<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): January 23, 1996
CONSOLIDATED NATURAL GAS COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 1-3196 13-0596475
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
CNG Tower
625 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3199
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (412) 227-1000
--------------
None
- --------------------------------------------------------------
(Former name or former address, if changed since last report.)
Page 1 of 77 Pages
Exhibit Index on Page 8
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Item 5. Other Events.
On January 23, 1996, the Board of Directors of Con-
solidated Natural Gas Company (the "Company") declared a divi-
dend 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
February 28, 1996 (the "Record Date"). The Rights are to be
issued pursuant to a shareholder rights plan which was approved
by the Board of Directors on November 13, 1995. 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, sub-
ject 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 consum-
mation 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 out-
standing as of the Record Date, by such Common Stock certifi-
cate. The Rights Agreement provides that, until the Distribu-
tion 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.
Page 2 of 77 Pages
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Until the Distribution Date (or earlier redemption or expira-
tion of the Rights), the surrender for transfer of any of the
Company's Common Stock certificates outstanding as of the
Record Date will also constitute the transfer of the Rights
associated with the Common Stock represented by such certifi-
cate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certifi-
cates") 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 Feb-
ruary 28, 2006, 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 Per-
son at any time following the Distribution Date, each holder of
a Right will thereafter have the right to receive, upon exer-
cise, Common Stock (or, in certain circumstances, cash, prop-
erty 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 Agree-
ment) 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 com-
pany 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) issu-
able upon exercise of the Rights are subject to adjustment from
Page 3 of 77 Pages
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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 peri-
odic 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 Pur-
chase 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 frac-
tional 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, the Com-
pany may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). Under cer-
tain circumstances set forth in the Rights Agreement, the deci-
sion 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 Direc-
tors, 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
Page 4 of 77 Pages
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other assets deemed to have the same value as one share of Com-
mon 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
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 Com-
pany 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 ambi-
guity, 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 Distri-
bution 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 rec-
ommended or approved by a majority of the Independent Direc-
tors, but shall not include an Acquiring Person or any repre-
sentative thereof.
A copy of the Rights Agreement is filed herewith as
Exhibit 1. The foregoing description of the Rights does not
purport to be complete and is qualified in its entirety by ref-
erence to such Exhibit, which is hereby incorporated herein by
reference.
Page 5 of 77 Pages
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Item 7. Financial Statements and Exhibits.
(c) Exhibits. The following exhibits are filed
herewith and incorporated herein by reference:
Exhibit Number
1 Rights Agreement, dated as of January 23, 1996,
between Consolidated Natural Gas Company and
Society National Bank, as Rights Agent.
2 Press Release dated November 13, 1995.
3 Press Release dated January 23, 1996.
Page 6 of 77 Pages
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized.
CONSOLIDATED NATURAL GAS COMPANY
Dated: January 23, 1996 By: /s/ David M. Westfall
-------------------------------
Name: David M. Westfall
Title: Senior Vice President,
Finance
Page 7 of 77 Pages
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EXHIBIT INDEX
Number Description Page
- ------ ----------- ----
99.1 Rights Agreement, dated as of Janu- 9
ary 23, 1996, between Consolidated
Natural Gas Company and Society
National Bank, as Rights Agent.
99.2 Press Release dated November 13, 74
1995.
99.3 Press Release dated January 23, 76
1996.
Page 8 of 77 Pages
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<PAGE>
Exhibit 1
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- ---------------------------------------------------------------
CONSOLIDATED NATURAL GAS COMPANY
and
SOCIETY NATIONAL BANK, Rights Agent
RIGHTS AGREEMENT
Dated as of January 23, 1996
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- ---------------------------------------------------------------
<PAGE>
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
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Page
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>
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>
RIGHTS AGREEMENT
Rights Agreement, dated as of January 23, 1996 (the
"Agreement"), between Consolidated Natural Gas Company, a Dela-
ware 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
January 23, 1996 ("Rights Dividend Declaration Date") autho-
rized 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 February 28, 1996 (the "Record Date")
and has authorized the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions of Sec-
tion 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 condi-
tions 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 con-
stituting a Substantial Block (as such term is hereinafter
defined), but shall not include (i) the Company, any Sub-
sidiary (as such term is hereinafter defined) of the Com-
pany, 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>
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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 Benefi-
cial Ownership of any shares of the Voting Stock consti-
tuting all or a portion of such Substantial Block; and
(iii) any Person who or which, together with all Affili-
ates 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 Sec-
tion 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 Per-
son 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.
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(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 exercis-
able 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 "bene-
ficially 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 Trig-
gering 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 Dis-
tribution 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 writ-
ing); 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
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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 compa-
rable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Per-
son 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 "Bene-
ficial Owner" of, or to "beneficially own," any securities
acquired in a bona fide firm commitment underwriting pur-
suant 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 ref-
erence 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.
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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 Indepen-
dent 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.
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(w) "Original Rights" shall have the meaning set
forth in the definition of "Beneficial Owner" above.
(x) "Person" shall mean any individual, firm, corpo-
ration, 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>
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(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 con-
trolled, 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 Com-
pany 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 desir-
able 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>
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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 ten-
der or exchange offer if, upon consummation thereof, such Per-
son 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 Dis-
tribution 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 pro-
vided 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 hold-
ers 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 outstand-
ing on the Record Date shall also constitute the transfer of
the Rights associated with Common Stock represented by such
certificate.
<PAGE>
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(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 circum-
stances 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 Jan-
uary 23, 1996 (the "Rights Agreement"), the terms
of which are hereby incorporated herein by refer-
ence and a copy of which is on file at the princi-
pal 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. Consoli-
dated 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 writ-
ten request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights benefi-
cially 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 certifi-
cates 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 certif-
icates. 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>
-10-
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 leg-
ends, summaries or endorsements printed thereon as the Company
may deem appropriate and as are not inconsistent with the pro-
visions 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 countersig-
nature, 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 Affili-
ate 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 Direc-
tors of the Company has determined is part of a plan, arrange-
ment 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>
-11-
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). Accord-
ingly, this Right Certificate and the Rights rep-
resented 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 fac-
simile signature. The Right Certificates shall be counter-
signed 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 counter-
signature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates, nevertheless, may be counter-
signed 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 Com-
pany by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Com-
pany 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 Com-
pany, 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>
-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 Certifi-
cates 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 Certifi-
cates 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 pur-
chase. 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 Cer-
tificates 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. Nei-
ther 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 Cer-
tificate 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 agree-
ment, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting or disposing of
<PAGE>
-13-
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, com-
bination 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 reason-
ably 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, reimburse-
ment 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; Expi-
ration 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 Pur-
chase 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 February 28, 2006 (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>
-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 para-
graph (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 pay-
ment 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 Sec-
tion 20(k), promptly (i) requisition from the Company certifi-
cates for the total number of shares of Common Stock to be pur-
chased, (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 Cer-
tificate, 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 regis-
tered 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 Com-
pany 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 Cer-
tificate 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>
-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 pursu-
ant 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 understand-
ing (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 under-
standing (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 Sec-
tion 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 Bene-
ficial 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 pur-
pose of exercise, transfer, split up, combination or exchange
shall, if surrendered to the Company or to any of its agents,
be delivered to the Rights Agent for cancellation or in can-
celled form, or, if surrendered to the Rights Agent, shall be
cancelled by it, and no Right Certificates shall be issued in
<PAGE>
-16-
lieu thereof except as expressly permitted by any of the provi-
sions 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 Cer-
tificate 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 autho-
rized 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 secu-
rities) 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 exer-
cise 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, fol-
lowing 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 secu-
rities purchasable upon exercise of the Rights on an appropri-
ate form, (ii) cause such registration statement to become
<PAGE>
-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 appro-
priate under the blue sky laws of the various states. The Com-
pany 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 tem-
porarily 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 juris-
diction unless the requisite qualifications in such jurisdic-
tion 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 Trig-
gering 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 exer-
cise 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>
-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 Com-
mon 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 frac-
tional 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 outstand-
ing 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) subdi-
vide 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>
-19-
the effective date of such subdivision, combination or reclas-
sification, 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 aggre-
gate 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 divi-
dend, 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 Dec-
laration 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 Pur-
chase Price and the number of Adjustment Shares shall be fur-
ther 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 Com-
mon Stock which are authorized by the Company's certificate of
incorporation but not outstanding or reserved for issuance for
<PAGE>
-20-
purposes other than upon exercise of the Rights is not suffi-
cient to permit the exercise in full of the Rights in accor-
dance 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 exer-
cise 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 fol-
lowing 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 requir-
ing 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 outstand-
ing Rights, and (y) may suspend the exercisability of the
<PAGE>
-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 Mar-
ket 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 Com-
pany 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 pur-
chase 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 Com-
mon 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 Equiva-
lent 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 immedi-
ately prior to such record date by a fraction, of which the
numerator shall be the number of shares of Common Stock out-
standing on such record date plus the number of shares of Com-
mon Stock or Equivalent Common Stock which the aggregate offer-
ing 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 addi-
tional shares of Common Stock and/or Equivalent Common Stock to
be offered for subscription or purchase (or into which the con-
vertible securities so to be offered are initially convert-
ible). In case such subscription price may be paid by delivery
<PAGE>
-22-
of consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as deter-
mined 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 con-
solidation 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 pay-
able 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 deter-
mined 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 appli-
cable 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) con-
secutive 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>
-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) consecu-
tive 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 subdivi-
sion, 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 consoli-
dated 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 trad-
ing 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 Inde-
pendent 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>
-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 consti-
tute 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 there-
after 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>
-25-
(g) All Rights originally issued by the Company sub-
sequent 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 Pur-
chase 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 imme-
diately 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 Cer-
tificates on such record date Right Certificates evidencing,
subject to Section 14, the additional Rights to which such
<PAGE>
-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 Com-
pany, 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 there-
tofore and thereafter issued may continue to express the Pur-
chase 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 exer-
cise 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 effec-
tive 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 addi-
tional shares upon the occurrence of the event requiring such
adjustment.
<PAGE>
-27-
(m) Anything in this Section 11 to the contrary not-
withstanding, the Company shall be entitled to make such reduc-
tions 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 war-
rants referred to hereinabove in this Section 11 hereafter made
by the Company to holders of its Common Stock shall not be tax-
able 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 Sub-
sidiaries to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will dimin-
ish 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 earn-
ing 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 immedi-
ately 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>
-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 exer-
cise 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 adjust-
ment 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 pro-
vided 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 Sec-
tion 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 Trans-
fer of Assets or Earning Power. (a) In the event that, fol-
lowing 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 Subsid-
iary of the Company in a transaction which complies with Sec-
tion 11(n)) shall consolidate, merge with or into the Company
and the Company shall be the continuing or surviving corpora-
tion 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 securi-
ties 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 Per-
sons (other than the Company or any of its Subsidiaries in one
<PAGE>
-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 cur-
rent Purchase Price for a full share of Common Stock by the
number of shares of Common Stock for which a Right is exercis-
able 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 immedi-
ately 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 divid-
ing 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 vir-
tue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Com-
pany" 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>
-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 transac-
tion 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, "Princi-
pal Party" shall refer to such other corporation and
(y) if such Person is a Subsidiary, directly or indi-
rectly, of more than one corporation, the Common Stocks
of two or more of which are and have been so regis-
tered, "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 out-
standing 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 securi-
ties purchasable upon exercise of the Rights on an appro-
priate form, will use its best efforts to cause such reg-
istration statement to become effective as soon as practi-
cable after such filing and will use its best efforts to
cause such registration statement to remain effective
<PAGE>
-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 suc-
cessive 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 frac-
tional 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 admit-
ted 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 securi-
ties exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading
on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or
such other system then in use, or, if on any such date the
Rights are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such
<PAGE>
-32-
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 frac-
tions of shares of Common Stock or Common Stock Equivalents
upon exercise or exchange of the Rights or to distribute cer-
tificates which evidence fractional shares. In lieu of frac-
tional 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 reg-
istered 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 Certifi-
cate and in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifi-
cally 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>
-33-
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 Certifi-
cates 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 fur-
ther 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 cer-
tificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any nota-
tions 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 pur-
poses 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 author-
ity, prohibiting or otherwise restraining performance of
such obligation; provided, however, that the Company must
<PAGE>
-34-
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 Com-
pany 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 admin-
istration 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 neg-
ligence, 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>
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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 elec-
tion 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 suc-
cessor Rights Agent shall be a party, or any corporation suc-
ceeding 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 fil-
ing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eli-
gible 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 Agree-
ment, any of the Right Certificates shall have been counter-
signed 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>
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countersigned, the Rights Agent may countersign such Right Cer-
tificates 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 opin-
ion of such counsel shall be full and complete authoriza-
tion 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 cer-
tificate signed by any one of the Chairman of the Board,
the President, any Senior Vice President, any Vice Presi-
dent, 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 con-
tained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to
<PAGE>
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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 respon-
sibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execu-
tion 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 war-
ranty 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 Com-
mon Stock will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, exe-
cute, 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 per-
formance of its duties hereunder and certificates deliv-
ered 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 Trea-
surer 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>
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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 appli-
cation 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 Com-
pany 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 sur-
rendered 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>
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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 accor-
dance with such instructions.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be dis-
charged 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 Com-
pany shall become the temporary Rights Agent and the registered
holder of any Right Certificate may apply to any court of com-
petent 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 autho-
rized 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>
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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 predeces-
sor 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 pur-
chasable 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 herein-
after 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 appro-
priate 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 sig-
nificant risk of material adverse tax consequences to the Com-
pany 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>
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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 redemp-
tion), other securities, cash or other assets; provided, how-
ever, 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 Indepen-
dent 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 Acquisi-
tion 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 Com-
pany 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 Com-
pany's right of redemption hereunder, the Board of Directors of
the Company shall act in good faith, in a manner they reason-
ably believe to be in the best interests of the Company and
with such care, including reasonable inquiry, skill and dili-
gence, 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>
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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 pur-
chase 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 Indepen-
dent 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, appro-
priately 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>
-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 autho-
rized but unissued to permit any exchange of Rights as contem-
plated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize addi-
tional 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 addi-
tional 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 reclassifi-
cation 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>
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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, distribu-
tion of rights or Rights, or the date on which such reclassifi-
cation, 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 Sec-
tion 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 there-
after 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>
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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 Sec-
tion 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 penul-
timate 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 con-
tained herein which may be defective or inconsistent with any
other provisions herein, (iii) to lengthen the time period dur-
ing 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 Inde-
pendent Directors and shall require the concurrence of a major-
ity of such Independent Directors) or (iv) to change or supple-
ment 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>
-46-
Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment shall be made on or after the Distribu-
tion Date which changes the Redemption Price, the Final Expira-
tion Date, the Purchase Price or the number of shares of Common
Stock for which a Right is then exercisable. Prior to the ear-
lier of the Shares Acquisition Date or the Distribution Date,
the interests of the holders of Rights shall be deemed coinci-
dent with the interests of the holders of Common Stock.
Section 28. Successors. All the covenants and pro-
visions 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 calcula-
tion of the number of shares of Common Stock outstanding at any
particular time, including for purposes of determining the par-
ticular 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 pro-
vided 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 Indepen-
dent Directors), or as may be necessary or advisable in the
administration of this Agreement, including, without limita-
tion, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed neces-
sary 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 fore-
going) 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>
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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 any-
thing in this Agreement to the contrary, if any such term, pro-
vision, 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 con-
tract 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, except that the rights,
duties and obligations of the Rights Agent shall be governed
and construed in accordance with the laws of the State of Ohio.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such coun-
terparts 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 head-
ings 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>
-48-
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and their respective corpo-
rate seals to be hereunto affixed and attested, all as of the
day and year first above written.
[SEAL]
CONSOLIDATED NATURAL GAS COMPANY
By: /s/ David M. Westfall
------------------------------
Name: David M. Westfall
Title: Senior Vice President,
Finance
Attest:
By: /s/ Laura J. McKeown
---------------------------
Name: Laura J. McKeown
Title: Secretary
[SEAL]
SOCIETY NATIONAL BANK
By: /s/ Frances J. Zimmerman
------------------------------
Name: Frances J. Zimmerman
Title: Vice President
Attest:
By: /s/ Laura Thoms
---------------------------
Name: Laura Thoms
Title: Assistant Vice President
<PAGE>
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- Rights
--------
NOT EXERCISABLE AFTER FEBRUARY 28, 2006 OR EAR-
LIER 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 January 23, 1996 (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 February 28, 2006 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 Certifi-
cate with the Form of Election to Purchase and related certifi-
cate duly executed, along with a signature guarantee and such
other and further documentation as the Rights Agent may reason-
ably 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>
of February 28, 1996, 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 Cer-
tificate 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 Agree-
ment reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immuni-
ties 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 enti-
tled 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>
reasonably request, another Right Certificate or Right Certifi-
cates 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 sub-
mitted 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 obliga-
tory for any purpose until it shall have been countersigned by
the Rights Agent.
A-3
<PAGE>
WITNESS the facsimile signature of the proper offic-
ers of the Company and its corporate seal. Dated as of ,
.
[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>
[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>
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 secu-
rities of the Company to obtain, individually or in the aggre-
gate, beneficial ownership of Common Stock or other securities
that have 10% or more of the aggregate voting power of the out-
standing shares of the Common Stock and other securities having
voting power.
Dated:
----------, ---- ----------------------------
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
A-6
<PAGE>
NOTICE
The signature to the foregoing Assignment and Cer-
tificate must correspond to the name as written upon the face
of this Right Certificate in every particular, without altera-
tion or enlargement or any change whatsoever.
A-7
<PAGE>
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 exer-
cise 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>
Signature Guaranteed:
(Signatures must be guaranteed.)
A-9
<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On January 23, 1996 the Board of Directors of Consol-
idated 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 February 28,
1996 (the "Record Date"). The Rights are to be issued pursuant
to a shareholder rights plan which was approved by the Board of
Directors on November 13, 1995. Each Right entitles the regis-
tered 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 consum-
mation 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 out-
standing as of the Record Date, by such Common Stock certifi-
cate. The Rights Agreement provides that, until the Distribu-
tion 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 expira-
tion of the Rights), the surrender for transfer of any of the
B-1
<PAGE>
Company's Common Stock certificates outstanding as of the
Record Date will also constitute the transfer of the Rights
associated with the Common Stock represented by such certifi-
cate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Right Certifi-
cates") 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 Distri-
bution Date. The Rights will expire at the close of business
on February 28, 2006, 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 Per-
son at any time following the Distribution Date, each holder of
a Right will thereafter have the right to receive, upon exer-
cise, Common Stock (or, in certain circumstances, cash, prop-
erty 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 Agree-
ment) 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 com-
pany 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) issu-
able 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
B-2
<PAGE>
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 peri-
odic 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 Pur-
chase 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 frac-
tional 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, the Com-
pany may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). Under cer-
tain circumstances set forth in the Rights Agreement, the deci-
sion 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 Direc-
tors, 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 Com-
mon 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
B-3
<PAGE>
stockholder of the Company, including, without limitation, the
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 Com-
pany 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 ambi-
guity, 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 Distri-
bution 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 rec-
ommended or approved by a majority of the Independent Direc-
tors, but shall not include an Acquiring Person or any repre-
sentative thereof.
A copy of the Rights Agreement has been filed with
the Securities and Exchange Commission as an Exhibit to a Reg-
istration Statement on Form 8-A dated January 23, 1996. A copy
of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not pur-
port to be complete and is qualified in its entirety by refer-
ence to the Rights Agreement, which is hereby incorporated
herein by reference.
B-4
<PAGE>
<PAGE>
Exhibit 2
[PRESS RELEASE]
Consolidated Natural Gas Board of Directors
Adopts Shareholder Rights Plan
PITTSBURGH, November 13, 1995 -- Consolidated Natural
Gas Company announced today that its board of directors has
adopted a shareholder rights plan designed to ensure that all
shareholders receive fair and equal treatment in the event of a
proposed takeover.
If the plan is approved by the Securities and
Exchange Commission, CNG will join over 1,700 American public
companies, including more than half the Fortune 500 companies,
who have adopted shareholder rights plans.
The board said the plan was adopted as part of its
fiduciary responsibility to the shareholders, and is not in
response to any specific effort to acquire control of CNG. The
board of directors is not aware of any such effort.
"Putting in place a good plan that properly protects
our shareholders' interests is good housekeeping by our board
of directors," said George A. Davidson, Jr., CNG's chairman and
chief executive officer. "It is especially appropriate in
light of the changing environment in the utility industry
today."
After SEC approval under the Public Utility Holding
Company Act, CNG will distribute to its shareholders, as a
dividend, the right to purchase additional shares of stock
exercisable only if a person or group were to acquire, or
announce a tender or exchange offer that would result in the
acquisition of, 10 percent or more of CNG's outstanding common
stock. The rights would expire in 10 years. Details of the
plan would be mailed to all shareholders at the time of the
dividend.
As of September 30, 1995, there were 93,366,470
shares of CNG common stock outstanding. CNG's stock is widely
held. It has over 40,000 registered stockholders, including
over 285 institutions, and no individual or institution holds
more than 2 percent of its stock. Over 7,000 employees and
retirees hold about 13.5 percent of the stock through various
benefit and stock ownership plans.
<PAGE>
-2-
CNG is one of the nation's largest producers, trans-
porters, distributors and marketers of natural gas, and offers
a variety of energy marketing services throughout North Amer-
ica. The company's natural gas transmission and distribution
operations serve customers in Ohio, Pennsylvania, Virginia,
West Virginia, New York and other states in the Northeast and
Mid-Atlantic regions. CNG explores for and produces natural
gas and oil in the United States and Canada.
<PAGE>
<PAGE>
Exhibit 3
[PRESS RELEASE]
CNG Announces Details of Shareholders Rights Plan
PITTSBURGH, January 23, 1996 -- The board of direc-
tors of Consolidated Natural Gas Company today announced
details of its previously announced shareholder rights plan.
The board has declared the rights as a non-cash dividend to be
distributed to its shareholders of record as of February 28,
1996.
The plan, announced on November 13, is designed to
ensure that all shareholders receive fair and equal treatment
in the event of a proposed takeover. The board said the plan
was adopted as part of its fiduciary responsibility to the
shareholders, and was not in response to any specific effort to
acquire control of CNG. The board of directors is not aware of
any such effort.
Under the plan, stockholders will receive one right
for each share held, and that right will entitle the holder to
buy one-half share of CNG common stock for $87.50. The rights
will stay with the shares and be exercisable only if a person
or group were to acquire 10 percent or more of CNG's outstand-
ing common stock, or announce a tender or exchange offer that
would result in the acquisition of 10 percent or more of CNG's
outstanding stock.
CNG can redeem the rights at $.01 per right for 10
days after they become exercisable. They will expire at the
close of business on February 28, 2006. Details of the plan
are outlined in materials that will be mailed to all common
stockholders in March.
CNG is joining over 1,700 American public companies,
including more than half the Fortune 500 companies, who have
adopted shareholder rights plans.
As of December 31, 1995, there were 93,591,623 shares
of CNG common stock outstanding. CNG's stock is widely held.
The company has over 40,000 registered stockholders, including
over 285 institutions, and no individual or institution hold
more than 2 percent of its stock. Over 7,000 employees and
<PAGE>
-2-
retirees hold about 13.5 percent of the stock through various
benefit and stock ownership plans.
CNG is one of the nation's largest producers, trans-
porters, distributors and marketers of natural gas, and offers
a variety of energy marketing services throughout North Amer-
ica. The company's natural gas transmission and distribution
operations serve customers in Ohio, Pennsylvania, Virginia,
West Virginia, New York and other states in the Northeast and
Mid-Atlantic regions. CNG explores for and produces natural
gas and oil in the United States and Canada.
<PAGE>
