under certain circumstances, one-half of one share of Common
Stock, upon the terms and subject to the conditions hereinafter set forth
(the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby
agree as follows:
Section 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 (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of securities of the Company constituting a
Substantial Block (as such term is hereinafter defined), but shall not
include (i) 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 or any Person organized, appointed or established
by the Company or any Subsidiary
<PAGE> 6
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of the Company for or pursuant to the terms of any such plan, (ii) any
Person who or which, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of a Substantial Block solely as a
result of a change in the aggregate number of shares of Voting Stock (as
such term is hereinafter defined) outstanding since the last date on which
such Person acquired Beneficial Ownership of any shares of the Voting Stock
constituting all or a portion of such Substantial Block; and (iii) any
Person who or which, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of a Substantial Block in the good
faith belief that such acquisition would not (x) cause such Person and its
Affiliates and Associates to become the Beneficial Owner of a Substantial
Block and such Person relied in good faith in computing the percentage of
its voting power on publicly filed reports or documents of the Company
which are inaccurate or out-of-date or (y) otherwise cause a Distribution
Date or the adjustment provided for in Section 11(a) to occur.
Notwithstanding clause (ii) or (iii) of the prior sentence, if any Person
that is not an Acquiring Person due to such clause (ii) or (iii) does not
cease to be the Beneficial Owner of a Substantial Block by the close of
business on the fifth Business Day (as such term is hereinafter defined)
after notice from the Company (the date of notice being the first day) that
such Person is the Beneficial Owner of a Substantial Block, such Person
shall, at the end of such five Business Day period, become an Acquiring
Person (and such clause (ii) or (iii) shall no longer apply to such
Person). For purposes of this definition, the determination whether any
Person acted in "good faith" shall be conclusively determined by the Board
of Directors of the Company, acting by a vote of those directors of the
Company whose approval would be required to redeem the Rights under Section
23.
(b) "Act" shall have the meaning set forth in Section 9(c) hereof.
(c) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date hereof.
<PAGE> 7
- - 3 -
(e) "Agreement" shall have the meaning set forth in the introduction
hereto.
(f) 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 has, directly or indirectly, the right to acquire (whether
such right is exercisable immediately or only after the passage of
time or upon the occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (1)
securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange, (2)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event (as such term is hereinafter defined)
or (3) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event, which Rights were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) hereof ("Original
Rights") or pursuant to Section 11(i) or Section 22 hereof in
connection with an adjustment made with respect to Original Rights; or
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, the right to vote or dispose
of or has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (ii) if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made
pursuant to, and in accordance
<PAGE> 8
- - 4 -
with, the applicable rules and regulations of the Exchange Act and (2)
is not 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) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (ii) of this paragraph (f))
or disposing of any securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall
cause a Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired in a bona fide firm commitment underwriting pursuant to
an underwriting agreement with the Company.
(g) "Business Day" shall mean any day other than a Saturday, 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.
(h) "Certification" shall have the meaning set forth in Section 18
hereof.
(i) "close of business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(j) "Common Stock" when used with reference to the Company shall mean
the shares of common stock, $2.75 par value, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall
mean either the capital stock with the greatest voting power of such other
Person or, if such Person is a Subsidiary of another Person, the equity
securities or other equity interest having power to control or direct the
management of such Person.
<PAGE> 9
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(k) "Common Stock Equivalent" shall have the meaning set forth in
Section 11(a)(iii).
(l) "Company" shall have the meaning set forth in the introduction
hereto.
(m) "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
(n) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(o) "Distribution" shall have the meaning set forth in the recitals
hereto.
(p) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(q) "Equivalent Common Stock" shall have the meaning set forth in
Section 11(b) hereof.
(r) "Exchange Act" shall have the meaning set forth in the
definitions of "Affiliate" and "Associate" above.
(s) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(t) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(u) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(v) "Independent Director" shall mean any member of the Board of
Directors of the Company, while such person is a member of the Board, who
is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and was a member of the Board prior to the
date hereof, and any successor of an Independent Director while such
successor is a member of the Board, who is not an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, or a representative or
nominee of an Acquiring Person or of any such Affiliate or Associate, and
is recommended or elected to succeed the Independent Director by a majority
of the Independent Directors.
<PAGE> 10
- - 6 -
(w) "Original Rights" shall have the meaning set forth in the
definition of "Beneficial Owner" above.
(x) "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity, and shall include any successor (by
merger or otherwise) of such entity.
(y) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(z) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(aa) "Record Date" shall have the meaning set forth in the recitals
hereto.
(bb) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(cc) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(dd) "Rights" shall have the meaning set forth in the recitals
hereto.
(ee) "Rights Agent" shall have the meaning set forth in the
introduction hereto.
(ff) "Rights Dividend Declaration Date" shall have the meaning set
forth in the recitals hereto.
(gg) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii).
(hh) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii).
(ii) "Section 13 Event" shall mean any event described in Section
13(a).
(jj) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, includes a report
filed pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
<PAGE> 11
- - 7 -
(kk) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(ll) "Subsidiary" shall mean, with reference to any Person, any
corporation (or other entity) of which an amount of voting securities (or
comparable ownership interests) sufficient to elect at least a majority of
the directors (or comparable individuals) of such corporation (or other
entity) is beneficially owned or otherwise controlled, directly or
indirectly, by such Person.
(mm) "Substantial Block" shall mean a number of shares of Voting
Stock which have 10% or more of the aggregate voting power of all
outstanding shares of Voting Stock.
(nn) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(oo) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(pp) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
(qq) "Triggering Event" shall mean any Section 11(a)(ii) Event or
Section 13 Event.
(rr) "Voting Stock" shall mean the outstanding shares of Common
Stock, $2.75 par value, and any other shares of capital stock of the
Company which are entitled to vote generally in the election of directors.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts
such appointment. The Company shall act as Co-Rights Agent and may from
time to time appoint such other Co-Rights Agents as it may deem necessary
or desirable upon ten calendar days' written notice to the Rights Agent.
In no event shall the Rights Agent have any duty to supervise or in any way
be liable for such Co-Rights Agents.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the close of business on the tenth calendar day after the
Shares Acquisition Date (or, if the tenth day after the Shares Acquisition
Date occurs before the Record
<PAGE> 12
- - 8 -
Date, the close of business on the Record Date) or (ii) the close of
business on the tenth calendar day after the date of the commencement of,
or of the first public announcement of the intent of any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any Person organized,
appointed or established by the Company or any Subsidiary of the Company
for or pursuant to the terms of any such plan) to commence, a tender or
exchange offer if, upon consummation thereof, such Person would be an
Acquiring Person (the earlier of the dates in subsection (i) and (ii)
hereof being herein referred to as the "Distribution Date") (x) the Rights
will be evidenced (subject to the provisions of paragraph (b) of this
Section 3) by the certificates for the Common Stock registered in the names
of the holders of the Common Stock (which certificates for Common Stock
shall be deemed also to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Stock. As soon
as practicable after receipt by the Rights Agent of written notice from the
Company of the Distribution Date, the Rights Agent, at the Company's
expense, will send by first-class, postage prepaid mail, to each record
holder of Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company, a
Right Certificate, in substantially the form of Exhibit A hereto,
evidencing one Right for each share of Common Stock so held, subject to
adjustment as provided herein. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) As soon as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Common Stock,
in substantially the form attached hereto as Exhibit B (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of
Common Stock as of the close of business on the Record Date, at the address
of such holder shown on the records of the Company. With respect to
certificates for Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates for
Common Stock, and the registered holders of Common Stock shall also be the
registered holders of the associated Rights. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any of the certificates for Common Stock outstanding on the
Record Date shall also constitute the transfer of the Rights associated
with Common Stock represented by such certificate.
<PAGE> 13
- - 9 -
(c) Rights shall be issued in respect of all shares of
Common Stock issued after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date (as such term is defined in
Section 7), or, in certain circumstances provided in Section 22 hereof,
after the Distribution Date. Certificates representing such shares of
Common Stock 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 between
Consolidated Natural Gas Company and Society National Bank dated
as of , 1995 (the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of Consolidated
Natural Gas Company. 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. Consolidated Natural Gas Company will mail to the
holder of this certificate a copy of the Rights Agreement as in
effect on the date of mailing without charge within five Business
Days after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights
beneficially owned by an Acquiring Person may become null and
void.
After the due execution of any supplement or amendment to this Agreement in
accordance with the terms hereof, the reference to this Agreement in the
foregoing legend shall mean the Agreement as so supplemented or amended.
Until the Distribution Date, the Rights associated with Common Stock
represented by certificates containing the foregoing legend shall be
evidenced by such certificates alone, and the surrender for transfer of any
of such certificates shall also constitute the transfer of the Rights
associated with Common Stock represented by such certificates. In the
event that the Company purchases or acquires any shares of Common Stock
after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Stock shall be deemed cancelled and retired so
that the Company shall not be entitled to exercise any Rights associated
with the shares of Common Stock which are no longer outstanding. The
failure to print the foregoing legend on any such Common Stock certificate
or any other defect therein shall not affect
<PAGE> 14
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in any manner whatsoever the application or interpretation of the
provisions of Section 7(e) hereof.
Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. The Right Certificates
shall be in machine-printable format and in a form reasonably satisfactory
to the Rights Agent. Subject to the provisions of Section 11 and Section
22 hereof, the Right Certificates, whenever distributed, shall be dated as
of the Record Date, shall show the date of countersignature, and on their
face shall entitle the holders thereof to purchase such number of shares of
Common Stock (or following a Triggering Event, other securities, cash or
other assets, as the case may be) as shall be set forth therein at the
price set forth therein (such exercise price per share of Common Stock, the
"Purchase Price"), but the number of such shares and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii)
a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
(whether or not in writing) regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Company has determined is part
of a plan, arrangement or understanding (whether or not in writing) which
has as a primary purpose or effect the avoidance of Section 7(e) hereof,
and any Right Certificate issued pursuant to Section 6
<PAGE> 15
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or Section 11 hereof, upon transfer, exchange, replacement or adjustment of
any other Right Certificate referred to in this sentence, shall contain (to
the extent feasible) the following legend, modified as applicable to apply
to such Person:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Right Certificate and the Rights represented hereby may
become null and void in the circumstances specified in Section
7(e) of such Agreement.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by one of its
authorized officers either manually or by facsimile signature. The Right
Certificates shall be countersigned by an authorized signatory of the
Rights Agent either manually or by facsimile signature and shall not be
valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to
be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, issued and
delivered 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.
In case any authorized signatory of the Rights Agent who
shall have countersigned any of the Right Certificates shall cease to be
such signatory before delivery by the Company, such Right Certificates,
nevertheless, may be issued and delivered by the Company with the same
force and effect as though the person who countersigned such Right
Certificates had not ceased to be such signatory; and any Right
Certificates may be countersigned on behalf of the Rights Agent by any
person who, at the actual date of the countersignature of such Right
Certificate, shall be a proper signatory of the Rights Agent to countersign
such Right Certificate, although at the date of the
<PAGE> 16
- - 12 -
execution of this Rights Agreement any such person was not such a
signatory.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its office designated for such purpose, 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 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, the date
of each of the Right Certificates and the date of countersignature 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 Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to
the close of business on the Expiration Date, any 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 shares of Common Stock (or following a
Triggering Event, other securities, cash or other assets, as the case may
be) as the Right Certificate or Right Certificates surrendered then
entitled such holder (or, in the case of a transfer, such former 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 office of the Rights Agent designated for such
purpose, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request. Neither the
Rights Agent nor the Company shall be obligated to take any 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, as the
Company shall reasonably request, of the identity of the Beneficial Owner,
Affiliates or Associates of such Beneficial Owner or holder, or of any
other Person with which such holder or any of such holder's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting or disposing of
<PAGE> 17
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securities of the Company. Thereupon the Rights Agent shall, subject to
Section 14 and Section 20(k) hereof, 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 from a Right
Certificates holder 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 to them,
along with a signature guarantee and such other and further documentation
as the Rights Agent may reasonably request, and if requested by the
Company, 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 owner 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, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including, without limitation, the restrictions
on exercisability set forth in Sections 9(c), 11(a)(iii), 23(a) and 24(b)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the
designated office of the Rights Agent, together with payment of the
aggregate Purchase Price for the total number of shares of Common Stock (or
other securities, cash or other assets, as the case may be) as to which the
Rights are then exercisable, at or prior to the earliest of (i) the close
of business on 200_ (the "Final Expiration Date"), or (ii) the time at
which the Rights are redeemed as provided in Section 23 hereof or (iii) the
time at which all exercisable Rights are exchanged as provided in Section
24 hereof (such earliest date being herein referred to as the "Expiration
Date").
(b) The Purchase Price for each full share of Common Stock
pursuant to the exercise of a Right shall initially be
<PAGE> 18
- - 14 -
$175 (being $87.50 per half share of Common Stock), 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 and completed accompanied by payment of the
Purchase Price for the number of shares of Common Stock (or other
securities, cash or other assets, as the case may be) to be purchased and
an amount equal to any applicable transfer tax, the Rights Agent shall
thereupon, subject to Section 20(k), promptly (i) requisition from the
Company certificates for the total number of shares of Common Stock to be
purchased, (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, (iii) promptly after receipt of such certificates, cause
the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt promptly
deliver such cash to or upon the order of the registered holder of such
Right Certificate. The payment of the Purchase Price must be made in cash
or by certified bank check or bank draft or money order payable to the
order of the Company or the Rights Agent. In the event that the Company is
obligated to issue securities, distribute property or pay cash pursuant to
Section 11(a)(iii) hereof, the Company will make all arrangements necessary
so that cash, property or securities are available for issuance,
distribution or payment by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Right Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event,
any Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an
<PAGE> 19
- - 15 -
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 which whom the Acquiring Person
has any continuing agreement, arrangement or understanding (whether or not
in writing) regarding the transferred Rights or (B) a transfer which the
Board of Directors of the Company has determined is part of a plan,
arrangement or understanding (whether or not in writing) which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become
null and void without any further action and no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether under any
provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person, or any of its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless
such registered holder shall have (i) completed and signed the certificate
contained in the form of election to purchase set forth on the reverse side
of the Right Certificate surrendered for such exercise, and (ii) provided
such additional evidence of the identity of the Beneficial Owner,
Affiliates or Associates of such Beneficial Owner or holder, or of any
other Person with which such holder or any of such holder's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting or disposing of
any securities of the Company as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall, if surrendered
to the Company or to any of its agents, be delivered to the Rights Agent
for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled by it, and no Right Certificates shall be issued
in
<PAGE> 20
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lieu thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in
such case shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of Shares of Common
Stock. (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Common Stock (and following the occurrence of a Triggering Event, out of
its authorized and unissued other securities), or out of its authorized and
issued shares of Common Stock (and, following the occurrence of a
Triggering Event, out of its authorized and issued other securities) held
in its treasury, the number of shares of Common Stock (and, following the
occurrence of a Triggering Event, other securities) that will be sufficient
to permit the exercise in full of all outstanding Rights (it being
understood that any of the foregoing shares or securities may also be
reserved for other purposes) or will take such other steps as are
appropriate to assure that the number of such shares or securities (or
their equivalents) sufficient to permit the exercise in full of all
outstanding Rights will be available upon such exercise.
(b) So long as the shares of Common Stock (and, following
the occurrence of a Triggering Event, other securities) issuable upon the
exercise of Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time as
the Rights become exercisable (but only to the extent that it is reasonably
likely that the Rights will be exercised), all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the first occurrence of a Section 11(a)(ii)
Event, or as soon as required by law, as the case may be, a registration
statement under the Securities Act of 1933, as amended (the "Act"), with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
<PAGE> 21
- - 17 -
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as
of which the Rights are no longer exercisable for such securities, and (B)
the Expiration Date. The Company will also take such action as may be
appropriate under the blue sky laws of the various states. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days
after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement and shall
give simultaneous written notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement and notice to the Rights Agent at such time as the
suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualifications in such jurisdiction shall
have been obtained.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Common Stock
(and following the occurrence of a Triggering Event, other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Right Certificates or of any shares of the Common Stock (or other
securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required (a) to pay any transfer tax which may be
payable in respect of any transfer involved in the transfer or delivery of
Right Certificates or the issuance or delivery of certificates for Common
Stock (or other securities, as the case may be) in a name other than that
of the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or (b) to issue or deliver any certificates for a
number of shares of Common Stock (or other securities, as the case may be)
upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of
<PAGE> 22
- - 18 -
such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. Common Stock Record Date. Each Person in whose
name any certificate for any number of shares of Common Stock (or other
securities, as the case may be) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of such
whole and/or fractional shares of Common Stock (or other securities, as the
case may be) 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 and shall show the date of countersignature; provided,
however, that if the date of such surrender and payment is a date upon
which Common Stock (or other securities, as the case may be) transfer books
of the Company are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the
next succeeding Business Day on which the Common Stock (or other
securities, as the case may be) transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a stockholder of
the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares
or Number of Rights. The Purchase Price, the number of shares covered by
each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Common Stock
payable in shares of the Common Stock, (B) subdivide the outstanding Common
Stock, (C) combine the outstanding Common Stock into a smaller number of
shares or (D) issue any shares of its capital stock in a reclassification
of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, the Purchase Price in effect at the time of the record
date for such dividend or of
<PAGE> 23
- - 19 -
the effective date of such subdivision, combination or reclassification,
and the number and kind of shares of Common Stock or capital stock, as the
case may be, issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when Common Stock
(or other securities) transfer books of the Company were open, he or she
would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the
event any Person, alone or together with its Affiliates and Associates,
becomes, at any time after the Rights Dividend Declaration Date, an
Acquiring Person except as the result of a transaction set forth in Section
13(a) hereof, then, prior to the later of (x) the date on which the
Company's rights of redemption pursuant to Section 23(a) expire, or (y)
five (5) days after the date of the first occurrence of a Section 11(a)(ii)
Event, proper provision shall be made so that each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have a right to
receive, upon exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number of shares of
Common Stock of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price for a full share of Common
Stock by the number of shares of Common Stock for which a Right is then
exercisable and dividing that product by (y) 50% of the Current Market
Price per share of Common Stock of the Company (determined pursuant to
Section 11(d)) on the date of the occurrence of the event described above
in this subparagraph (ii) (such number of shares is hereinafter referred to
as the "Adjustment Shares"), provided that the Purchase Price and the
number of Adjustment Shares shall be further adjusted as provided in this
Agreement to reflect any events occurring after the date of such first
occurrence.
(iii) In the event that the number of shares of Common
Stock which are authorized by the Company's certificate of incorporation
but not outstanding or reserved for issuance for
<PAGE> 24
- - 20 -
purposes other than upon exercise of the Rights is not sufficient to permit
the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (2) the Purchase Price (such excess, the "Spread"),
and (B) with respect to each Right, make adequate provision to substitute
for the Adjustment Shares, upon exercise of the Rights and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) other equity securities of the Company (including, without limitation,
shares of preferred stock which a majority of the Independent Directors and
the Board of Directors of the Company have deemed to have the same value as
shares of Common Stock (such shares of preferred stock, "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having an aggregate value equal to
the Current Value, where such aggregate value has been determined by a
majority of the Independent Directors and the Board of Directors of the
Company based upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors of the Company; provided, however,
that if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the later of
(x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on
which the Company's rights of redemption pursuant to Section 23(a) expire
(the later of (x) and (y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver,
upon the surrender for exercise of a Right and without requiring payment of
the Purchase Price, shares of Common Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value
equal to the Spread. If the Board of Directors of the Company shall
determine in good faith that it is likely that sufficient additional shares
of Common Stock could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such period, as
it may be extended, the "Substitution Period"). To the extent that the
Company determines that some action need be taken pursuant to the first
and/or second sentences of this subparagraph (iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability
of the
<PAGE> 25
- - 21 -
Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the Company shall
issue a public announcement and shall give concurrent written notice to the
Rights Agent stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement and notice to the
Rights Agent at such time as the suspension is no longer in effect. For
purposes of this subparagraph (iii), the value of the Common Stock shall be
the Current Market Price (as determined pursuant to Section 11(d) hereof)
per share of Common Stock on the Section 11(a)(ii) Trigger Date and the
value of any Common Stock Equivalent shall be deemed to be the same as the
value of Common Stock on such date. The Company shall give the Rights
Agent notice of the selection of any Common Stock Equivalent under this
subparagraph (iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Stock
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Stock (or securities
having substantially the same rights, privileges and preferences as the
shares of Common Stock ("Equivalent Common Stock") or convertible into
Common Stock or Equivalent Common Stock) at a price per share of Common
Stock or Equivalent Common Stock (or having a conversion price per share,
if a security convertible into Common Stock or Equivalent Common Stock)
less than the Current Market Price (as defined in Section 11(d) per share
of Common Stock or Equivalent Common Stock, as the case may be) 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, of which the numerator shall be
the number of shares of Common Stock outstanding on such record date plus
the number of shares of Common Stock or Equivalent Common Stock which the
aggregate offering price of the total number of shares of Common Stock or
Equivalent Common Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price and of which the denominator shall be
the number of shares of Common Stock outstanding on such record date plus
the number of additional shares of Common Stock and/or Equivalent Common
Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In
case such subscription price may be paid by delivery
<PAGE> 26
- - 22 -
of 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. Shares of Common 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.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of Common Stock (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 periodic cash dividend or a
dividend payable in Common 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, of which the numerator shall be the Current Market Price per
share of Common Stock (as defined in Section 11(d)) on such record date,
less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants applicable to one share of Common Stock and of which the
denominator shall be such Current Market Price per share of Common 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.
(d) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii), the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
thirty (30) consecutive Trading Days (as such term is hereinafter defined
in this paragraph (d)) immediately prior to such date and, for purposes of
computations made pursuant to Section 11(a)(iii)
<PAGE> 27
- - 23 -
hereof, the Current Market Price per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices per share of
such Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the Current
Market Price per share of Common Stock is determined during the period
following the announcement by the issuer of such Common Stock of (A) a
dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into shares of such Common Stock
(other than the Rights) or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite 30 Trading Day or 10 Trading Day period, as set forth above,
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 Market Price shall be appropriately adjusted to
take into account ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading
on the New York Stock Exchange or, if the shares of the Common Stock are
not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange
on which the shares of the Common Stock are listed or admitted to trading
or, if the shares of the Common Stock are not listed or admitted to trading
on any national securities exchange, the last quoted price, or, if not so
quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system
then in use, or, if on any such date the shares of Common Stock are not
quoted by such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in
Common Stock selected by the Board of Directors of the Company. If on any
such date no market maker is making a market in the Common Stock, the fair
value of such shares on such date shall be as determined in good faith by
the Independent Directors if the Independent Directors constitute a
majority of the Board of Directors or, in the event the Independent
Directors do not constitute a majority of the Board of Directors, by an
independent investment banking firm selected by the Board of Directors,
whose determinaiton shall be described in a statement filed with the Rights
Agent and shall
<PAGE> 28
- - 24 -
be conclusive for all purposes. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the transaction
of business or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, a Monday, Tuesday, Wednesday,
Thursday or Friday on which banking institutions in the State of New York
are not authorized or obligated by law or executive order to close. If the
Common Stock is not publicly held or not so listed or traded, "Current
Market Price" per share shall mean the fair value per share as determined
in good faith by the Independent Directors if the Independent Directors
constitute a majority of the Board of Directors or, in the event the
Independent Directors do not constitute a majority of the Board of
Directors, by an independent investment banking firm selected by the Board
of Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest ten-thousandth of a
share of Common Stock. 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
mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter
exercised shall become entitled to receive any shares of capital stock
other than shares of Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Right and the Purchase Price
thereof shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Section 11(a) through (p), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to Common Stock
shall apply on like terms to any such other shares.
<PAGE> 29
- - 25 -
(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 shares of
Common 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 Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of shares (calculated to the nearest tenth-thousandth) obtained
by (i) multiplying (x) the number of shares covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately
prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of Common 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 shares of Common Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to
such adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest 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 the adjustment of
the Purchase Price. The Company shall make a public announcement and shall
give simultaneous written notice to the Rights Agent of its election to
adjust the number of Rights, indicating the record date for 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 subparagraph (i), the Company
shall, as promptly as practicable, cause to be distributed to holders of
Right Certificates on such record date Right Certificates evidencing,
subject to Section 14, the additional Rights to which such
<PAGE> 30
- - 26 -
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 may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of 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 shares of Common Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number
of shares which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of a share of
Common Stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue such number of
fully paid and nonassessable shares of such Common Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the occurrence
of such event the issuance to the holder of any Right exercised after such
record date of the number of shares of Common Stock and other capital stock
or securities of the Company, if any, issuable upon such exercise over and
above the number of shares of Common Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis
of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such
adjustment.
<PAGE> 31
- - 27 -
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that the Board of Directors of the
Company shall determine to be advisable in order that any consolidation or
subdivision of shares of Common Stock, issuance wholly for cash of any
shares of Common Stock at less than the Current Market Price, issuance
wholly for cash of the Common Stock or securities which by their terms are
convertible into or exchangeable for Common Stock, stock dividends or
issuance of rights, options or warrants referred to hereinabove in this
Section 11 hereafter made by the Company to holders of its Common Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23, 24 and
27 hereof, take (nor will it permit any of its Subsidiaries 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.
(o) The Company covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction which complies
with Section 11(n)), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section
11(n)), or (iii) sell or transfer (or permit any of its Subsidiaries to
sell or transfer), in one or more transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(n)) if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of the Person who constitutes, or would constitute,
the "Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
<PAGE> 32
- - 28 -
(p) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date, the Company may, in lieu of
making any adjustment to the Purchase Price, the number of shares of Common
Stock eligible for purchase on exercise of each Right or the number of
Rights outstanding, which adjustment would otherwise be required by
Section 11(a)(i), 11(b), 11(c), 11(h) or 11(i), make such other equitable
adjustment or adjustments thereto as the Board of Directors (whose
determination shall be conclusive) deems appropriate in the circumstances
and not inconsistent with the objectives of the Board of Directors in
adopting this Agreement and such Sections.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in Sections
11 and 13, the Company shall (a) promptly prepare a certificate setting
forth such adjustment, and a brief statement of the facts accounting for
such adjustment and the adjusted Purchase Price, (b) promptly file with the
Rights Agent and with each transfer agent for the Common Stock a copy of
such certificate and (c) mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 26. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment
therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) In the event that, following the Shares
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with or into, any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(n)) and the
Company shall not be the continuing or surviving corporation of such
consolidation or merger, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(n)) shall
consolidate, merge with or into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the Common
Stock shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or (z) 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 more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or any of its Subsidiaries in one
<PAGE> 33
- - 29 -
or more transactions each of 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 (except as provided in Section 7(e)) shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of validly issued, fully paid, nonassessable and freely tradable
shares of Common Stock of the Principal Party (as hereinafter defined), not
subject to any liens, encumbrances, rights of call or first refusal, or
other adverse claims as shall be equal to the result obtained by (1)
multiplying the then current Purchase Price for a full share of Common
Stock by the number of shares of Common Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such shares for
which a Right was exercisable immediately prior to the first occurrence of
a Section 11(a)(ii) Event by the Purchase Price for a full share of Common
Stock in effect immediately prior to such first occurrence), and dividing
that product (which, following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by (2) 50% of the Current Market Price per
share of the Common Stock of such Principal Party (determined in the manner
described in Section 11(d)) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall thereafter apply to such Principal Party, (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9) 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
its Common Stock thereafter deliverable upon the exercise of the Rights;
and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
<PAGE> 34
- - 30 -
(1) in the case of any transaction described in (x) or (y)
of the first sentence of Section 13(a), the Person that is
the issuer of any securities into which shares of Common
Stock of the Company are converted in such merger or
consolidation and, if no securities are so issued, the
Person that is the other party to the merger or
consolidation; and
(2) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the
party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions; provided, however, that in any such case, (x)
if the Common Stock of such Person is not at such time and
has not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another
corporation the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other
corporation and (y) if such Person is a Subsidiary, directly
or indirectly, of more than one corporation, the Common
Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of
such corporations is the issuer of the Common Stock having
the greatest market value.
(c) The Company shall not consummate any Section 13 Event
unless the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which are neither outstanding nor reserved for
issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of
this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party
(i) will prepare and file a registration statement
under the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, will use its best efforts to cause such registration
statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such
registration statement to remain effective
<PAGE> 35
- - 31 -
(with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
The provisions of this Section 13 shall similarly apply to successive
Section 13 Events. In the event that a Section 13 Event shall occur at any
time after the occurrence of a Section 11(a)(ii) Event, the Rights which
have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares. (a)
The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, the Company shall pay 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-thecounter 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
<PAGE> 36
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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
shares of Common Stock or Common Stock Equivalents upon exercise or
exchange of the Rights or to distribute certificates which evidence
fractional shares. In lieu of fractional shares of Common Stock or Common
Stock Equivalents, the Company may pay to the registered holders of Right
Certificates at the time the Rights evidenced thereby are exercised or
exchanged as herein provided an amount in cash equal to the same fraction
of the current market value of Common Stock or Common Stock Equivalents.
For purposes of this Section 14(b), the current market value of one share
of Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to Section 11(d)) for the Trading Day immediately prior
to the date of such exercise or exchange, as the case may be, and the
current market value of any Common Stock Equivalent shall be the same as
the current market value of the Common Stock on such date.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise or exchange of a Right, except as otherwise
permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Stock); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common
Stock), without the consent of the Rights Agent or of the holder of any
other Right Certificate (or, prior to the Distribution Date, of the Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such 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 hereunder and injunctive relief against
actual or threatened
<PAGE> 37
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violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Stock;
(b) after the Distribution Date, the Right
Certificates will be transferable only on the registry books
of the Rights Agent if surrendered at the office of the
Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed, along
with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request;
(c) subject to Section 6 and Section 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
whatever, and neither the Company nor the Rights Agent shall
be required to be affected by any notice to the contrary;
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall
have any liability to any holder of a Right or other Person
as a result of its inability to perform any of its
obligations under this Agreement by reason of any pre-
liminary 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 com-
mission, 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, that the Company must
<PAGE> 38
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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
Stockholder. No holder, as such, of any Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder
of the number of shares of Common Stock or any other securities of the
Company that 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 stockholder of the Company or
any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised or
exchanged for Common Stock 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 (including the
reasonable fees and expenses of counsel), 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 Common Stock or other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, instruction,
adjustment notice, certificate, statement, or other paper or document
believed by it to be genuine and to be signed,
<PAGE> 39
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executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.
In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any action
taken or omitted by it in connection with its administration of this
Agreement in reliance upon (i) the proper execution of the certification
appended to the Form of Assignment and the Form of Election to Purchase
included as part of Exhibit B hereto (the "Certification"), unless the
Rights Agent shall have actual knowledge that, as executed, the
Certification is untrue or (ii) the non-execution or failure to complete
the Certification including, without limitation, any refusal to honor any
otherwise permissible assignment or election by reason of such non-
execution or failure.
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 consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21. 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 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
<PAGE> 40
- - 36 -
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 President, any Senior Vice President, any Vice
President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct. The
issuance or non-issuance of a Right Certificate or Common
Stock or other security issued in lieu of Common Stock in
accordance with instructions given to the Rights Agent by
the Company pursuant to Section 20(k) hereof or in
accordance with the terms hereof shall not constitute
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
<PAGE> 41
- - 37 -
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 adjustment required under
the provisions of Section 11 or 13 or responsible for the
manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock
to be issued pursuant to this Agreement or any Right
Certificate or as to whether any shares of Common 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 and certificates delivered pursuant to
any provision hereof from any one of the Chairman of the
Board, the President, any Senior Vice President, any Vice
President, the Secretary or the Treasurer of the Company,
and is authorized 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 to be taken by it
in good faith in accordance with instructions of any such
officer. An application by the Rights Agent for
instructions may set forth in writing any action proposed to
be taken or omitted by the Rights Agent with respect to its
duties and obligations under
<PAGE> 42
- - 38 -
this Agreement and the date on and/or after which such
action shall be taken, and the Rights Agent shall not be
liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the
date specified therein (which date shall not be less than
one Business Day after the Company receives such
application) without the consent of the Company unless,
prior to taking or omitting such action, the Rights Agent
has received written instructions in response to an
application specifying the actions to be taken or omitted.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either by itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct;
provided, however, that reasonable care was exercised in the
selection thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) If, with respect to any 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, the
Rights Agent shall not take any further action with
<PAGE> 43
- - 39 -
respect to such requested exercise or transfer without first
consulting the Company. The Company shall give the Rights
Agent prompt written instructions as to the action to be
taken regarding the Right Certificates involved. The Rights
Agent shall not be liable for acting in accordance with such
instructions.
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 thirty (30) days' notice in writing mailed to the
Company by registered or certified mail, and, at the Company's expense, to
the holders of the Right Certificates by first class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30)
days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock
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 thirty (30) days after giving notice of
such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the Company shall
become the temporary Rights Agent and 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 corporation
organized and doing business under the laws of the United States or of the
State of New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in
the State of New York), in good standing, having a principal office in the
State of New York, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by
federal or state authority or which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $25 million. 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
<PAGE> 44
- - 40 -
assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock, and 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 following the Distribution Date and prior to the redemption
or expiration of the Rights, the Company (a) shall, with respect to shares
of Common Stock so issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement, or upon the exercise, conversion
or exchange of securities hereinafter issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, 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, the Company shall be advised by counsel that such
issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Right Certificate
would be issued, and (ii) 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 and Termination. (a) The Board of
Directors of the Company may, at its option, at any time prior to the
earlier of (x) the close of business on the tenth day following 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 day following
the Record Date), or (y) the Final Expiration Date, redeem all but not less
than all of the then outstanding Rights at a
<PAGE> 45
- - 41 -
redemption price of $.01 per Right as 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"), and the Company may, at its option, pay the Redemption
Price either in shares of its Common Stock (valued at their Current Market
Price as defined in Section 11(d) on the date of the redemption), other
securities, cash or other assets; provided, however, that if the Board of
Directors of the Company authorizes redemption of the Rights in either of
the circumstances set forth in clauses (x) or (y) below then there must be
Independent Directors in office and such authorization shall require the
concurrence of a majority of the Independent Directors: (x) such
authorization occurs on or after the Shares Acquisition Date or (y) such
authorization occurs on or after the date of a change (resulting from a
proxy or consent solicitation) in the composition of a majority of the
Board of Directors of the Company from the Board that was in office at the
commencement of such solicitation if any Person who is a participant in
such solicitation has stated (or if upon the commencement of such
solicitation a majority of the Board of Directors of the Company has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take, or may consider taking, any action which would
result in such Person becoming an Acquiring Person or which would cause the
occurrence of a Triggering Event. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after
the first occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired.
(b) In deciding whether or not to exercise the Company's
right of redemption hereunder, the Board of Directors of the Company shall
act in good faith, in a manner they reasonably believe to be in the best
interests of the Company and with such care, including reasonable inquiry,
skill and diligence, as a person of ordinary prudence would use under
similar circumstances, and they may consider the long-term and short-term
effects of any action upon employees, customers and creditors of the
Company and upon communities in which offices or other establishments of
the Company are located, and all other pertinent factors.
(c) Immediately upon the action of the Board of Directors
of the Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights
will terminate and the only right
<PAGE> 46
- - 42 -
thereafter of the holders of Rights shall be to receive the Redemption
Price for each Right held. Within 10 days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to the Rights Agent and to all such holders at their
last addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the Transfer
Agent for the Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which
the payment of the Redemption Price will be made. 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, and other than in connection with the repurchase
of Common Stock prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the
Company may, at its option (provided that there are then Independent
Directors in office and a majority of the Independent Directors concur), at
any time and from time to time on or after a Section 11(a)(ii) Event,
exchange all or part of the then outstanding and exercisable Rights (which
shall not include Rights that have become void pursuant to the provisions
of Section 7(e) hereof) for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
of this Agreement (such exchange ratio being hereinafter referred to as the
"Exchange Ratio").
(b) Immediately upon the action of the Board of Directors
of the Company ordering the exchange of any Rights pursuant to subsection
(a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only
right thereafter of a holder of such Rights shall be to receive that number
of shares of Common Stock equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent. Any
<PAGE> 47
- - 43 -
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange will be effected and, in the
event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares
of Common Stock issued but not outstanding, or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may be necessary to
authorize additional shares of Common Stock or for issuance upon exchange
of the Rights.
(d) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute for any share of Common Stock
exchangeable for a Right (i) Common Stock Equivalents
(ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v)
any combination of the foregoing, having an aggregate value which a
majority of the Independent Directors and the Board of Directors of the
Company shall have determined in good faith to be equal to the Current
Market Price of one share of Common Stock (determined pursuant to Section
11(d) hereof) on the Trading Date immediately preceding the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the Company
shall propose at any time following the Distribution Date (a) to pay any
dividend payable in stock of any class to the holders of Common Stock or to
make any other distribution to the holders of Common Stock (other than a
regular periodic cash dividend), or (b) to offer to the holders of Common
Stock rights or warrants to subscribe for or to purchase any additional
shares of Common Stock or shares of stock of any class or any other
securities, rights or options, or (c) to effect any reclassification of
Common Stock (other than a reclassification involving only the subdivision
of outstanding Common Stock), or (d) to effect any consolidation or merger
into or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n) hereof), or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of more
than 50% of the assets or
<PAGE> 48
- - 44 -
earning power of the Company and its Subsidiaries (taken as a whole) to,
any other Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with
Section 11(n) hereof), or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give
to the Rights Agent and to each holder of a Right, in accordance with
Section 26, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights
or Rights, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to to
take place and the date of participation therein by the holders of the
Common 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 (a) or (b) above at least
twenty (20) days prior to the record date for determining holders of the
Common Stock for purposes of such action, and in the case of any such other
action, at least twenty (20)) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Stock, whichever shall be the earlier.
In case a Section 11(a)(ii) Event shall occur, then, in any
such case, the Company shall as soon as practicable thereafter give to the
Rights Agent and to each holder of a Right, to the extent feasible and in
accordance with Section 26, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii) and all references in the preceding
paragraph to Common Stock shall be deemed to thereafter refer to other
securities.
Section 26. 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:
Consolidated Natural Gas Company
CNG Tower
625 Liberty Avenue
Pittsburgh, PA 15222-31999
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company
<PAGE> 49
- - 45 -
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:
Society National Bank
c/o KeyCorp Shareholder Services, Inc.
P.O. Box 6477
Cleveland, OH 44101-1777
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments. Prior to the
earlier of the Distribution Date or the Shares Acquisition Date and subject
to the penultimate sentence of this Section 27, the Company may from time
to time supplement or amend this Agreement without the approval of any
holders of Right Certificates. From and after the earlier of the
Distribution Date or the Shares Acquisition Date, and subject to the
penultimate sentence of this Section 27, the Company may from time to time
supplement or amend this Agreement without the approval of any holders of
Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to lengthen the time
period during which the Rights may be redeemed following the Shares
Acquisition Date for up to an additional twenty days beyond the time period
set forth in Section 23(a) (provided, however, that any such lengthening
shall be effective only if there are Independent Directors and shall
require the concurrence of a majority of such Independent Directors) or
(iv) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment unless the Rights Agent shall have
determined in good faith that such supplement or amendment would adversely
affect its interests under this Agreement.
<PAGE> 50
- - 46 -
Notwithstanding anything in this Agreement to the contrary, no supplement
or amendment shall be made on or after the Distribution Date which changes
the Redemption Price, the Final Expiration Date, the Purchase Price or the
number of shares of Common Stock for which a Right is then exercisable.
Prior to the earlier of the Shares Acquisition Date or the Distribution
Date, the interests of the holders of Rights shall be deemed coincident
with the interests of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions
of this Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the provisions of Rule 13d-
3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Board of Directors of the Company (and, where specifically provided for
herein, the Independent Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or the Company (or, as expressly
provided, the Independent Directors), or as may be necessary or advisable
in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and (ii)
make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or
not redeem the Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations (including, for the
purpose of clause (ii) below, all omissions with respect to the foregoing)
which are done or made by the Board (or, as provided for, by the
Independent Directors) in good faith, shall (i) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Right
Certificates and all other parties, and (ii) not subject the Board or the
Independent Directors to any liability to the holders of the Right
Certificates.
Section 30. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date,
<PAGE> 51
- - 47 -
the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, registered holders of
the Common Stock).
Section 31. Severability. If any term, provision,
covenant, or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board of Directors of the Company determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated
and shall not expire until the close of business on the tenth day following
the date of such determination by the Board of Directors.
Section 32. 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 Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
<PAGE> 52
- - 48 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be hereunto
affixed and attested, all as of the day and year first above written.
[SEAL]
CONSOLIDATED NATURAL GAS COMPANY
By:
Name:
Title:
Attest:
By: ___________________________
Name: ____________________
Title: ____________________
[SEAL]
SOCIETY NATIONAL BANK
By:
Name:
Title:
Attest:
By: ___________________________
Name: ____________________
Title: ____________________
<PAGE> 53
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER ______________ OR EARLIER IF
NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS MAY NOT BE EXERCISABLE AND THE
RIGHTS AGREEMENT MAY BE AMENDED WITHOUT THE APPROVAL OF
THE RIGHTS OWNERS.
CONSOLIDATED NATURAL GAS COMPANY
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 , 199_ (the "Rights
Agreement") between Consolidated Natural Gas Company, a Delaware
corporation (the "Company") and Society National Bank (the "Rights Agent"),
to purchase from the Company at any time after the Distribution Date (as
such term is defined in the Rights Agreement) and prior to 5:00 P.M. (New
York City time) on , 200_ at the designated office of the
Rights Agent, or its successors as Rights Agent, in New York, New York,
one-half of one fully paid, nonassessable share of the Common Stock, $2.75
par value (the "Common Stock"), of the Company, at a purchase price of $175
per share (the "Purchase Price"), being $87.50 per half share, upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase and related certificate duly executed, along with a
signature guarantee and such other and further documentation as the Rights
Agent may reasonably request. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share set forth above,
are the number and Purchase Price as
A-1
<PAGE> 54
of , 1995, based on the Common Stock of the Company as
constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced by this
Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate of Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a person who after such
transfer, became an Acquiring Person, such Rights shall become null and
void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Common Stock (or, in certain
circumstances, other securities) 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, including
Triggering Events (as such term is defined in the Rights Agreement).
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
above-mentioned office of the Rights Agent, and at the executive offices of
the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the Rights Agent,
along with a signature guarantee and such other and further documentation
as the Rights Agent may reasonably request, 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 Common Stock as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof, along with a signature guarantee
and such other and further documentation as the Rights Agent may
A-2
<PAGE> 55
reasonably request, another Right Certificate or Right Certificates for the
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (a) may be redeemed by the Company at
its option at a redemption price of $.01 per Right prior to the earlier of
the close of business on (i) the tenth day following the Shares Acquisition
Date and (ii) the Final Expiration Date or (b) may be exchanged in whole or
in part for shares of Common Stock and/or other securities, cash or other
assets of the Company deemed to have the same value as shares of Common
Stock, at any time after a Section 11(a)(ii) Event. The Rights Agreement
may be amended without the approval of the holders of the Rights as and to
the extent set forth therein.
No fractional shares of Common Stock will be issued upon the
exercise or exchange of any Right or Rights evidenced hereby, 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 the
Common Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in
the Rights Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised or
exchanged for Common Stock as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
A-3
<PAGE> 56
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of , 1995.
[SEAL]
ATTEST: CONSOLIDATED NATURAL GAS
COMPANY
By: ________________________ By: ________________________
Name: Name:
Title: Title:
Countersigned:
SOCIETY NATIONAL BANK,
as Rights Agent
By: _______________________
Authorized Signature
Date:
A-4
<PAGE> 57
[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 Certificates.)
FOR VALUE RECEIVED __________________________ hereby sells,
assigns and transfers unto ________________________________________________
_________________________________________________________________________
(please print name and address of transferee)
__________________________________________________________________________
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint _____________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _______________, ____
_______________________ Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
A-5
<PAGE> 58
CERTIFICATE
___________
The undersigned hereby certifies by checking the appropriate box
that:
____ ___
___ /___/ Exercising this Right Certificate will /__/ will not
/__/ enable the undersigned, its Affiliates, its Associates
and/or any other Person with which the undersigned or any of the
undersigned's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring,
holding, voting or disposing of securities of the Company to obtain,
individually or in the aggregate, beneficial ownership of Common Stock or
other securities that have 10% or more of the aggregate voting power of the
outstanding shares of the Common Stock and other securities having voting
power.
Dated: __________, ____ _________________________
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
A-6
<PAGE> 59
NOTICE
______
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
A-7
<PAGE> 60
FORM OF ELECTION TO PURCHASE
____________________________
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
To Consolidated Natural Gas Company:
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to purchase
the shares of Common Stock issuable upon the exercise of such Rights (or
such other securities of the Company or of any other Person which may be
issuable upon the exercise of the Rights) and requests that certificates
for such shares be issued in the name of:
Please insert social security or
other taxpayer 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 taxpayer identifying number
___________________________________________________________________________
(Please print name and address)
___________________________________________________________________________
Dated: ____________, ____
________________________________________
Signature
A-8
<PAGE> 61
Signature Guaranteed:
(Signatures must be guaranteed.)
A-9
<PAGE> 62
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On , 199_ the Board of Directors of Consolidated
Natural Gas Company (the "Company") declared a dividend distribution of one
Right for each outstanding share of Common Stock, $2.75 par value, of the
Company (the "Common Stock") to stockholders of record at the close of
business on , 199_ (the "Record Date"). Each Right
entitles the registered holder to purchase from the Company one-half of one
share of Common Stock at a price of $175 per share (the "Purchase Price"),
being $87.50 per half share, subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and Society National Bank, as Rights Agent
(the "Rights Agent").
Distribution Date; Transfer of Rights
_____________________________________
Until the earlier to occur of (i) ten days following the
date (the "Shares Acquisition Date") of the 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
Common Stock or other voting securities ("Voting Stock") that have 10% or
more of the voting power of the outstanding shares of Voting Stock or
(ii) ten days following the commencement or announcement of an intention to
make a tender offer or exchange offer the consummation of which would
result in such person acquiring, or obtaining the right to acquire,
beneficial ownership of Voting Stock having 10% or more of the voting power
of the outstanding shares of Voting Stock (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced, with respect
to any of the Company's Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate. The Rights Agreement
provides that, until the Distribution Date, the Rights will be transferred
with and only with the Company's Common Stock. Until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date upon transfer or new issuance of
the Company's Common Stock will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption
or expiration of the Rights), the surrender for transfer of any of the
Company's Common Stock certificates outstanding as of the
B-1
<PAGE> 63
Record Date will also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the
Rights ("Right Certificates") will be mailed to holders of record of the
Company's Common Stock as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire at the close of business on , 200_,
unless earlier redeemed or exchanged by the Company as described below.
Exercise of Rights for Common Stock of the Company
In the event that a Person becomes an Acquiring Person at
any time following the Distribution Date, each holder of a Right will
thereafter have the right to receive, upon exercise, Common Stock (or, in
certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the Purchase Price of the Right then in
effect. Notwithstanding any of the foregoing, following the occurrence of
such 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.
Exercise of Rights for Shares of the Acquiring Company
______________________________________________________
In the event that, at any time following the Shares
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction, or (ii) 50% or more of the Company's assets or
earning power is sold or transferred, each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have
the right to receive, upon exercise, Common Stock of the acquiring company
having a value equal to two times the Purchase Price of the Right then in
effect.
Adjustments to Purchase Price
_____________________________
The Purchase Price payable, and the number of shares of
Common Stock (or other securities, as the case may be) issuable upon
exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Common Stock, (ii) upon the grant
to holders of the Common Stock of certain rights or warrants to subscribe
for or
B-2
<PAGE> 64
purchase shares of the Common Stock or convertible securities at less than
the then Current Market Price of the Common Stock or (iii) upon the
distribution to holders of the Common Stock of evidences of indebtedness or
assets (excluding regular periodic cash dividends or dividends payable in
the Common Stock) or of subscription rights or warrants (other than those
referred to above). Prior to the Distribution Date, the Board of Directors
of the Company may make such equitable adjustments as it deems appropriate
in the circumstances in lieu of any adjustment otherwise required by the
foregoing.
With certain exceptions, no adjustment in the Purchase Price
will be required until the earlier of (i) three years from the date of the
event giving rise to such adjustment or (ii) the time at which cumulative
adjustments require an adjustment of at least 1% in such Purchase Price.
No fractional shares of Common Stock will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Common
Stock on the last trading date prior to the date of exercise.
Redemption and Exchange of Rights
Redemption and Exchange of Rights
_________________________________
At any time prior to 5:00 P.M. New York City time on the
tenth day following the Shares Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a
majority of the Independent Directors. Immediately upon the action of the
Board of Directors of the Company electing to redeem the Rights with, if
required, the concurrence of the Independent Directors, the Company shall
make announcement thereof, and upon such action, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be
to receive the Redemption Price.
At any time after the occurrence of the event set forth
under the heading "Exercise of Rights for Common Stock of the Company"
above, the Board of Directors may exchange the Rights (other than Rights
owned by an Acquiring Person, which have become void), in whole or in part,
at an exchange ratio of one share of Common Stock, and/or other securities,
cash or other assets deemed to have the same value as one share of Common
Stock, per Right, subject to adjustment.
Until a Right is exercised or exchanged for Common Stock,
the holder thereof, as such, will have no rights as a stockholder of the
Company, including, without limitation, the
B-3
<PAGE> 65
right to vote or to receive dividends. While the distribution of the
Rights will not be taxable to stockholders or to the Company, stockholders
may, depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for Common Stock or other
consideration of the Company or for the stock of the Acquiring Person as
set forth above, or are exchanged as provided in the preceding paragraph.
Amendments to Terms of the Rights
_________________________________
Any of the provisions of the Rights Agreement may be amended
by the Board of Directors of the Company without the consent of the holders
of the Rights prior to the Distribution Date. Thereafter, the provisions
of the Rights Agreement may be amended by the Board of Directors in order
to cure any ambiguity, defect or inconsistency, or to make changes which do
not adversely affect the interests of holders of Rights (excluding the
interest of any Acquiring Person); provided, however, that no supplement or
amendment may be made on or after the Distribution Date which changes those
provisions relating to the principal economic terms of the Rights. The
Board of Directors may also, with the concurrence of a majority of the
Independent Directors, extend the redemption period for up to an additional
20 days.
The term "Independent Directors" means any member of the
Board of Directors of the Company who was a member of the Board prior to
the date of the Rights Agreement, and any person who is subsequently
elected to the Board if such person is recommended or approved by a
majority of the Independent Directors, but shall not include an Acquiring
Person or any representative thereof.
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 dated , 199_. 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 hereby incorporated herein
by reference.
B-4
<PAGE> 1
EXHIBIT B-1
November 14, 1995
(212) 701-3600
Re: Share Purchase Rights Plans
___________________________
Ladies and Gentlemen:
On behalf of Consolidated Natural Gas Company
("Consolidated"), which is seeking authorization to implement a
share purchase rights plan on Form U-1, and in connection with
Consolidated's application for approval on Form U-1, we are
submitting this letter, which discusses the background and basic
structure of rights plans, their benefit to stockholders, the
fact that rights plans have become commonplace and the legality
of rights plans.
I. Background and Basic Structure of Rights Plans.
______________________________________________
Beginning in 1984, several companies adopted share
purchase rights plans absent any authoritative judicial decision
upholding the validity of such plans. The adoption of share
purchase rights plans, commonly known as "poison pills," was a
response to unsolicited attempts by investors to acquire public
companies, requiring boards of directors and stockholders to make
expeditious decisions affecting the value, corporate structure
and continued existence of the companies. Many of these attempts
involved partial or two-tiered offers, the breakup of the
corporate structure and the sale of assets, or took the form of
creeping acquisitions of stock that deprive stockholders of
participation in a control premium. Share purchase rights plans
allow companies to deal with takeover attempts within a more
reasonable time frame and with a greater possibility for
protecting the long-term interests of all stockholders by forcing
<PAGE> 2
acquirors to negotiate with a target's board of directors and
extracting higher acquisition premiums from acquirors.
Rights plans are intended to be effective against "two-
tiered" acquisitions, acquisition attempts in which offers for
less than all of the stock of a target company are followed by a
second-step merger in which the remaining stockholders receive
less consideration for their stock. Rights plans also discourage
partial tender offers with no second-step merger and
accumulations of more than a specified percentage of voting
control, thereby discouraging the acquisition of future control
without an offer to acquire all shares at an appropriate premium.
The key features of a rights plan -- "flip-in" and "flip-over"
provisions of the rights -- can impose unacceptable levels of
dilution on an acquiror. This potential for dilution, combined
with the authority of the target's board of directors to redeem
the rights before they are triggered, creates an incentive for
potential acquirors to negotiate with a target's board of
directors prior to taking any unilateral action.
Most rights plans contain the same basic structure and
features. Following adoption of the plan by the board of
directors, rights pursuant to the plan are distributed, as
dividends, pro rata to each stockholder. No stockholder approval
is required. Each right, excluding those held by an acquiring
person (as defined in the plan), entitles the holder thereof to
purchase a share or a fraction of a share of either common stock
or a newly issued series of preferred stock following the
occurrence of a specified event, typically the acquisition of a
specified percentage of a company's voting stock, at a price
fixed at the time the rights are issued and subject to adjustment
generally to prevent dilution. The exercise price is typically
at a significant premium over the market price at the time the
rights are issued and approximates, in the view of the board of
directors, the value of the stock at the maturity of the term of
the rights.
The rights may not be traded separately from the common
stock prior to a specified triggering event. The rights confer
no voting power and typically remain outstanding for ten years,
unless earlier exercised or redeemed. The rights are redeemable
by the board of directors of a company for a nominal price at any
time prior to the acquisition by one person, or several persons
<PAGE> 3
acting as a group, of beneficial ownership of a specified
percentage of a company's voting stock and for a fixed period
thereafter.
The antitakeover features of a rights plan are
triggered when the rights begin to trade separately and become
exercisable, which typically occurs upon (1) the acquisition by
an acquiring person of a specified percentage of a company's
voting stock, usually 10% to 15%, or (2) the commencement (or the
announcement of the commencement) of a tender offer or exchange
offer for a number of shares that would result in an acquiring
person owning such specified percentage of a company's voting
stock. The percentage "flip-in" feature provides that, upon an
acquiring person obtaining a specified percentage of a company's
voting stock, each right, excluding the rights held by the
acquiring person, will "flip-in," thereby entitling the holder to
purchase, at the exercise price, common stock of the company with
a then-market value equal to two times the exercise price. The
flip-in feature dilutes the acquiring person's investment and
discourages creeping accumulations of voting control. The "flip-
over" feature provides that, if after the rights become
exercisable, a company is acquired through a second-step merger
or other specified business combination, each right, excluding
the rights held by the acquiring person, will "flip-over" and
entitle the holder thereof to buy, for the exercise price, common
stock of the acquiring person with a then-market value equal to
two times the exercise price. This feature also dilutes an
acquiring person's investment.
II. Benefits to Stockholders.
________________________
Rights plans are beneficial to the interests of
stockholders because they increase a target's bargaining power
and lead to higher takeover premiums for stockholders. A rights
plan also maximizes stockholder value by allowing boards of
directors to consummate preferred transactions that they have
determined to be part of a company's long-term plan for
maximization of share prices. Although rights plans are designed
to protect stockholders from coercive takeover devices, such as
two-step mergers, market sweeps and creeping acquisitions of
<PAGE> 4
control, they do so without entrenching management or preventing
tender offers. Because rights plans typically contain a
redemption provision, which permits the board of directors to
redeem the rights at a nominal price at any time prior to a
triggering event or within a short time thereafter, an acquiring
person can avoid dilution so long as the board of directors
approves the transaction and redeems the rights. Even if the
board of directors were initially to oppose a tender offer,
triggering the exercisability of the rights, a tender offer could
still succeed in several ways, including: (1) tendering with a
condition that the board redeem the rights; (2) tendering with a
very high minimum condition of shares and rights; or
(3) soliciting proxies to remove the board and then redeeming the
rights. Thus, while not precluding hostile tender offers, a
rights plan does encourage a potential acquiror to negotiate with
the board of directors or the stockholders, rather than to act
unilaterally.
The adoption of a rights plan will not negatively
affect the economic interests of a company's stockholders. Since
the exercise price of a right is significantly higher than the
market price, the issuance of rights does not cause a dilution of
earnings per share and historically has not had any materially
negative impact on the market price of a company's stock. In
fact, a 1994 study by University of Rochester economists, which
analyzed over 600 companies with rights plans, found that rights
plans had no meaningful effect on the price of a company's stock.
The study concluded that rights plans "are reliably associated
with higher premiums for selling shareholders, both conditionally
and conditional on a successful takeover . . . . Antitakeover
measures increase the bargaining position of target firms ...."
R. Comment and G. Schwert, Poison or Placebo? Evidence on the
Deterrent and Wealth Effects of Modern Antitakeover Measures,
National Bureau of Economic Research, Program in Corporate
Finance (Sept. 1994), at 1. The plans benefit stockholders by
protecting against abusive tactics and increasing bargaining
power, resulting in higher prices for stockholders.
Certain institutional investors continue to oppose
rights plans, but stockholder proposals to redeem rights plans
have declined in recent years. Only twelve such proposals where
included in the proxy materials filed for 1,500 companies in 1994
and eight in 1995.
<PAGE> 5
III. Adoption Commonplace.
____________________
The adoption of rights plans among public companies is
commonplace. Over 1,700 American public companies have already
adopted rights plans, including more than half of the Fortune 500
companies and Business Week 1,000 companies and more than two-
thirds of the Fortune 200 companies. Additionally, 87% of
exchange-listed companies are covered by rights plans or control
share laws and at least 28 public utility companies have adopted
rights plans. Although none of the 13 public utility holding
companies currently have a rights plan, at least one holding
company applied for and was granted authorization to take steps
to implement a plan. See 58 SEC Docket 2497, Release No. 35-
26244 (Columbia Gas System, Inc.).
IV. Legal Authority.
_______________
The Delaware Supreme Court established the legality of
rights plans as a defensive measure in Moran v. Household Int'l
Inc., 500 A.2d 1346 (Del. 1985), in which the Court upheld the
adoption of a flip-over rights plan as permissible under Delaware
law and a proper exercise of a board of directors' business
judgment. The Delaware Supreme Court concluded that "sufficient
authority for the Rights Plan exists in 8 Del.C. Section 157" and
"adoption of the Rights Plan was within the authority of the
Directors . . . ." Moran, 500 A.2d at 1353, 1355. Although
there has been little doubt as to the legality of rights plans
modeled after the Household rights plan, in the past several
years there has been litigation on the validity of rights plans
that differ from the Household plan in several aspects.
A number of courts have addressed the validity of
discriminatory flip-ins, which provide that the rights held by
the acquiror become null and void upon the occurrence of a
triggering event, under the corporate laws of various states. In
Delaware, several decisions that have refused to order the board
of directors to redeem a flip-in rights plan did so without
addressing the validity of the discriminatory feature of the
<PAGE> 6
plan. See, e.g., Doskocil Cos. v. Griggy, No. 10095 (Del. Ch.
1988); Facet Enters. Inc. v. Prospect Group, Inc., No 9746 (Del.
Ch. 1988). Moreover, in some circumstances Delaware law permits
stockholders, as distinguished from shares, to be treated
unequally. See, e.g., Harvard Indus. Inc. v. Tyson, [1986-1987
Transfer Binder] Fed. Sec. L. Rep. (CCH) at 95,294. Thus,
although there has been no direct ruling on the issue by a
Delaware court (the Household rights plan did not have such a
provision), it appears that discriminatory flip-ins are valid
under Delaware law.
Most recent decisions, however, have recognized that a
rights plan may be used to protect the stockholders from coercive
or inadequate offers. See, e.g., Desert Partners, L.P. v. USG
Corp., 686 F. Supp. 1289 (N.D. Ill. 1988) (refusing to require
the board to redeem a rights plan in the context of coercive,
two-tiered offer); In re Damon Corp. Stockholders Litig., [1988-
89 Transfer Binder] Fed. Sec. L Rep. (CCH) Paragraph 94,040 (Del.
Ch. 1988) (refusing to require board to redeem rights in the face
of an all-cash, all shares tender offer at $24 per share where
the shares were valued at $30 per share). Cases have also
recognized that a rights plan may be used to advance short-term
stockholder values, including to run an auction for the sale of
the company. See, e.g., CRTF Corp. v. Federated Dep't Stores,
Inc., 683 F. Supp. 422 (S. D. N. Y. 1988) (citing Delaware law in
refusing to order the board to redeem the rights in the face of a
pending tender offer before the auction process had been
completed and noting that a rights plan "provides the directors
with a shield to fend off coercive offers and with a gavel to run
an auction"); Facet Enters. Inc. v. Koppers Co., 683 F. Supp. 458
(D. Del. 1988) (permitting the rights plan to remain in place
while the board considered a recapitalization plan as an
alternative to the unsolicited tender offer).
V. Conclusion.
__________
Consolidated Natural Gas Company is seeking the
Securities and Exchange Commission's authorization to implement a
rights plan because a rights plan is an effective measure that
allows a board of directors to take additional time to negotiate
<PAGE> 7
with potential acquirors and to enhance the probability of
competing bids, resulting in increased value for stockholders.
The adoption of rights plans is commonplace among public
companies and their legality in Delaware is unquestioned.
Cahill Gordon & Reindel
Securities and Exchange Commission
Division of Investment Management
450 Fifth Street, N.W.
Washington, D.C. 20549
<PAGE> 1
EXHIBIT G
Consolidated Natural Gas Company (70- )
________________________________
Notice of Proposal to Adopt a Shareholder Rights Plan.
Consolidated Natural Gas Company ("Consolidated"), CNG Tower, 625 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3199, a registered holding company, has
filed a declaration pursuant to Sections 6(a), 7, 9(a), 10 and 12(c) of the Act
and Rule 42 thereunder.
The Board of Directors of Consolidated ("Board") proposes to declare a
dividend distribution of one right ("Right") for each outstanding share of
Common Stock to shareholders of record at the close of business on a record
date ("Record Date") yet to be established. As of June 30, 1995 there were
93,270,609 shares of Common Stock outstanding. The detailed description and
terms of the Rights will be set forth in a Rights Agreement ("Agreement") to be
between Consolidated and Society National Bank, as Rights Agent ("Agent").
Each Right would entitle the registered holder to purchase from Consolidated
one-half of one share of Common Stock at a price of $175 per share ("Purchase
Price"), being $87.50 per half share, subject to adjustment.
Until the earliest to occur of (i) ten days following the date ("Shares
Acquisition Date") of the public announcement that a person or affiliated group
("Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of Common Stock or other voting securities ("Voting Stock") that have
10% or more of the voting power of the outstanding shares of Voting Stock or
<PAGE> 2
(ii) ten days following the commencement or announcement of an intention to
make a tender offer or exchange offer the consummation of which would result in
such person acquiring, or obtaining the right to acquire, beneficial ownership
of Voting Stock having 10% or more of the voting power of the outstanding
shares of Voting Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate. Until the Distribution Date, the Rights will be transferred
only with the Common Stock, and new Common Stock certificates issued after the
Record Date will contain a notation incorporating the Agreement by reference.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. As in the
case with most right plans which are in place, the Rights will expire at the
close of business on the tenth anniversary of the Record Date, unless earlier
redeemed or exchanged by Consolidated as described further herein.
In the event that a person becomes an Acquiring Person at any time
following the Distribution Date, each holder of a Right will thereafter have
the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of Consolidated) having a
value equal to two times the Purchase Price of the Right then in effect.
However, all Rights that are, or under certain circumstances were, beneficially
owned by any Acquiring Person will be null and void.
<PAGE> 3
In the event that, at any time following the Shares Acquisition Date, (i)
Consolidated is acquired in a merger or other business combination transaction,
or (ii) 50% or more of Consolidated's assets or earning power is sold or
transferred, each holder of a Right shall thereafter have the right to receive,
upon exercise, common stock of the acquiring company having a value equal to
two times the Purchase Price of the Right then in effect.
The Purchase Price payable, and the number of shares of Common Stock (or
other securities, as the case may be) issuable upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution.
At any time prior to 5:00 P.M. New York City time on the tenth day
following the Shares Acquisition Date, Consolidated may redeem the Rights in
whole, but not in part, at a price of $.01 per Right ("Redemption Price")
payable in cash or stock, payable in cash or stock. Under certain
circumstances set forth in the Agreement, the decision to redeem shall require
the concurrence of a majority of the Independent Directors. An "Independent
Director" means any member of the Board who was a member of the Board prior to
the date of the Agreement, and any person who is subsequently elected to the
Board if such person is recommended or approved by a majority of the
Independent Directors, but shall not include an Acquiring Person or any
representative thereof. Immediately upon the action of the Board electing to
redeem the Rights, Consolidated shall make announcement thereof and the only
right of the holders of Rights will be to receive the Redemption Price.
At any time after a person becomes an Acquiring Person, the Board may
exchange the Rights (other than Rights owned by an Acquiring Person, which
become void), in whole or in part, at an exchange ratio of one share of Common
Stock and/or other securities, cash or other assets deemed to have the same
value as one share of Common Stock, per Right, subject to adjustment.
<PAGE> 4
Until a Right is exercised or exchanged for Common Stock, the holder
thereof, as such, will have no rights as a stockholder of Consolidated. While
the distribution of the Rights will not be taxable to stockholders or to
Consolidated, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Common Stock
(or other consideration) of Consolidated or for the stock of the Acquiring
Person.
Any of the provisions of the Agreement may be amended by the Board without
the consent of the holders of the Rights prior to the Distribution Date.
Thereafter, the Agreement may be amended by the Board in order to cure any
ambiguity, defect or inconsistency, or to make changes which do not adversely
affect the interests of holders of Rights (excluding the interest of any
Acquiring Person); provided, however, that no supplement or amendment may be
made on or after the Distribution Date which changes those provisions relating
to the principal economic terms of the Rights. The Board may also, with the
concurrence of a majority of the Independent Directors, extend the redemption
period for up to an additional 20 days.
___________________________________
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
