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): July 22, 1998
EASTERN ENTERPRISES
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(Exact name of registrant as specified in its charter)
Massachusetts 1-2297 04-1270730
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
9 Riverside Road, Weston, Massachusetts 02493
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 647-2300
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None
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(Former name or former address, if changed since last report)
<PAGE>
Item 1 through 4 and Items 6, 7(a) and (b), 8 and 9. Not Applicable.
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Item 5. Other Events
As of July 22, 1998, the Board of Trustees of Eastern Enterprises (the
"Trust") adopted an amendment to the Common Stock Rights Agreement (the "1990
Rights Agreement"), dated as of February 22, 1990, as amended on January 30,
1995, between the Trust and BankBoston, N.A., formerly known as The First
National Bank of Boston, successor in interest under the 1990 Rights Agreement
to The Bank of New York. A copy of this amendment is filed herewith as Exhibit
99.1 and is hereby incorporated by reference.
On July 22, 1998 the Board of Trustees of the Trust declared a dividend
of one Common Stock Purchase Right ("New Right") for each outstanding share of
Common Stock, with a par value of $1.00 per share, of the Trust. The dividend is
payable at the close of business upon the earlier to occur of (i) the date of
redemption by the Trust of the Trust's outstanding rights issued pursuant to the
1990 Rights Agreement and (ii) February 18, 2000, to shareholders of record as
of the close of business on such date. The terms of the New Rights are set forth
in the Rights Agreement, dated as of July 22, 1998, between the Trust and
BankBoston, N.A., as Rights Agent, a copy of which is filed herewith as Exhibit
99.2 and is hereby incorporated by reference herein.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1--Amendment No. 2 to Common Stock Rights Agreement, dated as of
July 22, 1998, between Eastern Enterprises and BankBoston, N.A.
99.2--Rights Agreement ("New Rights Agreement"), dated as of
July 22, 1998, between the Trust and BankBoston, N.A.
99.3--Form of Common Stock Purchase Rights Certificate
(attached as Exhibit A to the New Rights Agreement).
Pursuant to the Rights Agreement, printed Common Stock
Purchase Rights Certificates will not be mailed until
the Distribution Date (as defined in the New Rights
Agreement).
99.4--Summary of Common Stock Purchase Rights (attached as Exhibit
B to the New Rights Agreement).
<PAGE>
SIGNATURE
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 hereunto duly authorized.
EASTERN ENTERPRISES
Date: July 28, 1998 By: /s/ L. William Law, Jr.
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L. William Law, Jr.
Senior Vice President, General
Counsel and Secretary
<PAGE>
EXHIBIT INDEX
Exhibits
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99.1--Amendment No. 2 to Common Stock Rights Agreement, dated as of
July 22, 1998, between Eastern Enterprises and BankBoston, N.A.
99.2--Rights Agreement ("New Rights Agreement"), dated as of
July 22, 1998, between the Trust and BankBoston, N.A.
99.3--Form of Common Stock Purchase Rights Certificate
(attached as Exhibit A to the New Rights Agreement).
Pursuant to the Rights Agreement, printed Common Stock
Purchase Rights Certificates will not be mailed until
the Distribution Date (as defined in the New Rights
Agreement).
99.4--Summary of Common Stock Purchase Rights (attached as Exhibit
B to the New Rights Agreement).
<PAGE>
EXHIBIT 99.1
EASTERN ENTERPRISES
Amendment No. 2 to
------------------
Common Stock Rights Agreement
-----------------------------
This Amendment, dated as of July 22, 1998, amends the Common Stock
Rights Agreement dated as of February 22, 1990, as amended on January 30, 1995
(as amended, the "Rights Agreement"), between Eastern Enterprises, a
Massachusetts business trust (the "Trust"), and BankBoston, N.A. (the "Rights
Agent"), formerly known as The First National Bank of Boston, successor in
interest under the Rights Agreement to The Bank of New York. Terms defined in
the Rights Agreement and not otherwise defined herein are used herein as so
defined.
W I T N E S S E T H:
-------------------
WHEREAS, on February 22, 1990 the Board of Trustees of the Trust
authorized the issuance of Rights to purchase, on the terms and subject to the
provisions of the Rights Agreement, shares of the Trust's Common Stock; and
WHEREAS, on February 22, 1990, the Board of Trustees of the Trust
authorized and declared a dividend distribution of one Right for every share of
Common Stock of the Trust outstanding on the Dividend Record Date and authorized
the issuance of one Right (subject to certain adjustments) for each share of
Common Stock of the Trust issued between the Dividend Record Date and the
Distribution Date; and
WHEREAS, the Distribution Date has not occurred; and
WHEREAS, pursuant to Section 26 of the Rights Agreement, the Board of
Trustees has unanimously approved an amendment of certain provisions of the
Rights Agreement as set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Amendments to the Rights Agreement.
----------------------------------
1.1. Section 1 of the Rights Agreement shall be amended as follows:
(a) Section 1(a) of the Rights Agreement shall be amended
by deleting the reference to "20%" and replacing it
with reference to "10%".
<PAGE>
(b) Section 1(c) of the Rights Agreement shall be amended
by deleting paragraph 1(c) and replacing it in its
entirety with the following paragraph:
" (c) [Reserved]."
(c) Section 1(d) of the Rights Agreement shall be amended
by deleting paragraph 1(d) and replacing it in its
entirety with the following paragraph:
" (d) [Reserved]."
(d) Section 1(q) of the Rights Agreement shall be amended
by deleting the five references
to "Adverse Person" therefrom.
(e) Section 1(r) of the Rights Agreement shall be amended
by deleting paragraph 1(r) and replacing it in its
entirety with the following paragraph:
" (r) "Distribution Date" shall mean the date which
is the later of (A) the earlier of (x) the 10th
Business Day following the Stock Acquisition Date or
(y) the 10th Business Day following the Offer
Commencement Date or (B) such specified or
unspecified date thereafter which is on or after the
Dividend Record Date, as may be determined by a
majority of the Trustees then in office."
(f) A new Subsection shall be added to the Rights
Agreement after Section 1(u) and before Section 1(v)
as follows:
" (u') "Exchange Ratio" shall have the
meaning set forth in Section 23A(a) hereof."
(g) Section 1(w) of the Rights Agreement shall be amended
by deleting the reference to "20%" and replacing it
with reference to "10%".
1.2. Section 3(c) of the Rights Agreement shall be amended by
adding the phrase ", as amended on January 30, 1995 and as of
July 22, 1998" after the phrase "February 22, 1990" in the
first sentence of the legend described therein and by deleting
the two references to "Adverse Person" from the last sentence
of the legend described therein.
1.3. Section 4(b) of the Rights Agreement shall be amended by
deleting the four references to "Adverse Person" therefrom.
1.4. Section 7(e) of the Rights Agreement shall be amended by
deleting the four references to "Adverse Person" therefrom.
<PAGE>
1.5. Section 9(a) of the Rights Agreement shall be amended by
adding to the end of paragraph (a) the
following language:
"; provided, further, however, that in no event shall such
failure to so reserve shares affect the rights of any holder
of Rights hereunder."
1.6. Section 11 of the Rights Agreement shall be amended as
follows:
(a) Clauses (A) and (B) of Section 11(a)(ii) shall be
deleted and replaced in their
entirety as follows:
"(A)any Person shall at any time after the
Declaration Date become an
Acquiring Person; or
(B) any Acquiring Person or any Affiliate of any
Acquiring Person, at any time after the Declaration
Date, directly or indirectly, shall (1) merge into
the Trust or otherwise combine with the Trust, and
the Trust shall be the continuing or surviving Person
of such merger or combination and the Common Stock of
the Trust shall remain outstanding and no shares
thereof shall be changed or otherwise transformed
into stock or other securities of any other Person or
the Trust or cash or any other property, (2) in one
or more transactions, transfer any assets to the
Trust in exchange (in whole or in part) for shares of
any class of its equity securities or for securities
exercisable for or convertible into shares of any
such class or otherwise obtain from the Trust, with
or without consideration, any additional shares of
any such class or securities exercisable for or
convertible into shares of any such class (other than
as part of a pro rata distribution to all holders of
such class), (3) sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise dispose (in
one transaction or a series of transactions) to, from
or with the Trust or any of the Trust's Subsidiaries,
assets with an aggregate fair market value in excess
of 25% of the assets of the Trust and its
Subsidiaries determined on a consolidated basis on
terms and conditions less favorable to the Trust than
the Trust would be able to obtain through
arm's-length negotiation with an unaffiliated third
party, (4) receive any compensation from the Trust or
any of the Trust's Subsidiaries other than
compensation as a director of the Trust or for
full-time employment as a regular employee at rates
in accordance with the Trust's (or such Subsidiary's)
past practices, (5) receive the benefit (except
proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial
assistance provided by the Trust or any of its
Subsidiaries on terms and conditions less favorable
to the Trust (or such Subsidiary) than the Trust
would be able to obtain through arm's-length
negotiation with an unaffiliated third party or
<PAGE>
(6) commence a tender or exchange offer for
securities of the Trust; or
(C) during such time as there is an Acquiring Person
at any time after the Declaration Date, there shall
be any reclassification of securities (including any
combination thereof), or recapitalization of the
Trust, or any merger or consolidation of the Trust
with any of its Subsidiaries (whether or not with or
into or otherwise involving an Acquiring Person or
any Affiliate of an Acquiring Person), or any
repurchase by the Trust or any of its Subsidiaries of
shares of the Common Stock of the Trust, or any other
class or series of securities issued by the Trust,
which reclassification, recapitalization, merger,
consolidation or repurchase is effected at a time
when a majority of the Board consists of persons who
are the Acquiring Person or its Affiliates, or
nominees or designees of any thereof, which has the
effect, directly or indirectly, of increasing by more
than 1% the proportionate share of the outstanding
shares of any class of equity securities or
securities exercisable for or convertible into any
class of equity securities of the Trust or any of its
Subsidiaries which is directly or indirectly owned by
an Acquiring Person or any Affiliate of an Acquiring
Person;"
(b) Section 11(a)(ii) shall be further amended by
deleting the phrase "clause (A) or (B)" from the
first sentence after the new subsection (C) and
replacing it with the phrase "clause (A), (B) or
(C)".
(c) Section 11(a)(iii) shall be amended by deleting the
parenthetical "(other than any Acquiring Person, any
Adverse Person and any Affiliates of the Acquiring
Person or Adverse Person)" from clause (ii) thereof
and replacing it with the following parenthetical:
"(other than any Acquiring Person or Disqualified
Transferee or any Affiliate of the Acquiring Person
or Disqualified Transferee)".
(d) Section 11(f) shall be amended by deleting the phrase
"and (m)" and replacing therewith the phrase ", (m)
and (p)" and deleting the phrase "and 13" and
replacing therewith the phrase ", 13 and 14".
(e) Section 11(p) shall be amended by deleting subsection
(p) and replacing it in its
entirety with the following:
<PAGE>
" (p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Trust shall at
any time after the Dividend Declaration Date and
prior to the Distribution Date (i) declare or pay a
dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, or (ii) effect a
subdivision, combination or consolidation of the
outstanding Common Stock (by reclassification or
otherwise than by payment of dividends in shares of
Common Stock) into a greater or smaller number of
shares, then in any such case, (i) the number of
shares of Common Stock purchasable after such event
upon proper exercise of each Right shall be
determined by multiplying the number of shares of
Common Stock so purchasable immediately prior to such
event by a fraction the numerator of which shall be
the total number of shares of Common Stock
outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the
total number of shares of Common Stock outstanding
immediately following the occurrence of such event;
and (ii) each share of Common Stock outstanding
immediately after such event shall have issued with
respect to it that number of Rights which each share
of Common Stock outstanding immediately prior to such
event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made
successively whenever such a dividend is declared or
paid or such a subdivision, combination or
consolidation is effected."
1.7. Section 13 of the Rights Agreement shall be amended as
follows:
(a) The first sentence of Section 13 shall be amended by
deleting the phrase "or occurrence of an Adverse
Person Event" therefrom.
(b) Clause (c) of the first sentence of Section 13 shall
be amended by deleting the reference to "50%" and
replacing it with reference to "25%".
1.8. Section 20(m) of the Rights Agreement shall be amended by
deleting the phrase "or Adverse
Person" from the first sentence thereof.
1.9. Section 23 of the Rights Agreement shall be amended by
deleting the proviso "; provided, however, that the Board may
not redeem any Rights following the occurrence of an Adverse
Person Event" from the first sentence thereof.
1.10. A new Section 23A shall be added to the Rights Agreement after
Section 23 as follows:
"Section 23A. Exchange.
(a) The Board, by majority vote, may, at its option,
at any time after any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio, as the
same may be so adjusted from time to time, being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board shall not be empowered to effect such
exchange at any time after any Person (other than (i) the
Trust, (ii) any Subsidiary of the Trust, (iii) any employee
<PAGE>
benefit plan of the Trust or of any Subsidiary of the Trust,
or (iv) any Person or entity organized, appointed or
established by the Trust for or pursuant to the terms of any
such plan), together with all Affiliates of such Person,
becomes the Beneficial Owner of 50% or more of the Common
Stock then outstanding.
(b) Immediately upon the action of the Board ordering
the exchange of any Rights pursuant to subsection (a) of this
Section 23A 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 Trust 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 Trust 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 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 shall state the method by which the exchange of the
Common Stock for Rights shall be effected and, in the event of
any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient
shares of Common Stock issued but not outstanding or
authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 23A, the Trust
shall take all such action as may be necessary to authorize
additional Common Stock for issuance upon exchange of the
Rights.
(d) The Trust shall not be required to issue
fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares of Common Stock.
In lieu of such fractional shares of Common Stock, the Trust
shall pay to each registered holder of a Right Certificate
with regard to which a fractional share of Common Stock would
otherwise be issuable an amount in cash equal to the same
fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the
current market value of a whole share of Common Stock shall be
the Closing Price of a share of Common Stock (as determined
pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this
Section 23A. "
<PAGE>
1.11. Section 24 of the Rights Agreement shall be amended as
follows:
(a) Clause (d) of the first sentence of Section 24 shall
be amended by deleting the reference to "50%" and
replacing it with reference to "25%".
(b) The following new paragraph shall be added to the end
of Section 24:
" Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a filing by
the Trust with the Securities and Exchange Commission
shall constitute sufficient notice to the holders of
securities of the Trust, including the Rights, for
purposes of this Agreement and no other notice need
be given."
1.12. Section 25 of the Rights Agreement shall be amended by
deleting the reference to
"THE FIRST NATIONAL BANK OF BOSTON
Attention: Shareholder Services Division
150 Royall Street
Canton, MA 02021"
therefrom and replacing it with reference to
"BankBoston, N.A.
c/o Boston EquiServe, L.P.
150 Royall Street
Canton, MA 02021
Attn: Client Administration".
1.13. Section 26 of the Rights Agreement shall be amended as
follows:
(a) The first sentence of Section 26 shall be deleted and
replaced in its entirety with the following sentence:
"Prior to the Distribution Date and subject to the
last sentence of this Section 26, the Trust may from
time to time supplement or amend any provision of
this Agreement without the approval of any holders of
the Rights."
(b) The second sentence of Section 26 shall be amended by
deleting the phrase "earlier of the Distribution Date
or an Adverse Person Event" and replacing it with the
phrase "Distribution Date".
(c) The second sentence of Section 26 shall be further
amended by deleting the parenthetical "(other than
any Acquiring Person, Adverse Person or Affiliates of
any Acquiring Person or Adverse Person)" from clause
(iv) thereof and replacing it with the parenthetical
"(other than an Acquiring Person, Disqualified
Transferee or any Affiliate of any Acquiring Person
or Disqualified Transferee)".
<PAGE>
1.14. Section 28 of the Rights Agreement shall be amended by
deleting the phrase ", that a Person is an Adverse Person"
from the parenthetical in clause (ii) therein.
1.15. Section 30 of the Rights Agreement shall be amended by adding
to the end of the paragraph the
following language:
"If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision,
covenant or restriction is held by such court or authority to
be invalid, void or unenforceable and the Board 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."
1.16. Exhibit A of the Rights Agreement shall be amended as follows:
(a) The third sentence of the legend shall be amended by
deleting the phrase "ADVERSE PERSON" therefrom and
replacing it with the phrase "AFFILIATE OF AN
ACQUIRING PERSON (WHICH INCLUDES AFFILIATES AND
ASSOCIATES)".
(b) The fifth sentence of the legend shall be amended by
deleting the phrases ", AN ADVERSE PERSON" and "OR AN
ADVERSE PERSON" therefrom.
(c) The first sentence of the first paragraph of the
Rights Certificate shall be amended by adding the
phrase ", as amended on January 30, 1995 and as of
July 22, 1998" after the phrase "February 22, 1990".
(d) The first sentence of the first paragraph of the
Rights Certificate shall be further amended by
deleting the phrase "The Bank of New York, a New York
banking corporation (the "Rights Agent")" therefrom
and replacing it with the phrase "BankBoston, N.A.
(the "Rights Agent"), formerly known as The First
National Bank of Boston, successor in interest under
the Rights Agreement to The Bank of New York".
(e) Clause (i) of the second paragraph of the Rights
Certificate shall be amended by deleting the phrases
", an Adverse Person" and "or an Adverse Person"
therefrom.
<PAGE>
(f) The first sentence of the eighth paragraph of the
Rights Certificate shall be amended by deleting the
parenthetical "(unless the Board of Trustees shall
determine a Person to be an Adverse Person)"
therefrom.
(g) Paragraphs (1) and (2) of the Certificate
accompanying the Rights Certificate shall be amended
by deleting from each such paragraph the phrase ", an
Adverse Person".
(h) Paragraphs (1) and (2) of the Certificate
accompanying the Form of Election to Purchase shall
be amended by deleting from each such paragraph the
phrases ", an Adverse Person" and "or Adverse
Person".
2. Governing Law.
This Amendment to the Rights Agreement shall be deemed to be a
contract made under the laws of The Commonwealth of Massachusetts and
for all purposes shall be governed by and construed in accordance with
the laws of said Commonwealth applicable to contracts to be made and
performed entirely within said Commonwealth.
3. Counterparts.
This Amendment to the Rights Agreement may be executed in any
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
4. Amendment; Ratification of Rights Agreement.
Except as expressly noted herein, this Amendment to the Rights
Agreement shall not by implication or otherwise alter, modify, amend or
in any way affect any of the terms, conditions, obligations, covenants
or agreements contained in the Rights Agreement, all of which are
ratified and affirmed in all respects and shall continue in full force
and effect.
5. Severability.
If any term, provision, covenant or restriction of this
Amendment to the Rights 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 Amendment to the Rights Agreement, and of the Rights Agreement,
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
<PAGE>
6. The Trust.
Reference is hereby made to the declaration of trust
establishing the Trust dated July 18, 1929, as amended, a copy of which
is on file in the office of the Secretary of State of The Commonwealth
of Massachusetts. The name "Eastern Enterprises" refers to the trustees
under such declaration as trustees and not personally. No trustee,
shareholder, officer or agent of the Trust shall be held to any
personal liability in connection with the affairs of the Trust and only
the trust estate may be liable.
[This space has intentionally been left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to the Rights Agreement to be duly executed as of the day and year first above
written.
EASTERN ENTERPRISES
By: /s/ Jean A. Scholtens
------------------------------
Title: Vice President and Treasurer
Attest:
By: /s/ L. William Law, Jr.
-------------------------
Secretary
BANKBOSTON, N.A., FORMERLY KNOWN AS
THE FIRST NATIONAL BANK OF BOSTON, as
Rights Agent
By: /s/ Margaret Prentice
----------------------
Title: Administrative Manager
Attest:
By: /s/ Joshua McGinn
-----------------------------
Title: Senior Account Manager
<PAGE>
EXHIBIT 99.2
EASTERN ENTERPRISES
and
BANKBOSTON, N.A.
as Rights Agent
Rights Agreement
Dated as of July 22, 1998
<PAGE>
Table of Contents
Section Page
Section 1. Certain Definitions............................................ 1
Section 2. Appointment of Rights Agent.................................... 6
Section 3. Issuance of Rights Certificates................................ 6
Section 4. Form of Rights Certificates............. ...................... 8
Section 5. Countersignature and Registration.............................. 9
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates............................................... 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. 10
Section 8. Cancellation and Destruction of Rights Certificates............12
Section 9. Reservation and Availability of Shares of Common Stock; Other
Covenants.............................. 12
Section 10. Common Stock Record Date; Etc.................................14
Section 11. Antidilution Adjustments......................................14
Section 12. Certificate of Adjustments....................................23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power................................ 24
Section 14. Fractional Rights and Fractional Shares.......................26
Section 15. Rights of Action..............................................26
Section 16. Agreement of Rights Holders...................................27
Section 17. Rights Certificate Holder Not Deemed a Shareholder............27
Section 18. Concerning the Rights Agent...................................28
Section 19. Merger or Consolidation or Change of Name of Rights Agent.....28
<PAGE>
Section 20. Duties of Rights Agent........................................29
Section 21. Change of Rights Agent........................................31
Section 22. Issuance of New Rights Certificates..... .....................32
Section 23. Redemption and Termination....................................33
Section 24. Exchange......................................................33
Section 25. Notice of Proposed Actions....................................34
Section 26. Notices.......................................................35
Section 27. Supplements and Amendments....................................36
Section 28. Successors............................... ....................36
Section 29. Determinations and Actions by the Board; etc.................37
Section 30. Benefits of this Agreement....................................37
Section 31. Severability.................................. ...............37
Section 32. Governing Law.................................................37
Section 33. Counterparts..................................................38
Section 34. Descriptive Headings..........................................38
Section 35. The Trust.....................................................38
<PAGE>
RIGHTS AGREEMENT
This Agreement (the "Agreement") dated as of July 22, 1998 is between
Eastern Enterprises, a Massachusetts business trust (the "Trust"), and
BankBoston, N.A., as Rights Agent (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on July 22, 1998 the Board of Trustees of the Trust (the
"Board") authorized the issuance of rights (collectively, the "Rights," and
individually a "Right"), each Right being a right to purchase, on the terms and
subject to the provisions of this Agreement, one share of the Trust's Common
Stock; and
WHEREAS, on July 22, 1998 (the "Declaration Date") the Board (a)
authorized and declared a dividend distribution of one Right for every share of
Common Stock of the Trust outstanding at the Close of Business upon the earlier
to occur of (i) the date of redemption by the Trust of the Trust's outstanding
Rights pursuant to Section 23 of the Common Stock Rights Agreement, dated as of
February 22, 1990, as amended (the "1990 Rights Agreement"), and (ii) February
18, 2000 (the earlier being, the "Dividend Record Date"), and (b) authorized the
issuance of, and agreed to issue, one Right (as such number may be adjusted in
accordance with Section 11(i) or 11(p) hereof) for every share of Common Stock
of the Trust issued between the Dividend Record Date and the Distribution Date
(as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "1990 Rights Agreement" shall have the meaning set forth in
the recitals to this Agreement.
(b) "Acquiring Person" shall mean (a) any Person who or which, together
with all Affiliates of such Person, shall be the Beneficial Owner of 10% or more
of the shares of Common Stock outstanding at any time on or after the Dividend
Record Date , or (b) any Person who or which, together with all Affiliates of
such Person, is, as of the Dividend Record Date, an Acquiring Person (as such
term is defined in the 1990 Rights Agreement, irrespective of the termination of
said 1990 Rights Agreement); provided, that neither clause (a) nor (b) shall
include: (i) the Trust, (ii) any Subsidiary of the Trust, (iii) any employee
benefit plan of the Trust or of any Subsidiary of the Trust, (iv) any Person
organized, appointed, or established by the Trust or a Subsidiary of the Trust
pursuant to the terms of any plan described in clause (iii) above or (v) any
<PAGE>
such Person who has reported or is required to report such ownership on Schedule
13G under the Exchange Act (or any comparable or successor report) or on
Schedule 13D under the Exchange Act (or any comparable or successor report)
which Schedule 13D does not state any intention to or reserve the right to
control or influence the management or policies of the Trust or engage in any of
the actions specified in Item 4 of such Schedule (other than the disposition of
the Common Stock) and, within 10 Business Days of being requested by the Trust
to advise it regarding the same, certifies to the Trust that such Person
acquired shares of Common Stock in excess of 9.9% inadvertently or without
knowledge of the terms of the Rights and who, together with all of such Person's
Affiliates, thereafter does not acquire additional shares of Common Stock while
the Beneficial Owner of 10% or more of the shares of Common Stock then
outstanding, provided, however, that if the Person requested to so certify fails
to do so within 10 Business Days, then such Person shall become an Acquiring
Person immediately after such 10 Business Day Period.
(c) "Act" shall mean the Securities Act of 1933 (or any successor act),
as amended and as may from time to time be in effect.
(d) "Affiliate," with respect to any Person, shall mean any other
Person who is, or who would be deemed to be, an "affiliate" or an "associate" of
such Person within the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as such Rule is in
effect on the Declaration Date.
(e) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" or have "Beneficial Ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates has
"beneficial ownership" of within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, as such Rule is
in effect on the Declaration Date;
(ii) which such Person or any of such Person's Affiliates has,
directly or indirectly, the right to acquire (whether such right is
exercisable immediately or after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion, exchange or other rights, warrants or
options, or otherwise;
(iii) which such Person or any of such Person's Affiliates
has, directly or indirectly, the right to vote or dispose of, including
pursuant to any agreement, arrangement or understanding (whether or not
in writing); provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security for
purposes of this Section 1(e)(iii) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy
given in response to a public proxy or consent solicitation made
<PAGE>
pursuant to, and in accordance with, the applicable proxy solicitation
rules and regulations promulgated under the Exchange Act or (B) is made
in connection with, or is to otherwise participate in, a proxy or
consent solicitation made, or to be made, pursuant to, and in
accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act, in either case
described in clause (A) or (B) above, whether or not such agreement,
arrangement or understanding is also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
(iv) which are beneficially owned, directly or indirectly, by
any other Person or any Affiliate thereof with which such Person or any
of such Person's Affiliates has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy or in
connection with a proxy or consent solicitation described in clause (A)
or (B) of the proviso to Section 1(e)(iii) hereof) or disposing of any
securities of the Trust;
provided, however, that for purposes of this Section 1(e) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Common Stock Event, or (C) securities issuable
upon exercise of Rights which were held by a Person or its Affiliates prior to
the Distribution Date as long as such Person is not responsible for the
occurrence of the Common Stock Event giving rise to the Distribution Date; and
provided, further, however, that nothing in this Section 1(e) shall cause a
Person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
(f) "Board" shall have the meaning set forth in the preamble to
this Agreement.
(g) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in The Commonwealth of Massachusetts or the
city in which the principal office of the Rights Agent is located are authorized
or obligated by law or executive order to close.
(h) "Close of Business" on any given date shall mean 5:00 p.m., Boston,
Massachusetts time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 p.m., Boston, Massachusetts time, on the next
succeeding Business Day.
(i) "Closing Price" shall have the meaning set forth in Section
11(d) hereof.
<PAGE>
(j) "Common Stock" shall mean the Common Stock, with a par value of
$1.00 per share, of the Trust, except that "Common Stock" when used with respect
to any Person other than the Trust shall mean either (i) the common stock (or
other capital stock or shares of beneficial interest) of such Person with the
greatest voting power, or (ii) the equity securities or other equity interests
having power to control or direct the management and affairs of such Person, or
(iii) if such Person is a Subsidiary of another Person, the Person (A) who
ultimately controls such Person who is the Subsidiary and (B) which has
outstanding such common stock (or such other capital stock, equity securities or
interests).
(k) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(l) "Common Stock Event" shall mean the occurrence of any event
described in (i) Section 11(a)(ii) hereof or (ii) clause (a), (b) or (c) of the
first sentence of Section 13 hereof.
(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) "Declaration Date" shall have the meaning set forth in the
preamble to this Agreement.
(p) "Disqualified Transferee" shall mean any Person who is a direct or
indirect transferee of any Right from an Acquiring Person or an Affiliate of an
Acquiring Person and became such a transferee (x) after the occurrence of a
Common Stock Event or (y) prior to or concurrently with the Acquiring Person
becoming such and received such Right pursuant to a transfer (whether or not for
value) (A) from the Acquiring Person to holders of its Common Stock or other
equity securities or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding (whether or not in writing)
regarding the transferred Right, or (B) which a majority of the Board then in
office reasonably determines is part of a plan, arrangement, or understanding
(whether or not in writing) which has as a primary purpose or effect, the
avoidance of Section 7(e) hereof.
(q) "Distribution Date" shall mean the date which is after the Dividend
Record Date and the later of (A) the earlier of (x) the 10th Business Day
following the Stock Acquisition Date or (y) the 10th Business Day following the
Offer Commencement Date or (B) such specified or unspecified date thereafter
which is on or after the Dividend Record Date, as may be determined by a
majority of the Board then in office.
(r) "Dividend Record Date" shall have the meaning set forth in the
preamble to this Agreement.
(s) "Excess Amount" shall have the meaning set forth in Section
11(a)(iii) hereof.
<PAGE>
(t) "Exchange Act" shall mean the Securities Exchange Act of 1934 (or
any successor act), as in effect on the Declaration Date.
(u) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(v) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(w) "Offer Commencement Date" shall mean any date, after the Dividend
Record Date, which is the date of the commencement by any Person, other than (i)
the Trust, (ii) a Subsidiary of the Trust, (iii) any employee benefit plan of
the Trust or of any Subsidiary of the Trust or (iv) any Person organized,
appointed, or established by the Trust or such Subsidiary pursuant to the terms
of any such plan, of a tender or exchange offer (including when such offer is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act) if upon consummation
thereof the Person and Affiliates thereof would be the Beneficial Owner of 10%
or more of the then outstanding shares of Common Stock (including any such date
which is after the date of this Agreement and prior to the issuance of the
Rights on the Dividend Record Date or thereafter).
(x) "Officers' Certificate" has the meaning set forth in Section
20(b) hereof.
(y) "Other Consideration" has the meaning set forth in Section
6(a) hereof.
(z) "Person" shall mean a corporation, association, partnership,
limited liability company, joint venture, trust, estate, organization, business,
entity or individual.
(aa) "Purchase Price" shall have the meaning set forth in Section
7(b) hereof.
(bb) "Redemption Price" shall have the meaning set forth in Section
23 hereof.
(cc) "Rights" shall have the meaning set forth in the preamble to
this Agreement.
(dd) "Rights Agent" shall have the meaning set forth in the preamble of
this Agreement subject to the appointment of a successor Rights Agent pursuant
to Section 21 hereof.
(ee) "Rights Certificates" shall have the meaning set forth in
Section 3(a) hereof.
(ff) "Stock Acquisition Date" shall mean the later of (i) the date of
the first public announcement by an Acquiring Person or the Trust that an
Acquiring Person has become such (including the first date on which any filing
with any governmental authority disclosing that an Acquiring Person has become
such becomes available to the public), or (ii) the date on which an executive
officer of the Trust has actual knowledge that an Acquiring Person has become
such.
<PAGE>
(gg) "Subsidiary" shall mean, as of any date, any Person of which the
Trust (or other specified parent) owns directly, or indirectly through a
Subsidiary or Subsidiaries, at least a majority of the outstanding capital stock
(or other shares of beneficial interest) entitled to vote generally, or holds
directly, or indirectly through a Subsidiary or Subsidiaries, at least a
majority of partnership or similar interests, or is a general partner or of
which the Trust (or other specified parent) owns voting securities sufficient to
elect at least a majority of the directors or trustees of such Person.
(hh) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ii) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(jj) "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a day which is a
Business Day.
(kk) "Trust" shall have the meaning set forth in the preamble to
this Agreement.
(ll) "Trustees" shall mean the members of the Board.
Section 2. Appointment of Rights Agent.
The Trust hereby appoints the Rights Agent to act as agent for the
Trust and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Trust may from time to time, upon prior written
notice to the Rights Agent, appoint such Co-Rights Agents as it may deem
necessary or desirable and the respective duties of the Rights Agent and any
Co-Rights Agent shall be as the Trust shall determine; provided, however, that
the Rights Agent shall have no duty to supervise and no liability for the acts
or omissions of any Co-Rights Agent.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates
representing shares of Common Stock registered in the names of the holders of
the Common Stock (which certificates shall be deemed also to be certificates for
the associated Rights) and not by separate rights certificates, and (ii) the
Rights will be transferable only in connection with the transfer of the
associated shares of Common Stock. As soon as practicable after the Distribution
Date, the Rights Agent will send by first-class, insured, postage prepaid mail,
to each record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the stock transfer
records of the Trust, one or more rights certificates, in substantially the form
of Exhibit A hereto (the "Rights Certificates"), evidencing in the aggregate
that number of Rights to which such holder is entitled in accordance with the
provisions of this Agreement. As of and after the Distribution Date, the Rights
will be evidenced solely by such Rights Certificates. The Rights are exercisable
<PAGE>
only in accordance with the provisions of Section 7 hereof and are redeemable
only in accordance with Section 23 hereof.
(b) As soon as practicable after the Dividend Record Date, the Trust
will cause a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit B (the "Summary of Rights"), to be sent by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Dividend Record Date, at the address of such holder shown on
the stock transfer records of the Trust. With respect to certificates for the
Common Stock outstanding as of the Dividend Record Date, until the Distribution
Date, the Rights associated with the shares of Common Stock represented by such
certificates will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the surrender for transfer of any of
the certificates representing shares of the Common Stock outstanding on the
Dividend Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock
issued (whether originally issued or delivered from the Trust's treasury) after
the Dividend Record Date but prior to the earliest of (i) the Distribution Date,
(ii) the Expiration Date, or (iii) the redemption of the Rights. Certificates
representing such shares of Common Stock and certificates issued on transfer of
such shares of Common Stock, with or without a copy of the Summary of Rights,
prior to the Distribution Date (or earlier expiration or redemption of the
Rights) shall be deemed also to be certificates for the associated Rights, and
commencing as soon as reasonably practicable following the Dividend Record Date
shall bear the following legend (or a legend substantially in the form thereof):
This certificate also evidences and entitles the holder to Rights set
forth in a Rights Agreement between the issuer and BankBoston, N.A. as
Rights Agent (the "Rights Agent"), dated as of July 22, 1998 (the
"Rights Agreement"), the terms of which are incorporated herein by
reference and a copy of which is on file at the principal offices of
both the issuer and the Rights Agent. The Rights Agent will mail to the
registered holder of this certificate a copy of the Rights Agreement,
as in effect on the date of mailing, without charge upon written
request. Under certain circumstances set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held by any
Person who is, was or becomes, or acquires shares from, an Acquiring
Person or any Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement and generally relating to the ownership
or purchase of large shareholdings), whether currently held by or on
behalf of such Person or Affiliate or by certain subsequent holders,
may become null and void.
Until the Distribution Date or the earlier redemption, expiration or termination
<PAGE>
of the Rights, the Rights associated with the Common Stock shall be evidenced by
the Common Stock certificates alone and the registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the surrender
for transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
Rights shall be issued to the extent provided in Section 22 hereof after the
Distribution Date and prior to the Expiration Date.
Form of Rights Certificates.ertificates
(a) The Rights Certificates (and the form of assignment and the form of
exercise notice and certificate to be printed on the reverse thereof) shall each
be substantially in the form set forth in Exhibit A hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Trust may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or traded, or to conform to usage. Subject to
the provisions of Sections 11 and 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Dividend Record Date (or, if the shares
pursuant to which the Rights are attached are issued thereafter, such date of
issuance), shall include the date of countersignature and on their face shall
entitle the holders thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the Purchase Price (as hereinafter defined), but
the amount and type of securities issuable upon the exercise of each Right and
the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or 22 hereof
that represents Rights beneficially owned by (i) any Acquiring Person or any
Affiliate of an Acquiring Person, or (ii) any Disqualified Transferee, and any
other Rights Certificate issued pursuant to Section 6 or 11 hereof upon the
transfer, exchange, replacement, or adjustment of any such Rights Certificate
shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate (which includes both affiliates and associates) of an
Acquiring Person (as each such term is defined in the Rights Agreement
between the issuer and BankBoston, N.A., as Rights Agent, dated as of
July 22, 1998 (the "Rights Agreement")). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void
in the circumstances specified in Section 7(e) of the Rights Agreement.
The Rights Agent will mail to the registered holder of this certificate
a copy of the Rights Agreement, as in effect on the date of such
mailing, without charge upon written request.
<PAGE>
Section 5. Countersignature and Registration.egistration
The Rights Certificates shall be executed on behalf of the Trust by its
President, or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Trust's seal or facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Trust, either
manually or by facsimile signature. The Rights Certificates shall be
countersigned, either manually or by facsimile signature, by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Trust who shall have signed any of the Rights Certificates shall
cease to be such officer of the Trust before countersignature by the Rights
Agent and issuance and delivery by the Trust, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent, issued, and delivered
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Trust. Any Rights
Certificate may be signed on behalf of the Trust by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Trust to sign such Rights Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent shall keep or cause
to be kept, at the office of the Rights Agent designated for such purpose, books
for registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates, and the date of countersignature thereof by the Rights Agent.
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e), and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the earlier of the Close of Business on the Expiration Date or the redemption
of the Rights, any Rights Certificate may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of shares of Common Stock (or,
following a Common Stock Event, Common Stock and/or such other securities, cash,
or other assets as shall be issuable in respect of the Rights in accordance with
the terms of this Agreement (such other securities, cash or other assets being
referred to herein as "Other Consideration")) as the Rights Certificate
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate to be
transferred, split up, combined, or exchanged at the office of the Rights Agent
designated for such purpose, accompanied by a signature guarantee and such other
documentation as the Rights Agent may reasonably request. Neither the Rights
Agent nor the Trust shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights Certificate until the
registered holder shall have completed and signed the certificate contained in
the form of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
from whom the Rights evidenced by such Rights Certificate are to be transferred
(or the Beneficial Owner to whom such Rights are to be transferred) or
<PAGE>
Affiliates thereof as the Trust shall reasonably request. Thereupon, subject to
Sections 4(b), 7(e) and 14 hereof, the Trust shall execute and the Rights Agent
shall countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Trust may require payment by the holders of Rights of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates which the
Trust is not required to pay in accordance with Section 9(d) hereof.
(b) Upon receipt by the Trust and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, the receipt of
indemnity or security satisfactory to them, and upon reimbursement to the Trust
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate, if
mutilated, accompanied by a signature guarantee and such other documentation as
the Rights Agent may reasonably request, the Trust will execute and deliver a
new Rights Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Except as otherwise provided herein, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby in whole or in part
at any time from and after the Distribution Date and at or prior to the Close of
Business on July 22, 2008 (the "Expiration Date") or the earlier redemption of
the Rights. Immediately after the Close of Business on the Expiration Date (or
the earlier redemption of the Rights), all Rights shall be extinguished and all
Rights Certificates shall become null and void. To exercise Rights, the
registered holder of the Rights Certificate evidencing such Rights shall
surrender such Rights Certificate, with the form of election to purchase on the
reverse side thereof and the certificate contained therein duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
accompanied by a signature guarantee and such other documentation as the Rights
Agent may reasonably request, together with payment in cash, only by electronic
or wire transfer, or by certified check or bank check, of the Purchase Price
with respect to the total number of shares of Common Stock (or, after a Common
Stock Event, shares and/or similar units of Common Stock and/or Other
Consideration) as to which the Rights are exercised (which payment shall include
any additional amount payable by such Person in accordance with Section 9(d)
hereof). The Rights Agent shall promptly deliver to the Trust all payments of
the Purchase Price received in respect of Rights Certificates accepted for
exercise.
(b) The purchase price for each share of Common Stock issuable pursuant
to the exercise of a Right (the "Purchase Price") shall initially be $160, shall
be subject to adjustment as provided in Section 11 hereof, and shall be payable
in lawful money of the United States of America.
<PAGE>
(c) Upon receipt of a Rights Certificate representing the Rights, with
the form of election to purchase set forth on the reverse side thereof and the
certificate contained therein duly executed, accompanied by payment of the
Purchase Price, with respect to each Right so exercised, the Rights Agent,
subject to Sections 7(e), 11(a)(iii) and 20(k) hereof, shall thereupon promptly
(i) requisition from any transfer agent of the Common Stock (or from the Trust
if there shall be no such transfer agent, or make available if the Rights Agent
is such transfer agent) certificates for the total number of shares of Common
Stock to be purchased and the Trust hereby irrevocably authorizes such transfer
agent to comply with any such request, (ii) after receipt of such certificates,
cause the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be designated
in writing by such holder, and (iii) when appropriate, requisition from the
Trust the amount of cash to be paid in lieu of issuance of a fractional share in
accordance with Section 14 hereof and after receipt promptly deliver such cash
to or upon the order of the registered holder of such Rights Certificate. After
the occurrence of a Common Stock Event, the Trust shall make all necessary
arrangements so that any Other Consideration then deliverable in respect of the
Rights is available for distribution by the Rights Agent. For purposes of this
Section 7, the Rights Agent shall be entitled to rely, and shall be protected in
relying, on an Officers' Certificate from the Trust to the effect that the
Distribution Date has occurred.
(d) Subject to Sections 4(b), 7(e) and 14 hereof, in case the
registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be executed and delivered by the Trust
to the Rights Agent and countersigned and delivered by the Rights Agent to the
registered holder of such Rights Certificate or to such holder's duly authorized
assigns.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Common Stock Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate of an Acquiring Person, or (ii)
a Disqualified Transferee 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
Trust shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but the Trust shall have
no liability to any holder of Rights Certificates or other Person and none of
the terms of this Agreement or the Rights shall be deemed to be waived with
respect to such holder or other Person as a result of any failure by the Trust
to make any determinations with respect to an Acquiring Person or any Affiliate
of an Acquiring Person or Disqualified Transferees hereunder or any failure to
have a legend placed on any Rights Certificate in accordance with Section 4(b)
hereof or on any Common Stock certificate in accordance with Section 3(c)
hereof.
<PAGE>
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Trust shall be obligated to undertake any action with
respect to a holder of any Rights Certificate upon the occurrence of any
purported exercise thereof unless such 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 Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial Owner
from whom the Rights evidenced by such Rights Certificate are to be transferred
(or the Beneficial Owner to whom such Rights are to be transferred) or
Affiliates thereof as the Trust shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Trust or to any of its
agents (other than the Rights Agent), be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Trust shall deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Rights Certificates purchased
or retired by the Trust otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Trust, or may, at
the written request of the Trust, but shall not be required to, destroy such
canceled Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Trust.
Section 9. Reservation and Availability of Shares of Common Stock; Other
Covenants.
(a) The Trust covenants and agrees that on and after the Distribution
Date, it shall use reasonable efforts to cause to be reserved and kept available
out of its authorized and unissued shares of Common Stock (or, following the
occurrence of a Common Stock Event, out of its authorized and unissued shares of
Common Stock and/or Other Consideration, or out of its authorized and issued
shares held in its treasury), the number of shares of Common Stock (or,
following a Common Stock Event, shares of Common Stock and/or Other
Consideration) that, except as provided in Section 11(a)(iii) hereof, would then
be sufficient to permit the exercise in full of all outstanding Rights;
provided, however, that the reservation of such shares shall be subject and
subordinate to any other reservation of such shares made by the Trust at any
time for any lawful purpose; provided, further, however, that in no event shall
such failure to so reserve shares affect the rights of any holder of Rights
hereunder.
(b) The Trust covenants and agrees that on and after the Distribution
Date so long as the Common Stock (or, following a Common Stock Event, shares
and/or similar units of Common Stock and/or Other Consideration) issuable upon
the exercise of Rights may be listed on any national securities exchange, the
Trust shall use its best efforts to cause all shares (or similar units) reserved
for such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
<PAGE>
(c) The Trust covenants and agrees that it shall take all such action
as may be necessary to ensure that each share of Common Stock (or, following a
Common Stock Event, each share and/or similar unit of Common Stock and/or Other
Consideration) delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (or units), subject to payment of the
Purchase Price, be duly and validly authorized and issued and fully paid and
nonassessable.
(d) The Trust covenants and agrees that it shall pay when due and
payable any and all federal and state transfer taxes and similar charges which
may be payable in respect of the issuance or delivery of the Rights Certificates
or of any shares of Common Stock (or, following the occurrence of a Common Stock
Event, each share and/or similar unit of Common Stock and/or Other
Consideration) upon the exercise of Rights; provided, however, that the Trust
shall not be required to pay any transfer tax which may be payable in respect of
any transfer involved in the transfer or delivery of Rights Certificates or in
the issuance or delivery of certificates for any shares of Common Stock (or,
following the occurrence of a Common Stock Event, each share and/or similar unit
of Common Stock and/or Other Consideration) in a name other than that of the
registered holder of the Rights Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for any shares of Common Stock
(and, following the occurrence of a Common Stock Event, any shares and/or
similar units of Common Stock and/or Other Consideration) upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Rights Certificate at the time of surrender thereof) or
until it has been established to the Trust's satisfaction that no such tax is
due.
(e) The Trust shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the first occurrence of a Common
Stock Event on which the consideration to be delivered by the Trust upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Act, with respect to the securities
issuable upon exercise of the Rights on an appropriate form, (ii) to cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) to 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, or (B) the Expiration Date or earlier redemption of the Rights. The
Trust will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states of the
United States in connection with the exercisability of the Rights. The Trust 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(e), the
exercisability of the Rights in order to prepare and file such registration
statement or to permit it to become effective. Upon any such suspension, the
Trust shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended. The Trust shall thereafter issue a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained.
<PAGE>
Section 10. Common Stock Record Date; Etc
Each Person in whose name any certificate for any shares of Common
Stock (or, following the occurrence of a Common Stock Event, shares and/or
similar units of Common Stock and/or Other Consideration) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such shares of Common Stock (or such shares and/or similar units of
Common Stock and/or Other Consideration, as the case may be) represented
thereby, and such certificate shall be dated the date which is the later of (i)
the date upon which the Rights Certificate evidencing such Rights was duly
surrendered, or (ii) the date upon which payment of the Purchase Price (and any
applicable transfer taxes) in respect thereof was made; provided, however, that
if such date is a date upon which the relevant transfer books of the Trust are
closed, such Person shall be deemed to have become the record holder of such
shares (or Other Consideration) on, and such certificate shall be dated, the
next succeeding Business Day on which such transfer books of the Trust are open;
provided, further, that the Trust covenants and agrees that it shall not close
such transfer books for a period exceeding ten consecutive days. Prior to the
exercise of the Rights evidenced thereby (which shall be deemed to have occurred
on the date such certificate for shares and/or similar units of Common Stock or
Other Consideration shall be dated in accordance with this Section 10), the
holder of a Rights Certificate, as such, shall not be entitled to any rights of
a security holder of the Trust with respect to the shares of Common Stock
(and/or such shares or similar units of Common Stock or Other Consideration) 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 Trust, except as expressly provided herein.
Section 11. Antidilution Adjustments.
The Purchase Price and the number and kind of securities covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event that the Trust shall at any time after the
Declaration Date (A) declare and pay a dividend on the Common Stock
payable in shares of Common Stock, (B) subdivide the outstanding Common
Stock, (C) combine the outstanding Common Stock into a smaller number
of shares, or (D) issue, change, or alter any of its shares of
beneficial interest or other capital stock in a reclassification or
recapitalization (including any such reclassification in connection
with a consolidation or merger in which the Trust is the continuing or
surviving Person), except as otherwise provided in this Section 11(a)
and Section 7(e) hereof, then, and in each such case, the Purchase
Price in effect at the time of the record date for such dividend or the
effective time of such subdivision, combination, reclassification or
recapitalization, and the number and kind of shares of beneficial
interest or other capital stock issuable upon exercise of the Rights at
such time, shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of Common Stock or other shares of
beneficial interest or other capital stock which, if such Right had
been exercised immediately prior to such time at the Purchase Price
then in effect and at a time when the transfer books for the Common
Stock (or other capital stock) of the Trust were open, such holder
<PAGE>
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination, reclassification or
recapitalization. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided 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) hereof.
(ii) In the event
(A) any Person shall at any time after the Dividend
Record Date become an Acquiring Person; or
(B) any Acquiring Person or any Affiliate of any
Acquiring Person, at any time after the Dividend Record Date,
directly or indirectly, shall (1) merge into the Trust or
otherwise combine with the Trust, and the Trust shall be the
continuing or surviving corporation of such merger or
combination and the Common Stock of the Trust shall remain
outstanding and no shares thereof shall be changed or
otherwise transformed into stock or other securities of any
other Person or the Trust or cash or any other property, (2)
in one or more transactions, transfer any assets to the Trust
in exchange (in whole or in part) for shares of any class of
its equity securities or for securities exercisable for or
convertible into shares of any such class or otherwise obtain
from the Trust, with or without consideration, any additional
shares of any such class or securities exercisable for or
convertible into shares of any such class (other than as part
of a pro rata distribution to all holders of such class), (3)
sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose (in one transaction or a series of
transactions) to, from or with the Trust or any of the Trust's
Subsidiaries, assets with an aggregate fair market value in
excess of 25% of the assets of the Trust and its Subsidiaries
determined on a consolidated basis on terms and conditions
less favorable to the Trust than the Trust would be able to
obtain through arm's-length negotiation with an unaffiliated
third party, (4) receive any compensation from the Trust or
any of the Trust's Subsidiaries other than compensation as a
director of the Trust or for full-time employment as a regular
employee at rates in accordance with the Trust's (or such
Subsidiary's) past practices, (5) receive the benefit (except
proportionately as a shareholder), of any loans, advances,
guarantees, pledges or other financial assistance provided by
the Trust or any of its Subsidiaries on terms and conditions
less favorable to the Trust (or such Subsidiary) than the
Trust would be able to obtain through arm's-length negotiation
with an unaffiliated third party or (6) commence a tender or
exchange offer for securities of the Trust; or
(C) during such time as there is an Acquiring Person
at any time after the Dividend Record Date, there shall be any
<PAGE>
reclassification of securities (including any combination
thereof), or recapitalization of the Trust, or any merger or
consolidation of the Trust with any of its Subsidiaries
(whether or not with or into or otherwise involving an
Acquiring Person or any Affiliate of an Acquiring Person), or
any repurchase by the Trust or any of its Subsidiaries of
shares of the Common Stock of the Trust, or any other class or
series of securities issued by the Trust, which
reclassification, recapitalization, merger, consolidation or
repurchase is effected at a time when a majority of the Board
consists of persons who are the Acquiring Person or its
Affiliates, or nominees or designees of any thereof, which has
the effect, directly or indirectly, of increasing by more than
1% the proportionate share of the outstanding shares of any
class of equity securities or securities exercisable for or
convertible into any class of equity securities of the Trust
or any of its Subsidiaries which is directly or indirectly
owned by an Acquiring Person or any Affiliate of an Acquiring
Person
then, in each such case, upon the Close of Business 10 Business Days
after the occurrence of such event, proper provision shall be made so
that each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon exercise thereof at
the Purchase Price in effect at the time of exercise in accordance with
the terms of this Agreement, in lieu of one share of Common Stock, such
number of shares of Common Stock of the Trust as shall equal the result
obtained by (x) multiplying an amount equal to the then current
Purchase Price by an amount equal to the number of shares of Common
Stock for which a Right was or would have been exercisable immediately
prior to the first occurrence of any such event whether or not such
Right was then exercisable, and (y) dividing that product by 50% of the
Current Market Price per share of the Common Stock of the Trust (as
defined in Section 11(d) hereof) determined as of the date of such
first occurrence.
(iii) In lieu of issuing whole or fractional shares of Common
Stock in accordance with Section 7(c) hereof, the Trust shall (i) in
the event that the number of shares of Common Stock which are
authorized by the Trust's Declaration of Trust but not outstanding or
reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of the Rights
in accordance with Section 7(c) hereof, or (ii) if a majority of the
Board then in office determines that it would be appropriate and not
contrary to the interests of the holders of Rights (other than any
Acquiring Person or Disqualified Transferee or any Affiliate of the
Acquiring Person or Disqualified Transferee), (A) determine an amount,
if any, (the "Excess Amount") equal to the excess of (1) the value (the
"Current Value") of the whole or fractional shares of Common Stock
issuable upon the exercise of a Right in accordance with Section 7(c)
hereof, over (2) the Purchase Price, and (B) with respect to each
Right, (subject to Section 7(e) hereof) make adequate provision to
substitute for such whole or fractional shares of Common Stock, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in
the Purchase Price, (3) Common Stock or other equity securities of the
Trust (including, without limitation, shares or units of preferred
stock which the Board has deemed in good faith to have the same value
<PAGE>
as a share of Common Stock (such shares of preferred stock being
referred to herein as "Common Stock Equivalents")), (4) debt securities
of the Trust, (5) other assets, or (6) any combination of the foregoing
(which would include the additional consideration provided to any
holder by reducing the Purchase Price) having an aggregate value equal
to the Current Value, where such aggregate value has been determined by
the Board; provided, however, subject to the provisions of Section
9(e), that if the Trust shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days following the
Close of Business 10 Business Days after the first occurrence of a
Common Stock Event described in Section 11(a)(ii) hereof, then the
Trust shall be obligated to deliver, upon the surrender for exercise of
a Right and without requiring payment of the Purchase Price, whole or
fractional shares of Common Stock (to the extent available) and then,
if necessary, cash, securities, and/or assets which in the aggregate
are equal to the Excess Amount. If the Board shall determine in good
faith that it is likely that sufficient additional shares of Common
Stock or Common Stock Equivalents could be authorized for issuance upon
exercise in full of the Rights, the 30-day period set forth above may
be extended to the extent necessary, but not more than 90 days
following the Close of Business 10 Business Days after the first
occurrence of such a Common Stock Event (such 30 day period) as it may
be extended to 90 days, is referred to herein as the "Substitution
Period"). To the extent that the Trust determines that some action is
to be taken pursuant to the preceding provisions of this Section
11(a)(iii), the Trust (x) shall provide, subject to Section 7(e)
hereof, that (except as to the form of consideration which shall be
determined as appropriate by a majority of the Board then in office)
such action shall apply uniformly to all outstanding Rights which shall
not have become null and void, and (y) may suspend the exercisability
of the 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 provisions
and to determine the value thereof. In the event of any such
suspension, the Trust shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended. The
Trust shall thereafter issue a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock issuable upon exercise of a
Right in accordance with Section 7(c) hereof shall be the Current
Market Price per share of the Common Stock (as determined pursuant to
Section 11(d) hereof) on the Close of Business 10 Business Days after
the date of the first occurrence of such a Common Stock Event and the
value of any Common Stock Equivalent shall be deemed to be equal to the
Current Market Price per share of the Common Stock on such date.
(b) In the event the Trust shall, after the Dividend Record Date, fix a
record date for the issuance of any options, warrants, or other rights to all
holders of Common Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase (i) Common Stock or
(ii) securities convertible into Common Stock at a price per share of Common
Stock (or having a conversion price per share of Common Stock, if a security is
convertible into Common Stock) less than the Current Market Price per share of
Common Stock (determined in accordance with Section 11(d) hereof) determined as
<PAGE>
of such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate minimum offering price of the
total number of shares of Common Stock so to be offered (and/or the aggregate
minimum conversion price of such convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the
maximum number of additional shares of Common Stock to be offered for
subscription or purchase (or the maximum number of shares into which such
convertible securities so to be offered are convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
shall be in a form other than cash, for purposes of this Section 11(b) the value
of such consideration shall be the fair market value thereof as determined in
good faith by the Board (which determination shall be described in an Officers'
Certificate filed with the Rights Agent). Shares of Common Stock owned by or
held for the account of the Trust 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 options
warrants or other rights 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 (subject, however, to such other adjustments as are provided
herein).
(c) In the event that the Trust shall, after the Dividend Record Date,
fix a record date for the making of a distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Trust is the surviving or continuing Person) of evidences
of indebtedness, cash (other than cash dividends paid out of the earnings or
retained earnings of the Trust and its Subsidiaries determined on a consolidated
basis in accordance with generally accepted accounting principles consistently
applied), other property (other than a dividend payable in a number of shares of
Common Stock, but including any dividend payable in shares of beneficial
interest or other capital stock other than Common Stock), or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, of which the numerator shall be the Current Market Price per share of
Common Stock (as defined in Section 11(d) hereof) determined as of such record
date, less (ii) the sum of (A) that portion of cash plus (B) the fair market
value, as determined in good faith by the Board (which determination shall be
described in an Officers' Certificate filed with the Rights Agent) of that
portion of such evidences of indebtedness, such other property, and/or such
subscription rights or warrants applicable to one share of Common Stock and of
which the denominator shall be such Current Market Price per share of the Common
Stock. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event 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 (subject, however, to such other
adjustments as are provided herein).
(d) For purposes of any computation pursuant to Section 11(a)(iii)
<PAGE>
hereof, the "Current Market Price" per share (or unit) of any security on any
date shall be deemed to be the average of the daily Closing Price of such
security for the 10 consecutive Trading Days immediately after such date and for
the purpose of any other computation hereunder, the "Current Market Price" per
share (or unit) of any security on any date shall be deemed to be the average of
the daily Closing Price of such security for the 20 consecutive Trading Days
immediately prior to such date; provided, however, that in the event that the
Current Market Price per share of such security is determined during a period
following the announcement by the issuer of such security of (i) a dividend or
distribution on such security payable in shares (or units) of such security or
securities convertible into shares (or units) of such security, or (ii) any
subdivision, combination or reclassification of such security, and prior to the
expiration of such 10 Trading Days or 20 Trading Days after (A) the ex-dividend
date for such dividend or distribution, or (B) the record date for such
subdivision, combination or reclassification, as the case may be, then, and in
each such case, the "Current Market Price" shall be the Closing Price of such
security on the last day of such respective 10 Trading Day or 20 Trading Day
period. For purposes of this Agreement, the "Closing Price" of any security on
any day shall be the last sale price, regular way, with respect to shares (or
units) of such security, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, with respect to such
security, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange; or, if such security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such security is listed or
admitted to trading; or, if such security is not so listed or admitted to
trading, the last quoted sale price with respect to shares (or units) of such
security, or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market with respect to shares (or units) of such
security, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other similar system then in use; or, if on
any such date such security is not quoted by any such organization, the average
of the closing bid and asked prices with respect to shares (or units) of such
security, as furnished by a professional market maker making a market in such
security selected by the Board; or, if no such market maker is available, the
fair market value of shares (or units) of such security as of such day as
determined in good faith by the Board (which determination shall be described in
an Officers' Certificate filed with the Rights Agent).
(e) No adjustment in the Purchase Price shall be required unless
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 (or similar
unit) of Common Stock or other securities. 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 the adjustment or (ii) the Expiration Date. Anything in this Section 11
to the contrary notwithstanding, the Trust shall be entitled to make such
reductions in the Purchase Price, in addition to those required by this Section
11, as it in its discretion shall determine to be advisable in order that any
<PAGE>
dividends payable in shares of beneficial interest or other capital stock,
subdivision of shares, distribution of rights to purchase shares of beneficial
interest or other stock or securities, or distribution of securities convertible
into or exchangeable for shares of beneficial interest or other stock hereafter
made by the Trust to its shareholders shall not be taxable.
(f) In the event that at any time, as a result of an adjustment made in
respect of a Common Stock Event, the holder of any Right thereafter exercised
shall become entitled to receive any shares of beneficial interest or other
capital stock of the Trust 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 such other shares contained in Sections 11(a), (b), (c), (e), (g),
(h), (i), (j), (k), (m) and (p) hereof, and the provisions of Sections 7, 9, 10,
11(d), 13 and 14 hereof with respect to the shares of Common Stock shall apply
on like terms to any such other shares.
(g) All Rights originally issued by the Trust subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights represented
thereby, all subject to further adjustment as provided herein.
(h) Unless the Trust shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made pursuant to Sections 11(b) and 11(c) hereof, 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 of Common Stock (calculated to the nearest ten-thousandth of a share)
obtained by (i) multiplying (x) the number of shares of Common Stock covered by
a Right immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and (ii)
dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) Assuming that no other adjustment pursuant to this Section 11 has
been made, the Trust may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights in substitution for any adjustment
in the number of shares of Common Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price by the Purchase Price in effect immediately after such adjustment of the
Purchase Price. The Trust shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
<PAGE>
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i) the Trust shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Trust, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Trust, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights 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 Trust, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
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 whole or fractional shares of Common Stock issuable upon exercise
of such Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares of
Common Stock which were expressed in the initial Rights 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 the number of shares of
Common Stock issuable upon exercise of the Rights, the Trust shall take any
action which may, in the opinion of its counsel, be necessary in order that the
Trust may validly and legally issue such number of fully paid and nonassessable
shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Trust may elect to defer until the occurrence of such event
the issuing to the holder of any Right exercised after such record date the
number of shares of Common Stock and other shares of beneficial interest or
other capital stock or securities of the Trust, if any, issuable upon such
exercise over and above the number of shares of Common Stock and other shares of
beneficial interest or other capital stock or securities of the Trust, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Trust shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional securities upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Trust shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, by means of a resolution of the Board acting in good faith,
shall determine to be advisable in order that any consolidation or subdivision
of the Common Stock, issuance wholly for cash of any Common Stock at less than
the Current Market Price thereof, issuance wholly for cash of Common Stock (or
other securities which by their terms are convertible into or exchangeable for
Common Stock), dividends payable in shares of Common Stock or other capital
<PAGE>
stock or shares of beneficial interest, or issuance of rights, options, or
warrants referred to hereinabove in this Section 11, hereafter made or declared
by the Trust to the holders of its Common Stock, shall not be taxable to such
holders.
(n) The Trust 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 Trust in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Trust in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, more than 25% of (A) the assets
(taken at net asset value as stated on the books of the Trust and determined on
a consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (B) the earning power of the Trust and its Subsidiaries
(determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied) to any other Person or Persons
(other than the Trust or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale, there are any rights,
warrants or other instruments or securities outstanding or agreements (whether
or not in writing) in effect that 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
shareholders of such other Person shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates.
(o) The Trust covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23 or 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Trust shall at any time after the Dividend Declaration Date and
prior to the Distribution Date (i) declare or pay a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, or (ii) effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or smaller number of shares, then in any such case, (i)
the number of shares of Common Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of shares
of Common Stock so purchasable immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event; and (ii) each share of
Common Stock outstanding immediately after such event shall have issued with
respect to it that number of Rights which each share of Common Stock outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
<PAGE>
Section 12. Certificate of Adjustments.
Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Trust shall (a) promptly prepare an Officers' Certificate setting forth such
adjustment, including any adjustment in Purchase Price, the number of shares or
Other Consideration payable, and a brief statement of the facts accounting for
such adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Common Stock a copy of such Officers' Certificate, and (c) mail a
brief summary thereof to each registered holder of a Rights Certificate in
accordance with Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such Officers' Certificate and on any adjustment therein
contained, and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such an Officers' Certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
In the event that, following the Stock Acquisition Date, directly or
indirectly, (a) the Trust shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Trust in a transaction that
complies with Section 11(o) hereof) and the Trust shall not be the continuing or
surviving Person of such consolidation or merger, (b) any Person (other than a
Subsidiary of the Trust in a transaction that complies with Section 11(o)
hereof) shall consolidate with, or merge with and into, the Trust, the Trust
shall be the continuing or surviving Person of such consolidation or merger and,
in connection with such consolidation or merger, all or part of the Common Stock
of the Trust shall be changed or otherwise transformed into or exchanged for
shares of beneficial interest or other stock or other securities of any other
Person or the Trust or cash or any other property, or (c) the Trust shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one transaction or a series of related transactions,
more than 25% of (A) the assets (taken at net asset value as stated on the books
of the Trust and determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) or (B) the earning power of
the Trust and its Subsidiaries (determined on a consolidated basis in accordance
with generally accepted accounting principles consistently applied) to any
Person (other than the Trust or any Subsidiary of the Trust in one or more
transactions each of which complies with Section 11(o) hereof) then, from and
after such event, proper provision shall be made so that (i) each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at the Purchase Price in effect at
the time of such exercise in accordance with the terms of this Agreement, such
number of whole or fractional shares of validly authorized and issued, fully
paid, non-assessable, and freely tradeable Common Stock of such other Person (or
in the case of a transaction or series of transactions described in clause (c)
above, the Person receiving the greatest amount of the assets or earning power
of the Trust, or if the Common Stock of such other Person is not and has not
been continuously registered under Section 12 of the Exchange Act for the
<PAGE>
preceding 12-month period and such Person is a direct or indirect Subsidiary of
another Person, that other Person, or if such other Person is a direct or
indirect Subsidiary of more than one other Person, the Common Stock of two or
more of which are and have been so registered, such other Person whose
outstanding Common Stock has the greatest aggregate value), free and clear of
any liens, encumbrances, rights of first refusal, or other adverse claims, as
shall be equal to the result obtained by (x) multiplying the Purchase Price in
effect immediately prior to the first occurrence of any Common Stock Event
described in this Section 13 by the number of shares of Common Stock for which a
Right is exercisable immediately prior to such first occurrence (and without
taking into account any prior adjustment made pursuant to 11(a)(ii)) and (y)
dividing that product by 50% of the Current Market Price per share (as defined
in Section 11(d) hereof) of the Common Stock of such other Person determined as
of the date of consummation of such consolidation, merger, sale, or transfer;
(ii) the issuer of such Common Stock shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale, or transfer, all the
obligations and duties of the Trust pursuant to this Agreement; (iii) the term
"Trust" shall thereafter be deemed, for all purposes of this Agreement, to refer
to such issuer, it being specifically intended that the provisions of Section 11
hereof (other than Section 11(a)(ii) hereof) shall apply only to such issuer
following the first occurrence of a Common Stock Event described in this Section
13; (iv) such issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) 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 whole or fractional 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 Common Stock Event
described in clauses (a), (b) or (c) of this Section 13. The Trust shall not
consummate any such consolidation, merger, sale or transfer unless (i) such
issuer shall have a sufficient number of authorized shares of its Common Stock
which have not been issued or reserved for issuance as will permit the exercise
in full of the Rights in accordance with this Section 13, and (ii) prior thereto
the Trust and such issuer shall have executed and delivered to the Rights Agent
a supplemental agreement so providing and further providing that as soon as
practicable after the date of any Common Stock Event described above in this
Section 13 such issuer shall (A) prepare and file a registration statement under
the Act, with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to cause
such registration statement to (I) become effective as soon as practicable after
such filing and (II) remain effective (with a prospectus at all times meeting
the requirements of the Act) until the Expiration Date, and (B) will deliver to
holders of the Rights historical financial statements of such issuer and each of
its Affiliates which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act. Furthermore, in case the Person
which is to be party to a transaction referred to in this Section 13 has any
provision in any of its authorized securities or in its charter or by-laws or
other agreement or instrument governing its affairs, which provision would have
the effect of causing such Person to issue, in connection with, or as a
consequence of, the consummation of a Common Stock Event described in clauses
(a), (b), or (c) of this Section 13, whole or fractional shares of Common Stock
of such Person at less than the then Current Market Price per share thereof (as
defined in Section 11(d) hereof), or to issue securities exercisable for, or
convertible into, Common Stock of such Person at less than such then Current
<PAGE>
Market Price, then, in such event, the Trust hereby agrees with each holder of
the Rights that it shall not consummate any such transaction unless prior
thereto the Trust and such Person shall have executed and delivered to the
Rights Agent a supplemental agreement providing that such provision in question
shall have been canceled, waived, or amended so that it will have no effect in
connection with, or as a consequence of, the consummation of the proposed
transaction. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Common Stock Event described in this Section 13 shall occur at any time
after the occurrence of a Common Stock Event described in Section 11(a)(ii)
hereof, the Rights which have not theretofore been exercised shall thereafter
become exercisable, except as provided in Section 7(e) hereof, in the manner
described in this Section 13.
Section 14. Fractional Rights and Fractional Shares.
(a) The Trust shall not be required to issue fractions of Rights or to
distribute fractions of Rights, except prior to the Distribution Date as
provided in Section 11(i) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of issuing such fractional Rights, at the
election of the Trust, there shall be paid to the registered holders of the
Rights 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.
(b) The Trust shall not be required to issue fractions of shares of its
beneficial interest or other capital stock upon exercise of the Rights or to
distribute certificates which evidence fractional shares. In lieu of fractional
shares, at the election of the Trust, there shall be paid to the registered
holders of Rights at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of a share
of such beneficial interest or other capital stock. For purposes of this Section
14(b), the current market value of a share of such capital stock shall be the
Closing Price of such capital stock for the Trading Day immediately prior to the
date of such exercise.
(c) The holder of a Right, by the acceptance of the Right, expressly
waives such holder's right to receive any fractional Rights or (except as
provided in Section 14(b) hereof) any fractional share upon exercise of a Right.
Section 15. Rights of Action.
Excepting the rights of action given the Rights Agent under Section 18
hereof and except as set forth in Section 20(l) hereof, all rights of action in
respect of this Agreement are vested in the registered holder of each Right; and
any registered holder of any Right, without the consent of the Rights Agent or
of the holder of any other Right, may, in its own behalf and for its own
<PAGE>
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Trust to enforce, or otherwise act in respect of, such registered
holder's right to exercise the rights evidenced by such Right in the manner
provided in such Rights Certificate and in this Agreement, and the Trust hereby
agrees to reimburse such registered holder for all expenses (including
reasonable attorneys' fees) incurred by such registered holder in connection
therewith. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of the obligations
hereunder, and shall be entitled to injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents and agrees with
the Trust 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 Common Stock;
(b) from and after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer with a form of assignment and certificate set
forth on the reverse side thereof duly executed, accompanied by a signature
guarantee and such other documentation as the Rights Agent may reasonably
request;
(c) subject to Sections 6(a) and 7(f) hereof, the Trust and the Rights
Agent may deem and treat the person in whose name a Rights Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or, prior to the Distribution Date, the associated Common Stock certificate,
made by anyone other than the Trust or the Rights Agent) for all purposes
whatsoever, and neither the Trust nor the Rights Agent shall be affected by any
notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Trust 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 preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining performance of such
obligation; provided, however, the Trust agrees to use its best efforts to have
any such order, decree or ruling lifted or otherwise overturned as soon as
possible.
<PAGE>
Section 17. Rights Certificate Holder Not Deemed a Shareholder.
No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends, or otherwise be deemed for any purpose the holder of
any securities of the Trust which may be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Trust or any right to vote in
the election of trustees or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any action by the Trust, or
to receive notice of meetings or other actions affecting shareholders (except as
provided in Section 25 hereof), or to receive dividends or preemptive rights, or
otherwise, until the time specified in Section 10 hereof.
Section 18. Concerning the Rights Agent.
The Trust agrees to pay to the Rights Agent such reasonable
compensation as shall be agreed to in writing between the Trust and the Rights
Agent 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
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Trust also agrees to indemnify the Rights Agent for, and to hold
it harmless against, any and all loss, liability, damages, claims or expense,
incurred without gross negligence, bad faith or willful misconduct on the part
of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses (including reasonable attorneys' fees and expenses) of
defending against any claim of liability for any of the foregoing.
The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for any number of shares of Common Stock or for other securities of
the Trust, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, instruction, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed and executed by the proper Person or Persons, and verified or
acknowledged as required by this Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the 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 shall be a party, or any corporation
succeeding to the shareholder services business of the Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided, that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement and
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
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 Rights Certificates
shall have the full force provided in the Rights 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 Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Rights Agent may consult with legal counsel of its selection
(who may be legal counsel to the Trust), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Trust prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate (an "Officers' Certificate") signed by a person believed by the
Rights Agent to be the President or any Vice President and by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the Trust
and delivered to the Rights Agent; and such Officers' 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 Officers'
Certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith, or willful misconduct.
<PAGE>
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature on such Rights Certificate) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Trust only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Trust of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Sections 11 or
13 hereof or be responsible for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedure (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt of a
certificate delivered pursuant to Section 12 hereof, describing any such
adjustment or procedures); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Common Stock or other securities to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Common Stock, or any shares or
similar units of other securities, will, when issued, be validly authorized and
issued, fully paid, and nonassessable.
(f) The Trust agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the President or any Vice President or
the Secretary or any Assistant Secretary or the Treasurer or any Assistant
Treasurer of the Trust, and to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any action taken
or suffered to be taken by it in good faith in accordance with instructions of
any such officer. Any application by the Rights Agent for written instructions
from the Trust may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent with respect to its
duties or obligations under this Agreement and the date on and/or after which
such action shall be taken or omitted 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 three Business Days after the date any such officer actually receives
such application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking or omitting any such action, the Rights
Agent has received written instructions from the Trust in response to such
application specifying the action to be taken or omitted.
<PAGE>
(h) The Rights Agent and any shareholder, director, officer, or
employee of the Rights Agent may buy, sell, or deal in any of the Rights or
other securities of the Trust or become pecuniarily interested in any
transaction in which the Trust may be interested, or contract with or lend money
to the Trust 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 Trust or for any other entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Trust resulting from any such act, default,
neglect or misconduct; provided, however, that reasonable care was exercised in
the selection and continued employment 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 Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certification appearing on the
reverse side thereof following the form of election to purchase has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Trust.
(l) The provisions of this Section 20 are solely for the benefit of the
Rights Agent or the Trust and any failure or omission under this Section 20
shall not affect the rights of the Trust under this Agreement and neither the
Rights Agent nor the Trust shall have any liability to any holder of Rights or
other Person on account of such failure or omission.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Trust and to each transfer agent of the Common Stock by registered
or certified mail, and, subsequent to the Distribution Date, to the holders of
the Rights Certificates by first-class mail. The Trust may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to
the Rights Agent, to each transfer agent of the Common Stock by registered or
certified mail, and, subsequent to the Distribution Date, to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Trust shall appoint a
successor to the Rights Agent. If the Trust shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
<PAGE>
with such notice, submit such holder's Rights Certificate for inspection by the
Trust), then the registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Trust or by such a court, shall
be a corporation organized and doing business under the laws of the United
States, the State of New York or The Commonwealth of Massachusetts (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 or The Commonwealth
of Massachusetts), in good standing, having an office designated for such
purpose in the State of New York or The Commonwealth of Massachusetts, which is
authorized under such laws to exercise corporate trust and/or stock transfer
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent combined
capital and surplus of at least $50,000,000. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose; and, except as the context herein otherwise requires, such
successor Rights Agent shall be deemed to be the "Rights Agent" for all purposes
of this Agreement. Not later than the effective date of any such appointment the
Trust shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Trust may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price per share and the number
or kind or class of shares of beneficial interest or other stock or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement. In addition, in connection
with the issuance or sale by the Trust of shares of Common Stock following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Trust (a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Trust, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights evidenced by a Rights Certificate
shall be issued if, and to the extent that, the Trust shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Trust or the Person to whom such Rights would be issued,
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
<PAGE>
Section 23. Redemption and Termination.
The Trust may, at its option, upon the affirmative vote or written
consent of not less than a majority of the Board then in office, at any time
prior to the earlier of (i) the Distribution Date or (ii) the Close of Business
on the Expiration Date, redeem all (but not less than all) of the then
outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend, combination of shares, or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). The Trust may, at its
option, pay the Redemption Price in cash, shares of Common Stock (based on the
Current Market Price of the Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the majority of the Board then in
office. Immediately upon the taking of such action ordering the redemption of
all of the Rights, evidence of which shall have been filed with the Rights
Agent, and without any further action and without any notice, the right to
exercise the Rights so redeemed will terminate and the only right thereafter of
the holders of such Rights so redeemed shall be to receive the Redemption Price
(without the payment of any interest thereon). Within 10 days after such action
ordering the redemption of all of the Rights, the Trust shall give notice of
such redemption to the holders of the then outstanding Rights by mailing such
notice 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 each 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 shall state the
method by which the payment of the Redemption Price shall be made.
Section 24. Exchange.
(a) The Board, by majority vote of the Trustees then in office, may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio, as the same may be
adjusted from time to time, being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board shall not be empowered to
effect such exchange at any time after any Person (other than (i) the Trust,
(ii) any Subsidiary of the Trust, (iii) any employee benefit plan of the Trust
or any such Subsidiary, or (iv) any entity holding Common Stock for or pursuant
to the terms of any such plan), together with all Affiliates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock then
outstanding.
(b) Immediately upon the action of the Board 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 Trust shall promptly give
<PAGE>
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 Trust 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 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 shall state the method by which the exchange of the
Common Stock for Rights shall be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the Trust
shall take all such action as may be necessary to authorize additional Common
Stock for issuance upon exchange of the Rights.
(d) The Trust shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Trust shall
pay to each registered holder of a Right Certificate with regard to which a
fractional share of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the Closing Price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
In case the Trust shall after the Distribution Date propose (a) to pay
any dividend payable in shares of beneficial interest or other stock of any
class to the holders of its Common Stock or to make any other distribution to
the holders of its Common Stock (other than a cash dividend out of earnings or
the retained earnings of the Trust), or (b) to offer to the holders of its
Common Stock rights or warrants to subscribe for or to purchase any additional
shares of Common Stock or shares of stock of any other class or any other
securities, rights, or options, or (c) to effect any reclassification of the
Common Stock (other than a reclassification involving only the subdivision of
outstanding shares of Common Stock), or (d) to effect any consolidation or
merger into or with, 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
transaction or a series of related transactions, of more than 25% of (i) the
assets of the Trust and its Subsidiaries (taken at net asset value as stated on
the books of the Trust and determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied) or (ii) the
earning power of the Trust and its Subsidiaries (determined on a consolidated
basis in accordance with generally accepted accounting principles consistently
applied) to any other Person or Persons, or (e) to effect the liquidation,
<PAGE>
dissolution or winding up of the Trust, then, in each such case, the Trust shall
give to the Rights Agent and each holder of a Right, in accordance with Section
26 hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of 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 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 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Common Stock whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Trust or the vote upon any such
action.
In case any Common Stock Event described in Section 11(a)(ii) hereof
shall occur, then, in any such case, the Trust shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such Common
Stock Event, which shall specify such event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a filing by the Trust with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Trust, including the Rights, for purposes of this Agreement and no other
notice need be given.
Notices.26. Notices
Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Rights Certificate to the Trust 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:
Eastern Enterprises
9 Riverside Road
Weston, MA 02193
Attn: General Counsel
Copy to: Ropes & Gray
One International Place
Boston, MA 02110-2624
Attn: Truman S. Casner
Subject to the provisions of Sections 19 and 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Trust or by the
<PAGE>
holder of any Rights 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 Trust) as follows:
BankBoston, N.A.
c/o Boston EquiServe, L.P.
150 Royall Street
Canton, MA 02021
Attn: Client Administration
(Eastern Enterprises Rights Agreement)
Notices or demands authorized by this Agreement to be given or made by
the Trust or the Rights Agent to the holder of any Rights 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 Trust.
Section 27. Supplements and Amendments.
Prior to the Distribution Date, the Trust, upon the vote of a majority
of the Board then in office, may from time to time supplement or amend this
Agreement without the approval of any holders of the Rights. From and after the
Distribution Date, the Trust may, upon the vote of a majority of the Board then
in office, from time to time amend this Agreement without the approval of any
holders of the Rights in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to change any time period governing
redemption of the Rights or any other time period or (iv) to make any other
provisions in regard to matters or questions arising hereunder which the Trust,
upon the vote of a majority of the Board then in office, may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
the Rights (other than any Acquiring Person or Disqualified Transferee or any
Affiliate of an Acquiring Person or Disqualified Transferee). The Rights Agent
shall join with the Trust in the execution and delivery of any such supplement
or amendment, unless such supplement or amendment affects any of the rights,
duties, or obligations of the Rights Agent hereunder, in which case the Rights
Agent may, but shall not be required to, join in such execution and delivery.
Section 28. Successors.
All the covenants and provisions of this Agreement by or for the
benefit of the Trust 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; etc.
The Board shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
<PAGE>
Board, or to the Trust, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below all omissions with respect to the
foregoing) which are done or made by the Board in good faith and with the
concurrence of a majority of the Board then in office shall (x) be final,
conclusive and binding on the Trust, the Rights Agent, the holders of the Rights
and all other parties and (y) not subject any Trustee to any liability to the
holders of the Rights.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person
other than the Trust, the Rights Agent, and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the associated shares of
Common Stock) any legal or equitable right, remedy, or claim under this
Agreement or the Rights; but this Agreement shall be for the sole and exclusive
benefit of the Trust, the Rights Agent, and the registered holders of the Rights
(and, prior to the Distribution Date, the associated Common Stock).
Section 31. Severability.
The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board 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.
Section 32. Governing Law.
This Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of The Commonwealth of Massachusetts
and for all purposes shall be governed by and construed in accordance with the
laws of said Commonwealth applicable to contracts to be made and performed
entirely within said Commonwealth.
Section 33. Counterparts.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
<PAGE>
such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
Section 35. The Trust.
Reference is hereby made to the declaration of trust establishing the
Trust dated July 18, 1929, as amended, a copy of which is on file in the office
of the Secretary of State of The Commonwealth of Massachusetts. The name
"Eastern Enterprises" refers to the trustees under such declaration as trustees
and not personally. No trustee, shareholder, officer or agent of the Trust shall
be held to any personal liability in connection with the affairs of the Trust
and only the trust estate may be liable.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and set their respective hands and seals, all as of the day and
year first above written.
EASTERN ENTERPRISES
By: /s/ Jean A. Scholtens
-----------------------------
Title: Vice President and Treasurer
Attest:
By: /s/ L. William Law, Jr.
-----------------------
Title: Secretary
BANKBOSTON, N.A., AS RIGHTS AGENT
By: /s/ Margaret Prentice
-------------------------
Attest: Title: Administrative Manager
By: /s/ Joshua McGinn
-------------------
Title: Senior Account Manager
<PAGE>
EXHIBIT A
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JULY 22, 2008 OR EARLIER IF ORDER OF REDEMPTION
IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
TRUST, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND
ASSOCIATES) OF AN ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID
SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED
OR BE OBTAINABLE. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND ASSOCIATES) OF AN
ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
EASTERN ENTERPRISES
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 July 22, 1998 (the "Rights
Agreement") between Eastern Enterprises (the "Trust"), and BankBoston, N.A. (the
"Rights Agent"), to purchase from the Trust at any time after the Distribution
<PAGE>
Date (as such term is defined in the Rights Agreement) and prior to 5:00 p.m.
(Boston, Massachusetts time) on July 22, 2008 (the "Expiration Date") at the
office of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one share of the Common Stock, with a par value of $1.00 per share
("Common Stock"), of the Trust per each Right represented hereby, at a purchase
price of $160 per share (the "Purchase Price") upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase set forth on
the reverse side hereof and the certificate contained therein duly completed and
executed, accompanied by a signature guarantee and such other documentation as
the Rights Agent may reasonably request. The number of Rights evidenced by this
Rights 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 of July 22, 1998 based on the shares
of Common Stock of the Trust as constituted at such date.
As more fully set forth in the Rights Agreement, upon the occurrence of
a Common Stock Event (as such term is defined in the Rights Agreement), if the
Rights evidenced by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement) or (ii) a Disqualified Transferee (as defined
in the Rights Agreement), such Rights shall automatically become null and void
and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Common Stock Event.
The Rights evidenced by this Rights Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification to the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.
As provided in the Rights Agreement, the Purchase Price and the number
and type of securities which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events.
In the circumstances described in Section 13 of the Rights Agreement,
the securities issuable upon the exercise of the Rights evidenced hereby shall
be the common stock or similar equity securities or equity interests of an
entity other than the Trust.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties, and immunities hereunder of the
Rights Agent, the Trust, and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the office of the Rights Agent
designated for such purpose and may be obtained by the holder of any Rights upon
written request to the Rights Agent.
<PAGE>
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
accompanied by a signature guarantee and such other documentation as the Rights
Agent designated for such purpose may reasonably request, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Common Stock (or other consideration, as the case may be), as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive, upon surrender
hereof, another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Trust by a majority vote of the
Trustees then in office, at any time prior to the earlier of (i) the
Distribution Date or (ii) the close of business on the Expiration Date, at a
redemption price of $.01 per Right (which amount is subject to adjustment as
provided in the Rights Agreement). In addition, in certain circumstances, the
Rights may be exchanged, in whole or in part, for shares of Common Stock.
Immediately upon the action of the Board ordering the exchange of any Rights and
without any further action and without any notice, the right to exercise such
Rights will terminate and the only right thereafter of a holder of such Rights
will be to receive that number of shares of Common Stock issuable upon the
exchange.
The Trust is not obligated to issue whole or fractional shares of
Common Stock (or other securities) upon the exercise of any Right or Rights
evidenced hereby, but in lieu thereof a cash payment may be made at the election
of the Trust, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Common
Stock or of any other securities of the Trust which may at any time be issuable
on the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Trust or any right to vote for the election of trustees
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any action by the Trust, or to receive notice of meetings
or other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
Reference is hereby made to the declaration of trust establishing the
Trust dated July 18, 1929, as amended, a copy of which is on file in the office
of the Secretary of State of The Commonwealth of Massachusetts. The name
"Eastern Enterprises" refers to the trustees under such declaration as trustees
and not personally. No trustee, shareholder, officer or agent of the Trust shall
be held to any personal liability in connection with the affairs of the Trust
and only the trust estate may be liable.
<PAGE>
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers and the seal
of the Trust. Dated as of _________ --, ----.
EASTERN ENTERPRISES
By_____________________________________
Title:
ATTEST:
- --------------------------------
Title:
Countersigned:
- --------------------------------
By_____________________________
Authorized Signatory
Date of Countersignature:
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and
transfers unto ----------------------
- ----------------------------------------------------------------------------
(Please print name and address of transferee)
_____________________________________________________________________ whose
social security or tax identification number, is: ______________ the Rights
evidenced by this Rights Certificate, together with all right, title and
interest herein, and does hereby irrevocably constitute and appoint
____________________ Attorney, to transfer the within Rights Certificate on the
books of the within-named Trust, with full power of substitution.
Dated: _________________________, ____.
-------------------------
Signature
Signature Guaranteed:*
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
after the occurrence of a Common Stock Event from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate of an Acquiring Person.
Dated:____________________ ______________________________________
Signature
Signature Guaranteed:*
- ----------------------------
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Rights
Certificate)
To Eastern Enterprises
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Rights Certificate to purchase the number of shares
of Common Stock (or other securities) issuable upon the exercise of such Rights
and requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number ________________________________________
--------------------------------------------------------------
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number ________________________________________
--------------------------------------------------------------
(Please print name and address)
Dated: _______________________, ____
------------------------------
Signature
(Signature must conform in all respects to name
of holder as specified on the face of this
Rights Certificate)
Signature Guaranteed:**
** Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate of any such Acquiring Person (as each such term is defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate
after the occurrence of a Common Stock Event (as such term is defined in the
Rights Agreement) from any Person who is, was, or subsequently became an
Acquiring Person or an Affiliate of an Acquiring Person.
Dated: _________________, ____ _________________________
Signature
Signature Guaranteed:***
- ------------------------
** Signature must be guaranteed by an "Eligible Guarantor Institution" (with
membership in an approved signature guarantee medallion program) pursuant to
Rule 17Ad-15 of the Securities Exchange Act of 1934.
<PAGE>
EXHIBIT B
EASTERN ENTERPRISES
SUMMARY OF PURCHASE RIGHTS
On July 22, 1998, the Board of Trustees (the "Board") of Eastern
Enterprises (the "Trust") declared a dividend of one purchase right (a "Right")
for every outstanding share of the Trust's common stock, $1.00 par value per
share (the "Common Stock"). The Rights will be distributed at the close of
business upon the earlier to occur of (i) the date of redemption by the Trust of
the Trust's outstanding Rights pursuant to the Common Stock Rights Agreement
dated as of February 22, 1990, as amended, and (ii) February 18, 2000, to
shareholders of record as of the close of business on such date (the "Dividend
Record Date"). The terms of the Rights are set forth in a Rights Agreement dated
as of July 22, 1998 (the "Rights Agreement") between the Trust and BankBoston,
N.A. (the "Rights Agent"). The Rights Agreement provides for the issuance of one
Right for every share of Common Stock issued and outstanding on the Dividend
Record Date and for each share of Common Stock which is issued or sold after
that date and prior to the "Distribution Date" (as defined below).
Each Right entitles the holder to purchase from the Trust one share of
Common Stock at a price of $160 per share, subject to adjustment. The Rights
will expire on July 22, 2008 (the "Expiration Date"), or upon the earlier
redemption of the Rights, and are not exercisable until the Distribution Date.
No separate Rights certificates will be issued at the present time.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
(i) the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Dividend Record Date upon transfer or new
issuance of the Trust's Common Stock will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any of the
Trust's Common Stock certificates will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
The Rights will separate from the Common Stock and Rights certificates
will be issued on the Distribution Date. Unless otherwise determined by a
majority of the Board then in office, the Distribution Date will occur on the
date which is after the Dividend Record Date and the earlier of (i) the tenth
business day following the later of the date of a public announcement that a
person, including affiliates and associates of such person (an "Acquiring
Person"), except as described below, has acquired or obtained the right to
acquire, beneficial ownership of 10% or more of the outstanding shares of Common
Stock or the date on which an executive officer of the Trust has actual
knowledge that an Acquiring Person became such (later being, the "Stock
Acquisition Date") or (ii) the tenth business day following commencement of a
tender offer or exchange offer that would result in any person together with its
affiliates and associates owning 10% or more of the Trust's outstanding Common
<PAGE>
Stock. In any event, the Board of Trustees may delay the distribution of the
certificates. After the Distribution Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to holders of record of the
Trust's Common Stock as of the close of business on the Distribution Date and
thereafter such separate Rights Certificates alone will evidence the Rights.
If, at any time after the Dividend Record Date, any person or group of
affiliated or associated persons (other than the Trust and its affiliates) shall
become an Acquiring Person, each holder of a Right will have the right to
receive shares of the Trust's Common Stock (or, in certain circumstances, cash,
property or other securities of the Trust) having a market value of two times
the exercise price of the Right. For example, if the exercise price is $160, the
holder of each Right would be entitled to receive $320 in market value of the
Trust's Common Stock for $160. Also, in the event that at any time after the
Stock Acquisition Date the Trust was acquired in a merger or other business
combination, or more than 25% of its assets or earning power was sold, each
holder of a Right would have the right to exercise such Right and thereby
receive common stock of the acquiring company with a market value of two times
the exercise price of the Right. Thus, if the exercise price is $160, the holder
of each Right would be entitled to receive $320 in market value of the acquiring
company's common stock upon payment of the $160. Following the occurrence of any
of the events described in this paragraph, any Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person or Disqualified Transferee shall immediately
become null and void.
The Board may, at its option, at any time after any person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of declaration of the
Rights (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). The Board, however, may not effect an exchange at any time after any
person (other than (i) the Trust, (ii) any subsidiary of the Trust, (iii) any
employee benefit plan of the Trust or any such subsidiary or any entity holding
Common Stock for or pursuant to the terms of any such plan), together with all
affiliates of such person, becomes the beneficial owner of 50% or more of the
Common Stock then outstanding. Immediately upon the action of the Board ordering
the exchange of any Rights and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right
thereafter of a holder of such Rights will be to receive that number of shares
of Common Stock equal to the number of such Rights held by the holder multiplied
by the Exchange Ratio.
The exercise price of the Rights, and the number of shares of Common
Stock or other securities or property issuable upon exercise of the Rights are
<PAGE>
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) upon the grant to holders of the Common Stock of certain
rights or warrants to subscribe for shares of the Common Stock or convertible
securities at less than the 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 cash dividends paid out of the earnings or
retained earnings of the Trust and certain other distributions) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustments in the exercise price of the
Rights will be required until cumulative adjustments equal at least 1% in such
price.
At any time prior to the earlier of (i) the Distribution Date or (ii)
the close of business on the Expiration Date, the Trust, by a majority vote of
the Board then in office, may redeem the Rights at a redemption price of $.01
per Right (the "Redemption Price"), as described in the Rights Agreement.
Immediately upon the action of the Board electing to redeem the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Trust, including, without limitation, the right
to vote or to receive dividends.
Neither the distribution of the Rights nor the subsequent separation of
the Rights on the Distribution Date will be a taxable event for the Trust or its
shareholders. Holders of Rights may, depending upon the circumstances, recognize
taxable income upon the occurrence of certain Rights triggering events including
a tender offer for 10% or more of the Common Stock or a person or group
attaining beneficial ownership of 10% or more of the Common Stock (collectively,
"Common Stock Events"). In addition, holders of Rights may have taxable income
as a result of (i) an exchange by the Trust of shares of Common Stock for Rights
as described above or (ii) certain anti-dilution adjustments made to the terms
of the Rights after the Distribution Date. A redemption of the Rights would be a
taxable event to holders.
The Rights Agreement may be amended by the Board at any time prior to
the Distribution Date without the approval of the holders of the Rights. From
and after the Distribution Date, the Rights Agreement may be amended by the
Board without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates, or
associates or their transferees).
Reference is hereby made to the declaration of trust establishing the
Trust dated July 18, 1929, as amended, a copy of which is on file in the office
of the Secretary of State of The Commonwealth of Massachusetts. The name
"Eastern Enterprises" refers to the trustees under such declaration as trustees
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and not personally. No trustee, shareholder, officer or agent of the Trust shall
be held to any personal liability in connection with the affairs of the Trust
and only the trust estate may be liable.
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to the Trust's Form 8-A. registration
statement with respect to the Rights. A copy of the Rights Agreement is
available free of charge from the Rights Agent, at the following address:
BankBoston, N.A.
c/o Boston EquiServe, L.P.
150 Royall Street
Canton, MA 02021
Attn: Client Administration
(Eastern Enterprises Rights Agreement)
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
