SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A/A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
EL PASO NATURAL GAS COMPANY
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 74-0608280
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(STATE OF INCORPORATION (I.R.S. EMPLOYER
OR ORGANIZATION) IDENTIFICATION NO.)
1001 LOUISIANA STREET 77002
HOUSTON, TEXAS ----------------------
- ----------------------- (ZIP CODE)
(ADDRESS OF PRINCIPLE
EXECUTIVE OFFICES)
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS TO NAME OF EACH EXCHANGE ON
BE SO REGISTERED WHICH CLASS IS TO BE REGISTERED
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PREFERRED STOCK NEW YORK STOCK EXCHANGE
PURCHASE RIGHTS
If this Form relates to the registration of a class of debt
securities and is effective upon filing pursuant to General
Instruction A.(c)(1), please check the following box. [ ]
If this Form relates to the registration of a class of debt
securities and is to become effective simultaneously with the
effectiveness of a concurrent registration statement under the
Securities Act of 1933 pursuant to General Instruction A.(c)(2),
please check the following box. [ ]
Securities to be registered pursuant to Section 12(g) of the Act:
None
This Amendment on Form 8-A/A is filed to supplement and
amend the information set forth in the Registration Statement on Form
8-A filed by El Paso Natural Gas Company, a Delaware corporation ("El
Paso" or the "Company"), on July 7, 1992 (the "Registration
Statement"). All capitalized terms not defined herein have the
meanings ascribed to such term in the Rights Agreement (as defined
herein).
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On July 18, 1997, the Board of Directors of El Paso approved
the amended and restated Shareholder Rights Agreement, dated as of
July 23, 1997 (as amended, the "Shareholder Rights Agreement"), between
El Paso and The First National Bank of Boston, as Rights Agent (the
"Rights Agent"). The Shareholder Rights Agreement, among other things,
increased the exercise price of the Rights from $75.00 to $150.00.
Currently, the Rights are attached to all Common Stock
certificates representing shares presently outstanding and the Rights
will be attached to any new Common Stock certificates representing
shares then outstanding. No separate Right certificates will be
distributed. Until the earlier to occur of (i) a public announcement
that, without the prior consent of the Company, a person or group of
affiliated or associated persons has acquired, or obtained the right
to acquire beneficial ownership of securities having 15% or more of
the voting power of all outstanding voting securities of the Company
(an "Acquiring Person") or (ii) ten days following the commencement of
(or a public announcement of an intention to make) a tender offer or
exchange offer the consummation of which would result in any person or
group and related persons becoming an Acquiring Person or (iii) twenty
business days prior to the date on which a Transaction (as defined in
the Shareholder Rights Agreement) is reasonably expected to become
effective or be consummated, without the prior consent of the Company
(the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock
certificate together with the Summary of Rights attached as Exhibit C
to the Rights Agreement. The Shareholder Rights Agreement provides
that, until the Distribution Date, the Rights will be transferred with
and only with Common Stock certificates. From as soon as practicable
after the Record Date and until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates
issued after the Record Date upon transfer or new issuance of the
Common Stock will contain a notation incorporating the Shareholder
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of
any certificates for Common Stock outstanding as of the Record Date
(with or without the Summary of Rights attached (annexed hereto as
Exhibit C to Exhibit 1)) will also constitute the transfer of the
Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Rights Certificates")
will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date, and the separate Rights
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on the earliest of (i) July 7, 2002, (ii) the
date of consummation of a merger transaction with a person or group
who acquired Common Stock pursuant to a Permitted Offer (as defined
below) and who is offering the same price per share and form of
consideration paid in the Permitted Offer, (iii) the time at which the
Rights are exchanged pursuant to the Shareholder Rights Agreement or
(iv) the date of redemption by the Company as described below.
The Purchase Price payable, and the number of one-hundredths
of a share of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock, certain
convertible securities or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock at less than
the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends out
of earnings or retained earnings and dividends payable in Preferred
Stock) or of subscription rights or warrants (other than those
referred to above).
In the event that, after the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such or, if a Transaction is proposed, the
Distribution Date, (i) the Company is involved in a merger or other
business combination transaction in which the holders of all of the
outstanding Common Shares immediately prior to the consummation of the
transaction are not the holders of all of the surviving corporation's
voting power and, in connection with such merger, all or part of the
Common Shares shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (ii)
50% or more of the Company's assets or earning power are sold (in one
transaction or a series of transactions), in either case with or to an
Interested Stockholder or any other person in which such Interested
Stockholder has an interest or any person acting on behalf of or in
concert with such Interested Stockholder, or, if in such transaction
all holders of Common Stock are not offered the same consideration,
any other person, proper provision shall be made so that following the
Distribution Date each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter have
the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of
the acquiring company (or, in the event there is more than one
acquiring company, the acquiring company receiving the greatest
portion of the assets or earning power transferred) which at the time
of such transaction would have a market value of two times the
exercise price of the Right (such right being called the "Merger
Right"). In the event that the Company is the surviving corporation in
a merger and the Common Stock is not changed or exchanged, or in the
event that a person becomes the beneficial owner of securities having
15% or more of the voting power of all then outstanding voting
securities of the Company (unless pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock at a price
and on terms determined by at least a majority of the members of the
Board of Directors who are not officers of the Company to be both
adequate and otherwise in the best interests of the Company and its
stockholders (a "Permitted Offer")), proper provision shall be made so
that each holder of a Right will for a 60-day period thereafter have
the right to receive upon exercise that number of shares of Common
Stock having a market value of two times the exercise price of the
Right, to the extent available, and then (after all authorized and
unreserved shares of Common Stock have been issued) a common stock
equivalent (such as the Preferred Stock or another equity security
with at least the same economic value as the Common Stock or common
stock equivalent) having a market value of two times the exercise
price of the Right, with Common Stock to the extent available being
issued first (such right being called the "Subscription Right"). The
holder of a Right will continue to have the Merger Right whether or
not such holder exercises the Subscription Right. Upon the occurrence
of any of the events giving rise to the exercisability of the
Subscription Right or the Merger Right, any Rights that are or were at
any time owned by an Interested Stockholder engaging in any of such
transactions or receiving the benefits thereof on or after the time
the Interested Stockholder becomes such shall become void insofar as
they relate to the Subscription Right or the Merger Right.
With certain exceptions, no adjustments in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
one-hundredths of a share of Preferred Stock will be issued and, in
lieu thereof, an adjustment in cash will be made based on the market
price of the Common Stock on the last trading date prior to the date
of exercise.
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price"), which redemption shall be
effective upon the action of the Board of Directors. Additionally, the
Company may redeem the then outstanding Rights in whole, but not in
part, at the Redemption Price (i) provided that such redemption is
incidental to a merger or other business combination transaction or
series of transactions involving the Company in which all holders of
Common Stock are offered the same consideration but not involving a
Transaction Person (as defined below), (ii) following an event giving
rise to, and the expiration of the exercise period for, the
Subscription Right if and for as long as no person beneficially owns
securities representing 15% or more of the voting power of the
Company's voting securities or (iii) if the Acquiring Person reduces
his ownership below 5% in transactions not involving the Company. The
redemption of Rights described in the preceding sentence shall be
effective only as of such time when the Subscription Right is not
exercisable, and in any event, only after 10 business days' prior
notice. Upon the effective date of the redemption of 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.
The Preferred Stock purchasable upon exercise of the Rights
will be non-redeemable and junior to any other series of preferred
stock the Company may issue (unless otherwise provided in the terms of
such stock). Each share of Preferred Stock will have a preferential
quarterly dividend in an amount equal to 100 times the dividend
declared on each share of Common Stock, but in no event less than $25
(the equivalent of $.25 per common share). In the event of
liquidation, the holders of Preferred Stock will receive a preferred
liquidation payment equal to the greater of 100 times $75 or 100 times
the payment made per each share of Common Stock. Each share of
Preferred Stock will have 100 votes, voting together with the shares
of Common Stock. In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each share
of Preferred Stock will be entitled to receive 100 times the amount
and type of consideration received per share of Common Stock. The
rights of the Preferred Stock as to dividends, liquidation and voting,
and in the event of mergers and consolidations, are protected by
customary anti-dilution provisions. Fractional shares of Preferred
Stock will be issuable; however, the Company may elect to distribute
depositary receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of one
one-hundredth of a share, an adjustment in cash will be made based on
the market price of the Preferred Stock on the last trading date prior
to the date of exercise.
In the event that a majority of the Board of Directors of
the Company is comprised of persons elected at a meeting of
stockholders who were not nominated by the Board of Directors in
office immediately prior to such meeting (including successors of such
persons elected to the Board of Directors), then for 365 days
following such meeting, the Shareholder Rights Agreement may not be
amended and the Rights may not be redeemed if such amendment or
redemption, as the case may be, is reasonably likely to facilitate a
combination or sale of assets or earning power (a "Transaction") with
an Acquiring Person or affiliate or associate thereof who has directly
or indirectly proposed or nominated a member of the Board who is in
office at the time the Transaction is being considered (a "Transaction
Person"). The Shareholder Rights Agreement may not be amended and the
Rights may not be redeemed thereafter if during such 365 day period
the Company enters into any agreement reasonably likely to facilitate
a Transaction with a Transaction Person and the amendment or
redemption, as the case may be, is reasonably likely to facilitate a
Transaction with a Transaction Person.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends. While
the distribution of the Rights will not be taxable to stockholders of
the Company, stockholders may, depending upon the circumstances,
recognize taxable income should the Rights become exercisable or upon
the occurrence of certain events thereafter.
The Rights have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to
acquire the Company without conditioning the offer on (i) the Rights
being redeemed, (ii) a substantial number of Rights being acquired or
(iii) the offer being deemed a "Permitted Offer" under the Rights
Agreement. However, the Rights should not interfere with any merger or
other business combination in connection with a Permitted Offer or
that is approved by the Company because the Rights are redeemable
under certain circumstances.
Item 2. Exhibits.
Exhibit No. Description
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1 Amended and Restated Shareholder Rights Agreement,
dated as of July 23, 1997 between El Paso Natural
Gas Company and The First National Bank of Boston,
as Rights Agent.
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.
EL PASO NATURAL GAS COMPANY
By: /s/ H. Brent Austin
---------------------------------
Name: H. Brent Austin
Title: Executive Vice President
and Chief Financial Officer
Date: August 13, 1997
EXHIBIT INDEX
Exhibit No. Description
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1 Amended and Restated Shareholder Rights Agreement,
dated as of July 23, 1997 between El Paso Natural
Gas Company and The First National Bank of Boston,
as Rights Agent.
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EL PASO NATURAL GAS COMPANY
and
THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
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Amended and Restated Shareholder Rights Agreement
Dated as of July 23, 1997
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TABLE OF CONTENTS
Page
Section 1. Certain Definitions..........................................1
Section 2. Appointment of Rights Agent..................................5
Section 3. Issue of Rights Certificates.................................5
Section 4. Form of Rights Certificates..................................7
Section 5. Countersignature and Registration............................8
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 Preferred Stock.............13
Section 10. Preferred Stock Record Date.................................14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights.......................................14
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares....................................................23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.............................................23
Section 14. Additional Covenants........................................26
Section 15. Fractional Rights and Fractional Shares.....................27
Section 16. Rights of Action............................................28
Section 17. Agreement of Rights Holders.................................29
Section 18. Rights Certificate Holder Not Deemed a Stockholder..........29
Section 19. Concerning the Rights Agent.................................30
Section 20. Merger or Consolidation or Change of Name of Rights
Agent.....................................................30
Section 21. Duties of Rights Agent......................................31
Section 22. Change of Rights Agent......................................34
Section 23. Issuance of New Rights Certificates.........................35
Section 24. Redemption and Termination..................................35
Section 25. Exchange....................................................37
Section 26. Notice of Certain Events....................................38
Section 27. Notices.....................................................39
Section 28. Supplements and Amendments..................................40
Section 29. Determination and Actions by the Board of Directors, etc....41
Section 30. Successors..................................................41
Section 31. Benefits of this Agreement..................................41
Section 32. Severability................................................42
Section 33. Governing Law...............................................42
Section 34. Counterparts................................................42
Section 35. Descriptive Headings........................................42
AMENDED AND RESTATED SHAREHOLDER RIGHTS AGREEMENT
This Agreement, dated as of July 23, 1997, between El Paso
Natural Gas Company, a Delaware corporation (the "Company"), and The
First National Bank of Boston, a national banking association (the
"Rights Agent").
W I T N E S S E T H
WHEREAS, on July 7, 1992, the Board of Directors of the
Company adopted a shareholder rights agreement (the "Original Rights
Agreement") and authorized and declared a dividend distribution of one
Right (as hereinafter defined) for each Common Share, $3.00 par value,
of the Company (the "Common Stock") outstanding as of the close of
business on July 28, 1992 (the "Record Date"), and issued one Right
(subject to adjustment as provided therein) for each share of Common
Stock of the Company issued between the Record Date and the earliest
of the Distribution Date and the Expiration Date (as such terms are
hereinafter defined), each Right representing the right to purchase
one one-hundredth of one Series A Junior Participating Preferred Share
of the Company having the rights, powers and preferences set forth in
the Form of Certificate of Designation attached thereto as Exhibit A,
upon the terms and subject to the conditions of the Original Rights
Agreement (the "Rights").
WHEREAS, on July 18, 1997, the Board of Directors determined
it desirable and in the best interests of the Company and its
shareholders that the Original Rights Agreement be amended and
restated upon the terms and subject to the conditions hereinafter set
forth.
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) "Acquiring Person" shall mean any Person (as such term
is hereinafter defined), who or which, together with all Affiliates
(as such term is hereinafter defined) and Associates (as such term is
hereinafter defined) of such Person, without the prior approval of the
Company, shall be the Beneficial Owner (as such term is hereinafter
defined) of securities representing 15% or more of the Voting Power
(as such term is hereinafter defined) (other than as a result of a
Permitted Offer) or who was such a Beneficial Owner at any time after
the date hereof, whether or not such Person continues to be the
Beneficial Owner of securities representing 15% or more of the Voting
Power. Notwithstanding the foregoing, (A) the term "Acquiring Person"
shall not include (i) the Company, (ii) any subsidiary of the Company
(as such term is hereinafter defined), (iii) any employee benefit plan
of the Company or any of its subsidiaries, (iv) any entity holding
securities of the Company organized, appointed or established by the
Company or any of its subsidiaries for or pursuant to the terms of any
such plan acting in such capacity and (B) no Person shall become an
"Acquiring Person" (i) as a result of the acquisition of shares of
Common Stock by the Company which, by reducing the number of shares
Common Stock outstanding, increases the proportional number of shares
beneficially owned by such Person together with all Affiliates and
Associates of such Person, provided, that if (1) a Person would become
an Acquiring Person (but for the operation of this subclause (i)) as a
result of the acquisition of shares of Common Stock by the Company,
and (2) after such share acquisition by the Company, such Person, or
an Affiliate or Associate of such Person, becomes the Beneficial Owner
of any additional shares of Common Stock, then such Person shall be
deemed an Acquiring Person; or (ii) if (1) within five Business Days
after such Person would otherwise have become or, if such Person did
so inadvertently, after such Person discovers that such Person would
otherwise have become, an Acquiring Person (but for the operation of
this subclause (ii)), such Person notifies the Board of Directors that
such Person did so inadvertently, and (2) within two Business Days
after such notification, such Person divests itself of a sufficient
number of shares of Common Stock so that such Person is the Beneficial
Owner of such number of shares of Common Stock that such Person no
longer would be an Acquiring Person.
(b) "Act" shall mean the Securities Act of 1933, as amended
and as in effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right or obligation to
acquire (whether such right or obligation is exercisable or
effective immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," securities
tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange;
or (B) the right to vote pursuant to any agreement, arrangement
or understanding (whether or not in writing); provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or
to "beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given in response
to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations of the
Exchange Act and (2) is not also then reportable by such person
on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona
fide public offering of securities), whether or not in writing,
for the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy or consent as described in clause (B) of
subparagraph (ii) of this paragraph (d)) or disposing of any
securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference
to a Person's Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding
together with the number of such securities not then actually issued
and outstanding which such Person would be deemed to own beneficially
hereunder.
(e) "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 State of New York are authorized or obligated by
law or executive order to close.
(f) "Close of business" on any given date shall mean 5:00
P.M., Boston time, on such date; provided, however, that if such date
is not a Business Day it shall mean 5:00 P.M., Boston time, on the
next succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, $3.00 par
value, of the Company or, in the event of a subdivision, combination
or consolidation with respect to such Common Stock, the Common Stock
resulting from such subdivision, combination or consolidation. "Common
Stock" when used with reference to stock issued by any Person other
than the Company shall mean the capital stock with the greatest voting
power, or the equity securities or other equity interest having power
to control or direct the management, of such Person or, if such Person
is a subsidiary of another Person, of the Person which ultimately
controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(i) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
(j) "Interested Stockholder" shall mean any Acquiring Person
or Transaction Person or any Affiliate or Associate of an Acquiring
Person or Transaction Person or any other Person in which any such
Acquiring Person, Transaction Person, Affiliate or Associate has an
interest which represents in excess of 5% of the total combined
economic or voting power of such Person, or any other Person acting
directly or indirectly on behalf of or in concert with any such
Acquiring Person, Transaction Person, Affiliate or Associate.
(k) "Permitted Offer" shall mean (i) a tender or exchange
offer for all outstanding Common Shares (other than a tender or
exchange offer which would constitute a Transaction) at a price and on
terms determined by at least a majority of the members of the Board of
Directors who are not officers of the Company to be both adequate and
otherwise in the best interests of the Company and its stockholders
(other than the Person or any Affiliate or Associate thereof on whose
behalf the offer is being made).
(l) "Person" shall mean any individual, firm, corporation,
partnership limited liability company, trust, association, joint
venture or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(m) "Preferred Stock" shall mean the Series A Junior
Participating Preferred Shares, $.01 par value, of the Company.
(n) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.
(o) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
(p) "Stock Acquisition Date" shall mean the first date of
public announcement (which for purposes of this definition, shall
include, without limitation, a report filed pursuant to the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
(q) A "subsidiary" of any Person shall mean any corporation
or other entity of which a majority of the voting power of the voting
equity securities or voting interests is owned, directly or
indirectly, by such Person, or which is otherwise controlled by such
Person.
(r) "Transaction" shall mean any merger, consolidation or
sale, mortgage or transfer of assets or earning power described in
Section 13(a) hereof or any acquisition of Common Stock of the Company
which would result in a Person becoming a Transaction Person.
(s) "Transaction Person" with respect to a Transaction shall
mean (x) any Person who (i) is or will become an Acquiring Person or a
Principal Party (as such term is defined in Section 13(b) hereof) if
the Transaction were to be consummated and (ii) either (A) such Person
directly or indirectly proposed or nominated a director of the Company
which director is in office at the time of consideration of the
Transaction, or (B) the Transaction with such Person was approved by
persons elected to the Board of Directors with the objective, for the
purpose or with the effect of facilitating a merger or consolidation
of the Company, a sale, mortgage or transfer, in one or more
transactions, of assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its subsidiaries (taken
as a whole) or any transaction which would result in a Person becoming
an Acquiring Person, or (y) an Affiliate or Associate of such a
Person.
(t) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
(u) "Voting Power" shall mean the voting power of all
securities of the Company then outstanding generally entitled to vote
for the election of directors of the Company.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3 hereof, shall
prior to the Distribution Date also be the holders of the Common
Stock) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from
time to time appoint such Co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Rights Certificates. (a) Until the
earlier of (i) the Stock Acquisition Date or (ii) the tenth day (or
such later date as may be determined by action of the Company's Board
of Directors) after the date of the commencement of, or first public
announcement of the intent of any Person (other than the Company, any
subsidiary of the Company, or any employee benefit plan of the Company
or any of its subsidiaries or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan) to commence (which intention to commence remains in
effect for five Business Days after such announcement), a tender or
exchange offer the consummation of which would result in such Person
becoming an Acquiring Person or (iii) twenty Business Days prior to
the date on which a Transaction is reasonably expected to become
effective or be consummated (the earlier of such dates being herein
referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of paragraph (b) of this Section
3) by the certificates for Common Stock registered in the names of the
holders of the Common Stock (which certificates for Common Stock shall
be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights (and the right to receive
certificates therefor) will be transferable only in connection with
the transfer of the underlying 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 records of the Company, a
certificate for Rights, in substantially the form of Exhibit B hereto
(the "Rights Certificates"), evidencing one Right for each share of
Common Stock so held. As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
(b) The Company has previously sent a copy of a Summary of
Rights describing the terms of the Original Rights Agreement (the
"Original Summary of Rights"), by first-class, postage prepaid mail,
to each record holder of the Common Stock as of the close of business
on the Record Date, at the address of such holder shown on the records
of the Company. Attached to this Agreement as Exhibit C is a copy of
an amended Summary of Rights (the "Summary of Rights") describing the
terms of this Agreement. With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution Date
(or earlier redemption, expiration or termination of the Rights), the
Rights will be evidenced by such certificates for the Common Stock
together with the Original Summary of Rights (which shall be deemed
amended to reflect the terms of the Summary of Rights) and the
registered holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the Distribution Date (or
earlier redemption, expiration or termination of the Rights), the
surrender for transfer of any of the certificates for the Common Stock
outstanding on the Record Date, even without a copy of the Original
Summary of Rights or the Summary of Rights attached thereto, shall
also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate.
(c) Certificates issued for Common Stock (including, without
limitation, certificates issued upon transfer or exchange of Common
Stock or reacquired Common Stock referred to in the last sentence of
this paragraph (c)) after the Record Date, but prior to the earlier of
the Distribution Date or the Expiration Date (as such term is
hereinafter defined), shall be deemed also to be certificates for
Rights, and shall have impressed, printed, stamped, written or
otherwise affixed onto them the following legend (or the legend
previously provided under the Original Rights Agreement):
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Shareholder
Rights Agreement between El Paso Natural Gas Company and The
First National Bank of Boston (the "Rights Agent") dated as
of July 7, 1992, and as amended and restated dated as of
July 23, 1997 (the "Shareholder Rights Agreement"), the
terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal offices of
El Paso Natural Gas Company. Under certain circumstances, as
set forth in the Shareholder Rights Agreement, such Rights
may be redeemed, may expire, or may be evidenced by separate
certificates and will no longer be evidenced by this
certificate. El Paso Natural Gas Company will mail to the
holder of this certificate a copy of the Shareholder Rights
Agreement without charge within ten days after receipt by
the Company's corporate secretary of a written request
therefor. Under certain circumstances, Rights issued to, or
held by, any Person who is, was or becomes an Interested
Stockholder (as defined in the Shareholder Rights Agreement)
and any subsequent holder of such Rights may become null and
void with respect to certain rights set forth in Section
11(a)(ii) and Section 13(a) of the Shareholder Rights
Agreement.
With respect to such certificates containing the foregoing legend (or
the legend previously provided under the Original Rights Agreement),
until the Distribution Date, the Rights associated with the Common
Stock represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate. In
the event that the Company purchases or acquires any shares of Common
Stock after the Record Date but prior to the Distribution Date, any
Rights associated with such shares of Common Stock shall be deemed
cancelled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Stock which are no
longer outstanding.
Section 4. Form of Rights Certificates. (a) The Rights
Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit B hereto (or, in the
case of Rights Certificates issued under the Original Rights
Agreement, in Exhibit B thereto; provided that any such Rights
Certificates shall without any further action on the part of the
holder thereof represent Rights under this Agreement) and may have
such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 23 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date, and on their face
shall entitle the holders thereof to purchase such number of one
one-hundredths of a share of Preferred Stock as shall be set forth
therein at the price per one one-hundredth of a share set forth
therein (the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a)
or Section 23 hereof that represents Rights beneficially owned by an
Interested Stockholder and any Rights Certificate issued at any time
upon the transfer of any Rights to such an Interested Stockholder or
to any nominee of such Interested Stockholder, and any Rights
Certificate issued pursuant to Section 6 or Section 11 upon transfer,
exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain the following legend:
The Rights represented by this Certificate are or were
beneficially owned by a Person who was or became an
Interested Stockholder. This Rights Certificate and the
Rights represented hereby may become void to the extent
provided by, and under certain circumstances as specified
in, Section 7(e) of the Rights Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such
Rights Certificate. The Company shall give notice to the Rights Agent
promptly after it becomes aware of the existence of any Interested
Stockholder.
Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President or any Vice President, either
manually or by facsimile signature, and shall have affixed thereto the
Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or
by facsimile signature. The Rights Certificates shall be manually or
by facsimile countersigned by the Rights Agent and shall not be valid
for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certificates shall
cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect
as though the person who signed such Rights Certificates had not
ceased to be such officer of the Company; and any Rights Certificates
may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at one of its offices 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 each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. Subject to the provisions of Sections 4(b), 7(e) and 15
hereof, at any time after the close of business on the Distribution
Date, and at or prior to the close of business on the Expiration Date,
any Rights Certificate or Certificates 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 one one-hundredths of a share of Preferred Stock (or,
following a Triggering Event, other securities, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then
entitled such holder 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 or Rights Certificates to be
transferred, split up, combined or exchanged, with the form of
assignment and certificate duly executed, at the office of the Rights
Agent designated for such purpose. Such holder shall provide such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon the Rights Agent, subject to
Section 4(b), Section 7(e) and Section 15 hereof, shall countersign
and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Rights Certificate if mutilated,
the Company 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) Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon presentation of the Rights
Certificate, with the appropriate form of election to purchase and
related certificate on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one
one-hundredths of a share of Preferred Stock (or such other number of
shares or other securities) as to which the Rights are exercised, at
or prior to the earlier of (i) the Close of Business on July 7, 2002
(the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 24 hereof (such earlier time being
herein referred to as the "Expiration Date"), (iii) the time at which
the Rights are exchanged as provided in Section 25 hereof, or (iv) the
consummation of a transaction contemplated by Section 13(e) hereof.
Any Person who prior to the Distribution Date becomes a record holder
of shares of Common Stock may exercise all of the rights of a
registered holder of a Rights Certificate with respect to the Rights
associated with such shares of Common Stock in accordance with and
subject to the provisions of this Agreement, including the provisions
of Section 7(e) hereof, as of the date such Person becomes a record
holder of shares of Common Stock.
(b) The Purchase Price for each one one-hundredth share of
Preferred Stock pursuant to the exercise of a Right shall be $150.00,
subject to adjustment from time to time as provided in the next
sentence and in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with
paragraph (c) below. Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Stock payable in shares of
Common Stock or (ii) effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise
than by payment of dividends in Common Stock) into a greater or lesser
number of Common Stock, then in any such case, each share of Common
Stock outstanding following such subdivision, combination or
consolidation shall continue to have one Right (subject to adjustment
as provided herein) associated therewith and the Purchase Price
following any such event shall be proportionately adjusted to equal
the result obtained by multiplying the Purchase Price immediately
prior to such event by a fraction the numerator of which shall be the
total number of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the
total number of Common Stock outstanding immediately following the
occurrence of such event. The adjustment provided for in the preceding
sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation
is effected.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the appropriate form of election to purchase
and related certificate duly executed, accompanied by payment of the
Purchase Price for the shares of Preferred Stock (or other securities,
as the case may be) to be purchased and an amount equal to any
applicable transfer tax (as determined by the Rights Agent) in cash,
or by certified check or money order payable to the order of the
Company, the Rights Agent shall, subject to Section 21(k), thereupon
promptly (i)(A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the
transfer agent) certificates for the number of shares of Preferred
Stock to be purchased, and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the
Company, in its sole discretion, shall have elected to deposit the
shares of Preferred Stock issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of
a share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with
such request, (ii) when appropriate, requisition from the Company the
amount of cash, if any, to be paid in lieu of issuance of fractional
shares in accordance with Section 15, (iii) promptly after receipt of
such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by
such holder and (iv) when appropriate, after receipt promptly deliver
such cash to or upon the order of the registered holder of such Rights
Certificate. In the event that the Company is obligated to issue other
securities of the Company, the Company will make all arrangements
necessary so that such other securities are available for distribution
by the Rights Agent, if and when appropriate. In addition, in the case
of an exercise of the Rights by a holder pursuant to Section
11(a)(ii), the Rights Agent shall return such Rights Certificate to
the registered holder thereof after imprinting, stamping or otherwise
indicating thereon that the rights represented by such Rights
Certificate no longer include the rights provided by Section 11(a)(ii)
of the Rights Agreement and if less than all the Rights represented by
such Rights Certificate were so exercised, the Rights Agent shall
indicate on the Rights Certificate the number of Rights represented
thereby which continue to include the rights provided by Section
11(a)(ii).
(d) In case the registered holder of any Rights Certificate
shall exercise (except pursuant to Section 11(a)(ii)) less than all
the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such
Rights Certificate or to his duly authorized assigns, subject to the
provisions of Section 15 hereof or the Rights Agent shall place an
appropriate notation on the Rights Certificate with respect to those
Rights exercised.
(e) Notwithstanding anything in this Agreement to the
contrary, if an Interested Stockholder engages in or there occurs one
or more of the transactions set forth in Section 11(a)(ii) or Section
13(a) on or after the time the Interested Stockholder became such,
then any Rights that are or were on or after the earlier of the
Distribution Date or the Stock Acquisition Date beneficially owned by
(i) an Interested Stockholder, (ii) a transferee of an Interested
Stockholder who becomes a transferee after the Interested Stockholder
becomes such, or (iii) a transferee of an Interested Stockholder who
becomes a transferee prior to or concurrently with the Interested
Stockholder becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Interested
Stockholder to holders of equity interests in such Interested
Stockholder or to any Person with whom the Interested Stockholder has
a continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of Directors of
the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance
of this Section 7(e), shall become void with respect to the rights
provided under Section 11(a)(ii) and Section 13(a) without any further
action and any holder of such Rights shall thereafter have no right to
exercise such Rights under the provisions of Section 11(a)(ii) and
Section 13(a). The Company shall use all reasonable efforts to insure
that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Interested Stockholder or its
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless the certificate contained in the appropriate form of election
to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise shall have been properly completed and
duly executed by the registered holder thereof and the Company shall
have been provided with such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of
exercise (other than a partial exercise), transfer, split up,
combination or exchange shall, if surrendered to the Company or any of
its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be
cancelled by it, and no Rights Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all cancelled Rights Certificates to the Company, or
shall, at the written request of the Company, destroy such cancelled
Rights Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
The Company covenants and agrees that at all times prior to the
occurrence of an event specified in Section 11(a)(ii) it will cause to
be reserved and kept available out of its authorized and unissued
shares of Preferred Stock, or any authorized and issued shares of
Preferred Stock held in its treasury, the number of shares of
Preferred Stock that will be sufficient to permit the exercise in full
of all outstanding Rights and, after the occurrence of an event
specified in Section 11, shall so reserve and keep available a
sufficient number of shares of Common Stock (and/or other securities)
which may be required to permit the exercise in full of the Rights
pursuant to this Agreement.
So long as the shares of Preferred Stock (and, after the
occurrence of an event specified in Section 11, Common Stock, or any
other securities, as the case may be) issuable upon the exercise of
the Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred
Stock (or Common Stock and/or other securities, as the case may be)
delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares or securities.
The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of
the Rights Certificates or of any certificates for shares of Preferred
Stock and/or Common Stock upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights Certificates
to a person other than, or in respect of the issuance or delivery of
the shares of Preferred Stock and/or Common Stock in a name other than
that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or to issue or deliver any
certificates for shares of Preferred Stock, and/or Common Stock in a
name other than that of the registered holder upon the exercise of any
Rights until such tax shall have been paid (any such tax being payable
by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no
such tax is due.
The Company shall use its best efforts to (i) file, as soon
as practicable following the Stock Acquisition Date (or, if required
by law, at such earlier time following the Distribution Date), a
registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting
the requirements of the Act and the rules and regulations thereunder)
until the date of the expiration of the rights provided by Section
11(a)(ii). The Company will also take such action as may be
appropriate under the blue sky laws of the various states.
Section 10. Preferred Stock Record Date. Each person in
whose name any certificate for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the
holder of record of the shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented thereby on,
and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly presented and payment of
the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such presentation and payment
is a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are
closed, such person shall be deemed to have become the record holder
of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock transfer books of
the Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of
shares or other securities covered by each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11:
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of shares or (D) issue any
shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is
the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and in Section 7(e), the Purchase
Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of
capital stock and other securities which, if such Right had been
exercised immediately prior to such date and at a time when the
Preferred Stock transfer books of the Company were open, he would
have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to any adjustment required
pursuant to Section 11(a)(ii).
(ii) In the event (A) any Person (other than the Company,
any subsidiary of the Company, any employee benefit plan of the
Company, any of its subsidiaries or any entity holding securities
of the Company organized, appointed or established by the Company
or any of its subsidiaries for or pursuant to the terms of any
such plan) alone or together with its Affiliates and Associates,
shall become an Acquiring Person, or (B) during such time as
there is an Acquiring Person, there shall be any reclassification
of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation
of the Company with any of its subsidiaries or any other
transaction or series of transactions (whether or not with or
into or otherwise involving an Acquiring Person) 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 of the Company or any of its subsidiaries which
is directly or indirectly owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, then, and in each
such case, proper provision shall be made so that each holder of
a Right, except as provided below and in Section 7(e) hereof,
shall, for a period of 60 days after the later of the occurrence
of any such event and the effective date of an appropriate
registration statement pursuant to Section 9, have a right to
receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of
shares of Common Stock of the Company (or, in the discretion of
the Board of Directors, one one-hundredth of a share of Preferred
Stock) as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for which a Right is
then exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event and (y) dividing that product by 50% of
the current market price per one share of Common Stock
(determined pursuant to Section 11(d)) on the date of the
occurrence of the event set forth in this subparagraph (ii) (such
number of shares being referred to as the "number of Adjustment
Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject
to the provisions of Section 13 hereof, then only the provisions
of Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).
(iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued shares of Common Stock
to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) and the Rights become so
exercisable (and the Board has determined to make the Rights
exercisable into fractions of a share of preferred stock),
notwithstanding any other provision of this Agreement, to the
extent necessary and permitted by applicable law and any
agreements in effect on the date hereof to which the Company is a
party, each Right shall thereafter represent the right to
receive, upon exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, a number of
shares, or units of shares, of (x) Common Stock (up to the
maximum number of shares of Common Stock which may permissibly be
issued using the allocation procedure specified in the second
sentence of Section 11(k)) and (y) preferred stock of the
Company, including, but not limited to Preferred Stock, equal in
the aggregate to the number of Adjustment Shares where the Board
of Directors of the Company shall have deemed such shares or
units, other than the shares of Common Stock, to have at least
the same economic value (determined pursuant to Sections 11(d)(i)
and (ii) hereof, to the extent applicable) as the Common Stock (a
"common stock equivalent") (one one-hundredth of a share of
Preferred Stock shall be deemed to be a common stock equivalent);
provided, however, if there are unavailable sufficient shares (or
fractions of shares) of Common Stock and/or common stock
equivalents, then the Company shall, to the extent permitted by
applicable law and any agreements to which it is a party, take
all such action as may be necessary to authorize additional
shares of Common Stock or common stock equivalents for issuance
upon exercise of the Rights, including the calling of a meeting
of shareholders; and provided, further, that the Company shall
issue no common stock equivalent upon exercise of the Rights
until the Company has first issued all authorized and unreserved
shares of Common Stock; and provided, further, that if the
Company is unable to cause sufficient shares of Common Stock
and/or common stock equivalents to be available for issuance upon
exercise in full of the Rights, then each Right shall thereafter
represent the right to receive the Adjusted Number of Common
Shares upon exercise at the Adjusted Purchase Price (as such
terms are hereinafter defined). As used herein, the term Adjusted
Number of Common Shares shall be equal to that number of shares
(or fractions of shares) of Common Stock (and/or shares or units
of common stock equivalents) equal to the product of (x) the
number of Adjustment Shares and (y) a fraction, the numerator of
which is the number of shares of Common Stock (and/or shares or
units of common stock equivalents) available for issuance upon
exercise of the Rights and the denominator of which is the
aggregate number of Adjustment Shares otherwise issuable upon
exercise in full of all Rights (assuming there were sufficient
shares of Common Stock available) (such fraction being referred
to as the "Proration Factor"). The Adjusted Purchase Price shall
mean the product of the Purchase Price and the Proration Factor.
The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Common
Stock and common stock equivalents upon exercise of the Rights
among holders of Rights.
(b) If the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock
entitling them (for a period expiring within 45 calendar days after
such record date) to subscribe for or purchase Preferred Stock (or
shares having the same or more favorable rights, privileges and
preferences as the Preferred Stock ("equivalent preferred stock")) or
securities convertible into Preferred Stock or equivalent preferred
stock at a price per share of Preferred Stock or per share of
equivalent preferred stock (or having a conversion price per share, if
a security convertible into Preferred Stock or equivalent preferred
stock) less than the current market price (as defined in Section
11(d)) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock and/or equivalent
preferred stock to be offered (and/or the aggregate initial conversion
price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date,
plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid in
a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be determined reasonably
and with good faith to the holders of Rights by the Board of Directors
of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent.
Shares of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such
a record date is fixed; and in the event that such rights or warrants
are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had
not been fixed.
(c) If the Company shall fix a record date for the making of
a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out
of the earnings or retained earnings of the Company), assets (other
than a dividend payable in Preferred Stock, but including any dividend
payable in stock other than Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the current
market price (as defined in Section 11(d)) per share of Preferred
Stock on such record date, less the fair market value (as determined
reasonably and with good faith to the holders of Rights by the Board
of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the
Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants distributable in respect of one share of Preferred Stock and
the denominator of which shall be the current market price per share
of the Preferred Stock. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would be in effect if such
record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, other
than in Section 11(a)(iii), the "current market price" per share
of Common Stock on any date shall be deemed to be the average of
the daily closing prices per share of such Common Stock for the
30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the
event that the current per share market price of the Common Stock
is determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on
such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock or (B)
any subdivision, combination or reclassification of such Common
Stock, and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then,
and in each such case, the "current market price" shall be
properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares
of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. If on any such
date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined reasonably
and with good faith by the Board of Directors of the Company
shall be used and shall be binding on the Rights Agent. The term,
"Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are
listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a
Business Day. If the Common Stock is not publicly held or not so
listed or traded, "current market price" per share shall mean the
fair value per share determined reasonably and with good faith to
the holders of Rights by the Board of Directors of the Company,
whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent.
(ii) For the purpose of any computation hereunder, the
"current market price" per share (or one one-hundredth of a
share) of Preferred Stock shall be determined in the same manner
as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the
current market price per share (or one one-hundredth of a share)
of Preferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or listed or
traded in a manner described in clause (i) of this Section 11(d),
the "current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such number
may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) multiplied by
the current market price per share of the Common Stock and the
"current market price" per one one-hundredth of a share of
Preferred Stock shall be equal to the current market price per
share of the Common Stock (as appropriately adjusted). If neither
the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, "current market price" per share shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred Stock, as the
case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the transaction which
mandates such adjustment or (ii) the Expiration Date.
(f) If as a result of any provision of Section 11(a), the
holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in
Section 11(a) through (c), inclusive, and the provisions of Sections
7, 9, 10, 13 and 15 hereof with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number of
one one-hundredths of a share of Preferred Stock purchasable from time
to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share of
Preferred 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) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one one-hundredths of
a share of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day
thereafter, but, if the 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 Company 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 15 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, 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 Company, 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 one one-hundredths of a share of Preferred
Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express
the Purchase Price per share and the number of one one-hundredths of a
share of Preferred 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 one one-hundredths of a share of Preferred Stock, Common
Stock or other securities issuable upon exercise of the Rights, the
Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and
legally issue such number of fully paid and nonassessable one
one-hundredths of a share of Preferred Stock, Common Stock or other
securities at such adjusted Purchase Price. If upon any exercise of
the Rights, a holder is to receive a combination of Common Stock and
common stock equivalents, a portion of the consideration paid upon
such exercise, equal to at least the then par value of a share of
Common Stock of the Company, shall be allocated as the payment for
each share of Common Stock of the Company so received.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and
other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything to the contrary in this Section 11
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any
consolidation or subdivision of the Preferred Stock, issuance wholly
for cash of any shares of Preferred Stock at less than the current
market price, issuance wholly for cash of shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable
for shares of Preferred Stock, stock dividends or issuance of rights,
options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preferred Stock shall
not be taxable to such stockholders.
(n) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the date of this Agreement and prior to the Distribution Date (i)
declare a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, (iii) combine the outstanding Common Stock into a smaller
number of shares, or (iv) issue any shares of its capital stock in a
reclassification of the outstanding Common Stock, the number of Rights
associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each share of Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock 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.
(o) The exercise of Rights under Section 11(a)(ii) shall
only result in the loss of rights under Section 11(a)(ii) to the
extent so exercised and shall not otherwise affect the rights
represented by the Rights under this Rights Agreement, including the
rights represented by Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11
and 13 hereof, the Company shall (a) promptly prepare a certificate
setting forth such adjustment 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 Preferred Stock and the
Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate in accordance with
Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such 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 certificate.
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power. (a) In the event that, on or following the
Stock Acquisition Date or, if a Transaction is proposed, the
Distribution Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any Interested Stockholder
or, if in such merger or consolidation all holders of Common Stock are
not offered the same consideration, any other Person, (y) the Company
shall consolidate with, or merge with, any Interested Stockholder or,
if in such merger or consolidation all holders of Common Stock are not
offered the same consideration, any other Person and the Company shall
be the continuing or surviving corporation of such consolidation or
merger (other than, in a case of any transaction described in (x) or
(y), a merger or consolidation which would result in all of the
securities generally entitled to vote in the election of directors
("voting securities") of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into securities of the surviving entity) all of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation and the holders (and
relative percentage holdings of each such holder) of such securities
not having changed as a result of such merger or consolidation) and,
in connection with such merger, all or part of the shares of Common
Stock shall be changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z) the Company
shall sell, mortgage or otherwise transfer (or one or more of its
subsidiaries shall sell, mortgage or otherwise transfer), in one or
more transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its subsidiaries
(taken as a whole) to any Interested Stockholder or Persons or, if in
such transaction all holders of Common Stock are not offered the same
consideration, any other Person (other than the Company or any
subsidiary of the Company in one or more transactions each of which
does not violate Section 14(b) hereof), then, and in each such case
(except as provided in Section 13(e) hereof), proper provision shall
be made so that (i) following the Distribution Date, each holder of a
Right, subject to Section 7(e), shall have the right to receive, upon
the exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, and in lieu of Preferred Stock, such
number of shares of freely tradeable Common Stock of the Principal
Party (as hereinafter defined), free and clear of liens, rights of
call or first refusal, encumbrances or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right is then exercisable (without taking
into account any adjustment previously made pursuant to Section
11(a)(ii) hereof) and dividing that product by (2) 50% of the current
market price per share of the Common Stock of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; (ii)
such Principal Party shall thereafter be liable for, and shall assume,
by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall only apply to such Principal Party following
the first occurrence of a Section 13 Event; and (iv) such Principal
Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9 hereof) in connection with such consummation
as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation
to its shares of Common Stock thereafter deliverable upon the exercise
of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or
(y) of the first sentence of this Section 13, the Person that is
the issuer of any securities into which shares of Common Stock of
the Company are converted in such merger or consolidation, and if
no securities are so issued, the Person that is the other party
to the merger or consolidation (including, if applicable, the
Company, if it is the surviving corporation); and
(ii) in the case of any transaction described in (z) of
the first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect subsidiary or Affiliate
of another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; (2) in
case such Person is a subsidiary, directly or indirectly, or Affiliate
of more than one Person, the Common Stocks of two or more of which are
and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value; and (3) in case such Person is owned,
directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each
of the chains of ownership having an interest in such joint venture as
if such party were a "subsidiary" of both or all of such joint
venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their
direct or indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a
sufficient number of shares of its authorized Common Stock which have
not been issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and each Principal Party and each other Person who
may become a Principal Party as a result of such consolidation,
merger, sale or transfer shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set
forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets mentioned in
paragraph (a) of this Section 13, the Principal Party at its own
expense will
(i) prepare and file a registration statement under the
Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, will use its
best efforts to cause such registration statement to become
effective as soon as practicable after such filing and will use
its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights
under the blue sky laws of such jurisdictions as may be necessary
or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all material respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights
under this Section 13 shall be in addition to the rights to exercise
Rights and adjustments under Section 11(a)(ii) and shall survive any
exercise thereunder.
(d) The Company shall not consummate any such merger,
consolidation, sale or transfer which shall be a Transaction unless
prior thereto certificates evidencing the Rights have been distributed
in accordance with Section 3(a) to holders of Common Stock not less
than twenty business days prior to the date on which the Transaction
becomes effective or is consummated.
(e) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a) if: (i) such
transaction is consummated with a Person or Persons who acquired
shares of Common Stock pursuant to a Permitted Offer (or a wholly
owned subsidiary of any such Person or Persons); (ii) the price per
share of Common Stock offered in such transaction is not less than the
price per share of Common Stock paid to all holders of Common Stock
whose shares were purchased pursuant to such Permitted Offer; and
(iii) the form of consideration being offered to the remaining holders
of Common Stock pursuant to such transaction is the same as the form
of consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this subsection
(e), all Rights hereunder shall expire.
Section 14. Additional Covenants. (a) After the Stock
Acquisition Date, the Company covenants and agrees that it shall not
(i) consolidate with (other than a subsidiary of the Company in a
transaction which does not violate Section 14(b) hereof), (ii) merge
with or into (other than a subsidiary of the Company in a transaction
which does not violate Section 14(b) hereof), or (iii) sell or
transfer (or permit any subsidiary to sell or transfer), in one or
more transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its subsidiaries
taken as a whole, to any other Person (other than the Company and/or
any of its Subsidiaries in one or more transactions each of which does
not violate Section 14(b) hereof) if (x) at the time of or after such
consolidation, merger or sale there are any charter or by-law
provisions of the Company or any other Person or any rights, warrants
or other instruments of the Company or any other Person outstanding or
agreements in effect or any other action taken which would diminish or
otherwise eliminate the benefits intended to be afforded by the Rights
or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates and
Associates. The Company shall not consummate any such consolidation,
merger or sale unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a supplemental
agreement evidencing compliance with this subsection.
(b) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 24 or
Section 28 hereof, take any action the purpose or effect of which is
to diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
Section 15. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in Section 11(n), or to
distribute Rights Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right. For
the purposes of this Section 15(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price of the Rights
for any day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if
the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or,
if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in
the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights
the fair value of the Rights on such date as determined reasonably and
with good faith to the holders of Rights by the Board of Directors of
the Company shall be used and shall be binding on the Rights Agent.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are one
one-hundredths or integral multiples of one one-hundredth of a share
of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock
(other than fractions which are one one-hundredths or integral
multiples of one one-hundredth of a share of Preferred Stock).
Fractions of shares of Preferred Stock in integral multiples of one
one-hundredth of a share of Preferred Stock may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by
it, provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as beneficial owners of the
shares of Preferred Stock represented by such depositary receipts. In
lieu of fractional shares of Preferred Stock that are not one
one-hundredth or integral multiples of one one-hundredth of a share of
Preferred Stock, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of one share of Preferred Stock. For purposes of this
Section 15(b), the current market value of a share of Preferred Stock
shall be the closing price of a share of Preferred Stock (as
determined pursuant to Section 11(d)(ii) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive
common stock equivalents (other than Preferred Stock) or other
securities upon the exercise of a Right, the Company shall not be
required to issue fractions of shares or units of such common stock
equivalents or other securities upon exercise of the Rights or to
distribute certificates which evidence fractional shares of such
common stock equivalents or other securities. In lieu of fractional
shares or units of such common stock equivalents or other securities,
the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of a share
or unit of such common stock equivalent or other securities. For
purposes of this Section 15(c), the current market value shall be
determined in the manner set forth in Section 11(d) hereof for the
Trading Day immediately prior to the date of such exercise and, if
such common stock equivalent is not traded, each such common stock
equivalent shall have the value of one one-hundredth of a share of
Preferred Stock.
(d) Except as otherwise expressly provided herein, the
holder of a Right by the acceptance of the Rights expressly waives his
right to receive any fractional Rights or any fractional shares upon
exercise of a Right.
Section 16. Rights of Action. All rights of action in
respect of this Agreement except those rights of action vested in the
Rights Agent pursuant to Sections 19 and 21 hereof are vested in the
respective registered holders of the Rights Certificates (and, prior
to the Distribution Date, the registered holders of the Common Stock);
and any registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the
Rights evidenced by such Rights Certificate in the manner provided in
such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement. Holders
of Rights shall be entitled to recover the reasonable costs and
expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Agreement.
Section 17. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and
the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of
transfer;
(c) subject to Section 6 and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name 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 Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary;
and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or a beneficial interest in 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 Company must use its best efforts
to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 18. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the
holder of the shares of Preferred Stock, Common Stock or any other
securities of the Company which may at any time 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 stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive
dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights evidenced
by such Rights Certificate shall have been exercised in accordance
with the provisions thereof.
Section 19. Concerning the Rights Agent. The Company agrees
to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and
disbursements and other reasonable disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly
or indirectly. The indemnification provided for hereunder shall
survive the expiration of the Rights and the termination of this
Agreement.
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 Common Stock
or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document
believed by it, after proper inquiry or examination, to be genuine and
to be signed, executed and, where necessary, verified or acknowledged,
by the proper Person or Persons.
Section 20. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any corporation succeeding to the corporate trust
or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation
would be eligible for appointment as a successor Rights Agent under
the provisions of Section 22 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this
Agreement, 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 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 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 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 21. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon
the following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall
be bound:
(a) The Rights Agent may consult with legal counsel selected
by it (who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person) be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by a person reasonably believed by the Rights Agent
to be the Chairman of the Board, the President, any Vice President,
the Treasurer, the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own negligence, bad faith or willful misconduct.
(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 as to the fact that it has
countersigned the Rights Certificates) or be required to verify the
same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent)
or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for
any breach by the Company of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of
Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after receipt
of the certificate described in Section 12 hereof); nor shall it be
responsible for any determination by the Board of Directors of the
Company of the current market value of the Rights or Preferred Stock
or Common Stock pursuant to the provisions of Section 15 hereof; nor
shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of
Preferred Stock or other securities to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of
Preferred Stock or other securities will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder and certificates delivered pursuant to any provision hereof
from any person reasonably believed by the Rights Agent to be the
Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary or the Treasurer of the Company,
and is authorized to apply to such officers for advice or instructions
in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance
with instructions of any such person. Any application by the Rights
Agent for written instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken
or omitted by the Rights Agent under this Agreement and the date on
and/or after which such action shall be taken or such omission shall
be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a
proposal included in such application on or after the date specified
in such application (which date shall not be less than five Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing
to any earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall
have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer
or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company or to the holders of the Rights resulting from
any such act, omission, default, neglect or misconduct, provided
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 certificate attached
to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative
response to clause 1 and/or 2 thereof, the Rights Agent shall not take
any further action with respect to such requested exercise of transfer
without first consulting with the Company.
(l) The Rights Agent shall not be required to take notice of
or be deemed to have notice of any fact, event or determination under
this Agreement unless and until the Rights Agent shall be specifically
notified in writing by the Company of such fact, event or
determination.
Section 22. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties
under this Agreement upon 30 days' notice in writing mailed to the
Company and to each transfer agent of the Common Stock and Preferred
Stock by registered or certified mail, and to holders of the Rights
Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock and Preferred Stock
by registered or certified mail, and 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 Company
shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving
notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with
such notice, submit his Rights Certificate for inspection by the
Company), 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
Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of 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 a principal
office in the State of New York or the Commonwealth of Massachusetts,
which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000 or (b) an affiliate of a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and Preferred 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 22, 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 23. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be approved
by its Board of Directors to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of shares 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 of
Common Stock following the Distribution Date and prior to the earliest
of the Redemption Date, the Final Expiration Date and the consummation
of a transaction contemplated by Section 13(e) hereof, the Company (a)
shall with respect to 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, notes or
debentures issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors of the
Company, issue Right Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however,
that no Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
Section 24. Redemption and Termination.
(a) (i) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (x) the time that any
person becomes an Acquiring Person or (y) 5:00 P.M., Boston time,
on the Final 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 or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the
"Redemption Price"), and the Company may, at its option, pay the
Redemption Price either in Common Stock (based on the current per
share market price, as defined in Section 11(d) hereof, of the
Common Stock at the time of redemption) or cash; provided,
however, that if the Company elects to pay the Redemption Price
in Common Stock, the Company shall not be required to issue any
fractional Common Stock and the number of Common Stock issuable
to each holder of Rights shall be rounded down to the next whole
share.
(ii) In addition, the Board of Directors of the Company
may redeem all but not less than all of the then outstanding
Rights at the Redemption Price following the occurrence of a
Stock Acquisition Date but prior to any event described in
Section 13(a), either (x) if each of the following shall have
occurred and remain in effect: (1) a Person who is an Acquiring
Person shall have transferred or otherwise disposed of a number
of voting securities of the Company in a transaction, or series
of transactions, (which did not result in the occurrence of an
event described in Section 11(a)) such that such Person is
thereafter a Beneficial Owner of securities representing 5% or
less of the Voting Power, (2) there are no other Persons,
immediately following the occurrence of the event described in
clause (1), who are Acquiring Persons, and (3) the transfer or
other disposition described in clause (1) above was other than
pursuant to a transaction, or series of transactions, which
directly or indirectly involved the Company or any of its
Subsidiaries or (y) in connection with any event specified in
Sections 11(a)(ii) or 13(a) in which all holders of Common Stock
are offered the same consideration and not involving an
Interested Stockholder or any other Person in which such
Interested Stockholder has any interest, or any other Person
acting directly or indirectly on behalf of or in association with
any such Interested Stockholder or (z) following the occurrence
of an event set forth in, and the expiration of any period during
which the holder of Rights may exercise the rights under, Section
11(a)(ii) if and for as long as the Interested Stockholder is not
thereafter the Beneficial Owner of securities representing 15% or
more of the Voting Power.
(iii) Notwithstanding anything to the contrary in this
Agreement, including, without limitation, the provisions of
Sections 24 (a)(i) and (a)(ii) hereof, in the event that a
majority of the Board of Directors is comprised of persons
elected at a meeting of stockholders who were not nominated by
the Board of Directors in office immediately prior to such
meeting (including successors of such persons elected to the
Board of Directors) with the objective or for the purpose of
either facilitating a Transaction or circumventing directly or
indirectly the provisions of this Section 24(a)(iii), then (1)
the Rights may not be redeemed for a period of 365 days following
the effectiveness of such election if such redemption is
reasonably likely to have the objective, purpose or effect of
facilitating a Transaction, and (2) the Rights may not be
redeemed following such 365-day period if (x) such redemption is
reasonably likely to have the objective, purpose or effect of
facilitating a Transaction and (y) during such 365-day period,
the Company enters into any agreement, arrangement or
understanding with any Transaction Person which is reasonably
likely to have the purpose or effect of facilitating a
Transaction.
(b) In the case of a redemption permitted under Section
24(a)(i), immediately upon the action of the Board of Directors of the
Company ordering the redemption 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 will
terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price. In the case of a redemption
permitted only under Section 24(a)(ii), evidence of which shall have
been filed with the Rights Agent, the right to exercise the Rights
will terminate and represent only the right to receive the Redemption
Price only after ten Business Days following the giving of notice of
such redemption to the holders of such Rights if no event set forth in
Section 11(a)(ii) shall have occurred, and, if such event shall have
occurred, upon the later of ten Business Days following the giving of
such notice or the expiration of any period during which the rights
under Section 11(a)(ii) may be exercised. Within ten days after the
action of the Board of Directors ordering any such redemption of the
Rights, the Company shall give notice of such redemption to the Rights
Agent and the holders of the then outstanding Rights by mailing such
notice to the Rights Agent and to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the
Transfer Agent for the Common Stock. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section 24 and
other than in connection with the purchase of Common Shares prior to
the Distribution Date.
(c) In the case of a redemption permitted under Section
24(a)(i), the Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release
announcing the manner of redemption of the Rights and (ii) mailing
payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry
books of the Transfer Agent of the Common Stock, and upon such action,
all outstanding Rights Certificates shall be null and void without any
further action by the Company.
Section 25. Exchange. (a) The Board of Directors of the
Company may, at its option, at any time after the time that any Person
becomes an Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e) and
Section 11(a)(ii) hereof) for Common Stock of the Company at an
exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction involving either the Common Stock or the Preferred Stock
occurring after the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any subsidiary
of the Company, any employee benefit plan of the Company or any such
subsidiary, any entity holding Common Stock for or pursuant to the
terms of any such plan or any trustee, administrator or fiduciary of
such a plan), together with all Affiliates and Associates 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 of Directors of
the Company ordering the exchange of any Rights pursuant to subsection
(a) of this Section 25 and without any further action and without any
notice, the right to exercise such rights shall terminate and the only
right thereafter of a holder of such Rights shall be to receive that
number of shares of Common Stock equal to the number of such rights
held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books
of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which
the exchange of shares of Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 7(e) and Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 25, the
Company, at its option, may substitute Preferred Stock (or equivalent
preferred stock, as such term is defined in Section 11(b) hereof) for
some or all of the Common Stock exchangeable for Rights, at the
initial rate of one-hundredth of a share of Preferred Stock (or
equivalent preferred stock) for each share of Common Stock, as
appropriately adjusted to reflect adjustments in the voting rights of
the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each share
of Common Stock shall have the same voting rights as one share of
Common Stock.
(d) The Board of Directors of the Company shall not
authorize any exchange transaction referred to in Section 25(a) hereof
unless at the time such exchange is authorized there shall be
sufficient Common Stock or Preferred Stock issued but not outstanding
or authorized but unissued to permit the exchange of Rights as
contemplated in accordance with this Section 25.
Section 26. Notice of Certain Events. In case the Company
shall propose (a) to pay any dividend payable in stock of any class to
the holders of Preferred Stock or to make any other distribution to
the holders of Preferred Stock (other than a regular quarterly cash
dividend out of earnings or retained earnings of the Company) or (b)
to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock
or shares of stock of any class or any other securities, rights or
options, or (c) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (d) to effect any
consolidation or merger into or with any other Person (other than a
subsidiary of the Company in a transaction which does not violate
Section 14(b) hereof), or to effect any sale or other transfer (or to
permit one or more of its subsidiaries to effect any sale or other
transfer), in one or more transactions, of more than 50% of the assets
or earning power of the Company and its subsidiaries (taken as a
whole) to, any other Person (other than the Company and/or any of its
subsidiaries in one or more transactions each of which does not
violate Section 14(b) hereof), or (e) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the
Company shall give to each holder of a Rights Certificate, in
accordance with Section 27 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 the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (a) or (b) above at
least 20 days prior to the record date for determining holders of the
shares of Preferred Stock for purposes of such action, and in the case
of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein by
the holders of the shares of Preferred Stock whichever shall be the
earlier.
In case any of the events set forth in Section 11(a)(ii) of
this Agreement shall occur, then, in any such case, the Company shall
as soon as practicable thereafter give to each holder of a Rights
Certificate, in accordance with Section 27 hereof, a notice of the
occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii)
hereof and all references in the preceding paragraph (a) to Preferred
Stock shall be deemed thereafter to refer also, if appropriate, to
Common Stock and/or, if appropriate, other securities of the Company.
Section 27. 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 or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as
follows:
El Paso Natural Gas Company
1001 Louisiana Street
Houston, Texas 77002
Attention: General Counsel
Subject to the provisions of Section 22, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the 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
Company) as follows:
The First National Bank of Boston
P.O. Box 1865 Mail Stop 45-02-16
Boston, Massachusetts 02105-1865
Attention: Shareholder Services Division
(1997 El Paso Natural Gas Company Rights Agreement)
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Rights
Certificate or, if prior to the Distribution Date, to the holder of
certificates representing Common Stock shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of
the Company.
Section 28. Supplements and Amendments. The Company and the
Rights Agent may from time to time supplement or amend this Agreement
without approval of any holders of Right Certificates in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) prior to the Distribution Date, to change or
supplement the provisions hereunder which the Company may deem
necessary or desirable or (iv) following the Distribution Date, to
shorten or lengthen any time period hereunder or to change or
supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an
Interested Stockholder); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iv) of
this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B)
any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits
to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 28, the Rights Agent shall execute such supplement or
amendment unless the Rights Agent shall have determined in good faith
that such supplement or amendment would adversely affect its interests
under this Agreement. Prior to this Distribution Date, the interests
of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.
Notwithstanding anything contained in this Agreement to the
contrary, in the event that a majority of the Board of Directors is
comprised of persons elected at a meeting of stockholders who were not
nominated by the Board of Directors in office immediately prior to
such meeting (including successors of such persons elected to the
Board of Directors) with the objective or for the purpose of either
facilitating a Transaction or circumventing directly or indirectly the
provisions of this Section 28, then (A) for a period of 365 days
following the effectiveness of such action, this Agreement shall not
be amended or supplemented in any manner reasonably likely to have the
objective, purpose or effect of facilitating a Transaction and (B) no
amendments or supplements may be made following such 365-day period if
(1) such amendment or supplement is reasonably likely to have the
objective, purpose or effect of facilitating a Transaction and (2)
during such 365-day period, the Company enters into any agreement,
arrangement or understanding with any Transaction Person which is
reasonably likely to have the objective, purpose or effect of
facilitating a Transaction.
Section 29. Determination and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any calculation of
the number of shares of Common Stock outstanding at any particular
time, including for purposes of determining the particular percentage
of such outstanding shares of Common Stock or any other securities of
which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board, or
the Company, or as may be necessary or advisable in the administration
of this Agreement, including, without limitation, the right and power
to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of
this Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement and whether any proposed amendment
adversely affects the interests of the holders of Rights
Certificates). 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, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights Certificates and
all other parties, and (y) not subject the Board to any liability to
the holders of the Rights Certificates.
Section 30. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 31. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation
other than the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, the
Common Stock).
Section 32. Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
Section 33. Governing Law. This Agreement, each Right and
each Rights Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and to be
performed entirely within such State.
Section 34. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
Section 35. Descriptive Headings. Descriptive headings of
the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of
any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate seals to
be hereunto affixed and attested, all as of the day and year first
above written.
Attest: EL PASO NATURAL GAS COMPANY
[Seal]
/s/ David L. Siddall By: /s/ H. Brent Austin
- ----------------------------- ----------------------------
Name: David L. Siddall Name: H. Brent Austin
Title: Assistant Secretary Title: Executive Vice President and
Chief Financial Officer
Attest: THE FIRST NATIONAL BANK OF BOSTON
as Rights Agent
[Seal]
/s/ Paul L. Eori By: /s/ Michael J. Lapolla
- ----------------------------- ----------------------------
Name: Paul L. Eori Name: Michael J. Lapolla
Title: Senior Account Manager Title: Administration Manager
Exhibit A
---------
Form of
Certificate of Designation,
Preferences and Rights of
Series A Junior Participating Preferred Stock
of
El Paso Natural Gas Company
(Pursuant to Section 151
of the General Corporation Law of the State of Delaware)
I, Britton White, Jr., Senior Vice President and General
Counsel of El Paso Natural Gas Company (the "Company"), a corporation
organized and existing under the General Corporation Law of the State
of Delaware, in accordance with the provisions of Section 103 thereof,
DO HEREBY CERTIFY as follows:
That pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the said
Corporation, said Board of Directors on July 7, 1992, adopted the
following resolution creating a series of 1,000,000 shares of
Preferred Stock designated as Series A Junior Participating Preferred
Stock:
RESOLVED that pursuant to the authority granted to and
vested in the Board of Directors of this Company in accordance with
the provisions of the Restated Certificate of Incorporation the Board
of Directors hereby creates a series of Preferred Stock of the Company
and hereby states the designation and number of shares, and fixes the
relative rights, preferences and limitations thereof (in addition to
the provisions set forth in the Restated Certificate of Incorporation
which are applicable to the Preferred Stock of all classes and series)
as follows:
Section 1. Designation and Amount. There shall be a series
of Preferred Stock, par value $.0l per share, of the Company which
shall be designated as "Series A Junior Participating Preferred
Stock," par value $.01 per share, and the number of shares
constituting such series shall be 1,000,000. Such number of shares may
be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series
A Junior Participating Preferred Stock to a number less than that of
the shares then outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion
of outstanding securities issued by the Company.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior
Participating Preferred Stock in preference to the holders of shares
of Common Stock, par value $3.00 per share (the "Common Stock"), of
the Company and any other junior stock, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash
on the first day of January, April, July, and October in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $25, or (b)
subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100
times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Junior Participating Preferred Stock. In the event the
Company shall at any time after July 28, 1992 (the "Rights Declaration
Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount to which holders of shares of Series
A Junior Participating Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in
paragraph (A) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $25 per
share on the Series A Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Junior Participating Preferred Stock
unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Participating Preferred Stock in
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series A Junior Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following voting
rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Junior Participating Preferred Stock
shall entitle the holder thereof to 100 votes on all matters submitted
to a vote of the stockholders of the Company. In the event the Company
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each
such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the
holders of shares of Series A Junior Participating Preferred Stock and
the holders of shares of Common Stock shall vote together as one class
on all matters submitted to a vote of stockholders of the Company.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an
amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a
period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series A Junior
Participating Preferred Stock then outstanding shall have
been declared and paid or set apart for payment. During each
default period, all holders of Preferred Stock (including
holders of the Series A Junior Participating Preferred
Stock) with dividends in arrears in an amount equal to six
(6) quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two
(2) Directors.
(ii) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Stock may
be exercised initially at a special meeting called pursuant
to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings
of stockholders, provided that neither such voting right nor
the right of the holders of any other series of Preferred
Stock, if any, to increase in certain cases, the authorized
number of Directors shall be exercised unless the holders of
ten percent (10%) in number of shares of Preferred Stock
outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Preferred Stock of
such voting right. At any meeting at which the holders of
Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the
right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then
exist up to two (2) Directors or, if such right is exercised
at an annual meeting, to elect two (2) Directors. If the
number which may be so elected at any special meeting does
not amount to the required number, the holders of the
Preferred Stock shall have the right to make such increase
in the number of Directors as shall be necessary to permit
the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during
the continuance of such period, the number of Directors
shall not be increased or decreased except by vote of the
holders of Preferred Stock as herein provided or pursuant to
the rights of any equity securities ranking senior to or
pari passu with the Series A Junior Participating Preferred
Stock.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their
right to elect Directors, the Board of Directors may order,
or any stockholder or stockholders owning in the aggregate
not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of the
holders of Preferred Stock, which meeting shall thereupon be
called by the Chairman of the Board or the President and
Chief Executive Officer of the Company. Notice of such
meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this
paragraph (C) (iii) shall be given to each holder of record
of Preferred Stock by mailing a copy of such notice to him
at his last address as the same appears on the books of the
Company. Such meeting shall be called for a time not earlier
than 10 days and not later than 60 days after such order or
request or in default of the calling of such meeting within
60 days after such order or request, such meeting may be
called on similar notice by any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of
the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii),
no such special meeting shall be called during the period
within 60 days immediately preceding the date fixed for the
next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Company if applicable, shall
continue to be entitled to elect the whole number of
Directors until the holders of Preferred Stock shall have
exercised their right to elect two (2) Directors voting as a
class, after the exercise of which right (x) the Directors
so elected by the holders of Preferred Stock shall continue
in office until their successors shall have been elected by
such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as
provided in paragraph (C)(ii) of this Section 3) be filled
by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected
the Director whose office shall become vacant. References in
this paragraph (C) to Directors elected by the holders of a
particular class of stock shall include Directors elected by
such Directors to fill vacancies as provided in clause (y)
of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to
elect Directors shall cease, (y) the term of any Directors
elected by the holders of Preferred Stock as a class shall
terminate, and (z) the number of Directors shall be such
number as may be provided for in the Restated Certificate of
Incorporation or By-laws irrespective of any increase made
pursuant to the provisions of paragraph (C) (ii) of this
Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the Restated
Certificate of Incorporation or By-laws). Any vacancies in
the Board of Directors effected by the provisions of clauses
(y) and (z) in the preceding sentence may be filled by a
majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) Declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire
for consideration any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Junior Participating Preferred Stock;
(ii) Declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock except dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity stock on
which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares
are then entitled;
(iii) Redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock provided that the Company may at any time redeem,
purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Company
ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior
Participating Preferred Stock; or
(iv) Purchase or otherwise acquire for consideration any
shares of Series A Junior Participating Preferred Stock or
any shares of stock ranking on a parity with the Series A
Junior Participating Preferred Stock except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and
other relative rights and preferences of the respective
series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(B) The Company shall not permit any subsidiary of the
Company to purchase or otherwise acquire for consideration any shares
of stock of the Company unless the Company could, under paragraph (A)
of this Section 4, purchase or otherwise acquire such shares at such
time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Company in any manner whatsoever shall be retired and cancelled
promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
(A) Upon any liquidation (voluntary or otherwise),
dissolution or winding up of the Company, no distribution shall be
made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Junior Participating Preferred Stock
shall have received per share, the greater of 100 times $75 or 100
times the payment made per share of Common Stock, plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall
have received an amount per share (the "Common Adjustment") equal to
the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock)
(such number in clause (ii), the "Adjustment Number"). Following the
payment of the full amount of the Series A Liquidation Preference and
the Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders
of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preferred
Stock and Common Stock, on a per share basis, respectively.
(B) In the event there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series A Junior Participating
Preferred Stock then such remaining assets shall be distributed
ratably to the holders of such parity shares in proportion to their
respective liquidation preferences. In the event there are not
sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.
(C) In the event the Company shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment Number
in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If the Company shall
enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property then in any
such event the shares of Series A Junior Participating Preferred Stock
shall at the same time be similarly exchanged or changed in an amount
per share (subject to the provision for adjustment hereinafter set
forth) equal to 100 times the aggregate amount of stock, securities,
cash and/or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or
exchanged. In the event the Company shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A
Junior Participating Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that
are outstanding immediately prior to such event.
Section 8. Redemption. The shares of Series A Junior
Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating
Preferred Stock shall rank junior to all other series of the Company's
Preferred Stock as to the payment of dividends and the distribution of
assets, unless the terms of any such series shall provide otherwise.
Section 10. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder's fractional shares,
to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders
of Series A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, I have executed and subscribed this
Certificate to and do affirm the foregoing as true under penalties of
perjury this 7th day of July, 1992.
By:
--------------------------------
Britton White, Jr.
Senior Vice President
and General Counsel
Attest:
- --------------------------
Assistant Secretary
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- ______Rights
[NOT EXERCISABLE AFTER JULY 7, 2002 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH
IN THE AMENDED AND RESTATED SHAREHOLDER RIGHTS AGREEMENT. THE
RIGHTS REPRESENTED BY THIS CERTIFICATE WERE ISSUED TO A PERSON
WHO WAS AN INTERESTED STOCKHOLDER. THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME VOID TO THE EXTENT PROVIDED
BY, AND UNDER THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
AMENDED AND RESTATED SHAREHOLDER RIGHTS AGREEMENT.]
The portion of the legend in brackets shall be inserted only if applicable.
Rights Certificate
El Paso Natural Gas Company
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 Shareholder Rights Agreement dated as of July 7,
1992, as amended and restated dated as of ________, 1997 (the
"Shareholder Rights Agreement") between El Paso Natural Gas Company, a
Delaware corporation (the "Company"), and The First National Bank of
Boston (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the
Shareholder Rights Agreement) and prior to 5:00 P.M. (Boston time) on
July 7, 2002, at the office of the Rights Agent designated for such
purpose, one one-hundredths of a share of Series A Junior
Participating Preferred Shares (the "Preferred Stock") of the Company,
at a purchase price of $150 per one one-hundredth of a share (the
"Purchase Price"), (unless such rights shall have been previously
redeemed) upon presentation and surrender of this Rights Certificate
with the appropriate Form of Election to Purchase and related
Certificate (attached hereto) duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of one
one-hundredths of a share of Preferred Stock which may be purchased
upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of July 28, 1992,
based on the Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event or a
Section 13 Event (as such terms are defined in the Shareholder Rights
Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Interested Stockholder (as such terms are
defined in the Rights Agreement), (ii) a transferee of any such
Interested Stockholder who becomes a transferee after the Interested
Stockholder becomes such, or (iii) under certain circumstances
specified in the Shareholder Rights Agreement, a transferee of any
such Interested Stockholder who becomes a transferee prior to or
concurrently with the Interested Stockholder becoming such, such
Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.
As provided in the Shareholder Rights Agreement, the
Purchase Price and the number of one one-hundredths of a share of
Preferred Stock or other 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.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Shareholder Rights Agreement, which
terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Shareholder Rights
Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates. Copies of the Shareholder Rights Agreement are on
file at the principal office of the Company, and the Company will mail
to the holder a copy of the Shareholder Rights Agreement within ten
days of receipt by the Company's corporate secretary of a written
request therefor.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office of the
Shareholder Services Division of the Rights Agent, may be exercised
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 Preferred stock 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 Shareholder Rights
Agreement, the Rights evidenced by this Certificate may be redeemed by
the Company at its option at a redemption price of $.01 per Right
(subject to adjustment as provided in the Shareholder Rights
Agreement) payable in Common Stock or cash. Subject to the provisions
of the Shareholder Rights Agreement, the Company, at its option, may
elect to mail payment of the redemption price to the registered holder
of the Right at the time of redemption, in which event this
certificate may become void without any further action by the Company.
No fractional shares of Preferred stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-hundredth of a share
of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), but in lieu thereof a cash payment
will be made, as provided in the Shareholder 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 shares of Preferred Stock or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Shareholder Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate
action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Shareholder Rights Agreement),
or to receive dividends or other distributions or to exercise any
preemptive or subscription rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate shall have been exercised
as provided in the Shareholder Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned, either manually or
by facsimile, by the Rights Agent.
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of .
ATTEST: EL PASO NATURAL GAS COMPANY
- ----------------------------- By: ----------------------------
Name: Name:
Title: Title:
Countersigned:
THE FIRST NATIONAL BANK OF BOSTON,
as Rights Agent
- -----------------------------
Authorized Signature
[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 sell, assigns and transfers unto
-----------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------
this Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint ___________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ____________, 19__
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank, savings
association, credit union or trust company having an office or
correspondent in the United States or other eligible guarantor
institution which is a participant in a signature guarantee medallion
program.
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 Interested Stockholder (as such terms are
defined pursuant to the Shareholder 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 from any Person who is, was or subsequently
became an Interested Stockholder.
Dated:___________, 19__ ----------------------------
Signature
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.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise the Rights represented
by the Rights Certificate.)
To EL PASO NATURAL GAS COMPANY:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Rights Certificate to purchase the shares of
Preferred Stock (or such other securities of the Company) issuable
upon the exercise of the Rights and requests that certificates for
such shares be issued in the name of:
- ----------------------------------------------------------------------
(Please insert social security or other identifying number)
- ----------------------------------------------------------------------
(Please print name and address)
- ----------------------------------------------------------------------
If such number of Rights shall not be all the Rights
represented by this Rights Certificate, a new Rights Certificate shall
be registered in the name of and delivered to:
- ----------------------------------------------------------------------
Please insert social security or other identifying number (complete
only if Rights Certificate is to be registered in a name other than
the undersigned)
- ----------------------------------------------------------------------
(Please print name and address)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Dated:______________, 19__
------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., or a commercial bank, savings
association, credit union or trust company having an office or
correspondent in the United States or other eligible guarantor
institution which is a participant in a signature guarantee medallion
program.
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 Interested Stockholder (as such terms are defined pursuant to the
Shareholder Rights Agreement);
(2) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Interested Stockholder (as such terms are defined pursuant to the
Shareholder Rights Agreement);
(3) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently
became an Interested Stockholder.
Dated:______________, 19__
------------------------------
Signature
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.
In the event the certification set forth above in the Form
of Assignment or the Form of Election to Purchase, as the case may be,
is not completed, the Corporation and the Rights Agent will deem the
Beneficial Owner of the Rights evidenced by this Right Certificate to
be an Interested Stockholder (as such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be
honored.
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
BECOMES AN INTERESTED STOCKHOLDER (AS DEFINED IN THE RIGHTS AGREEMENT)
AND CERTAIN RELATED PERSONS, WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME NULL AND VOID.
On July 7, 1992, the Board of Directors of El Paso Natural
Gas Company (the "Company") declared a dividend distribution of one
Right for each outstanding share of common stock, par value $3.00 per
share (the "Common Stock"), of the Company to stockholders of record
at the close of business on July 28, 1992 (the "Record Date"). Except
as set forth below, each Right, when exercisable, entitles the
registered holder to purchase from the Company one one-hundredth of a
share of a new series of preferred stock, designated as "Series A
Junior Participating Preferred Stock", par value $.01 per share (the
"Preferred Stock"), at a price of $150 per one one-hundredth share
(the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in an Amended and Restated
Shareholder Rights Agreement (the "Shareholder Rights Agreement")
between the Company and The First National Bank of Boston.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate
Right certificates will be distributed. Until the earlier to occur of
(i) a public announcement that, without the prior consent of the
Company, a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire beneficial ownership of
securities having 15% or more of the voting power of all outstanding
voting securities of the Company (an "Acquiring Person") or (ii) ten
days following the commencement of (or a public announcement of an
intention to make) a tender offer or exchange offer the consummation
of which would result in any person or group and related persons
becoming an Acquiring Person or (iii) twenty business days prior to
the date on which a Transaction (as defined in the Shareholders Rights
Agreement) is reasonably expected to become effective or be
consummated, without the prior consent of the Company (the earlier of
such dates being called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Stock certificates
outstanding as of the Record Date, by such Common Stock certificate
together with this Summary of Rights. The Shareholder Rights Agreement
provides that, until the Distribution Date, the Rights will be
transferred with and only with Common Stock certificates. From as soon
as practicable after the Record Date and until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date upon transfer or new
issuance of the Common Stock will contain a notation incorporating the
Shareholder Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Stock outstanding as of the
Record Date (with or without this Summary of Rights attached) will
also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the
Rights ("Rights Certificates") will be mailed to holders of record of
the Common Stock as of the close of business on the Distribution Date,
and the separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date.
The Rights will expire on the earliest of (i) July 7, 2002, (ii) the
date of consummation of a merger transaction with a person or group
who acquired Common Stock pursuant to a Permitted Offer (as defined
below) and who is offering the same price per share and form of
consideration paid in the Permitted Offer, (iii) the time at which the
Rights are exchanged pursuant to the Shareholder Rights Agreement or
(iv) the date of redemption by the Company as described below.
The Purchase Price payable, and the number of one-hundredths
of a share of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend
on, or a subdivision, combination or reclassification of the Preferred
Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock, certain
convertible securities or securities having the same or more favorable
rights, privileges and preferences as the Preferred Stock at less than
the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends out
of earnings or retained earnings and dividends payable in Preferred
Stock) or of subscription rights or warrants (other than those
referred to above).
In the event that, after the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such or, if a Transaction is proposed, the
Distribution Date, (i) the Company is involved in a merger or other
business combination transaction in which the holders of all of the
outstanding Common Shares immediately prior to the consummation of the
transaction are not the holders of all of the surviving corporation's
voting power and, in connection with such merger, all or part of the
Common Shares shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (ii)
the Company or its subsidiaries sell, mortgage or transfer assets or
earning power aggregating more than 50% of the assets or earning power
of the Company and its subsidiaries (taken as a whole) (in one
transaction or a series of transactions), in either case with or to
any Interested Stockholder, or, if in such transaction all holders of
Common Stock are not offered the same consideration, any other person,
proper provision shall be made so that following the Distribution Date
each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive,
upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company
(or, in the event there is more than one acquiring company, the
acquiring company receiving the greatest portion of the assets or
earning power transferred) which at the time of such transaction would
have a market value of two times the exercise price of the Right (such
right being called the "Merger Right"). In the event that the Company
is the surviving corporation in a merger and the Common Stock is not
changed or exchanged, or in the event that a person becomes the
beneficial owner of securities having 15% or more of the voting power
of all then outstanding voting securities of the Company (unless
pursuant to a tender offer or exchange offer (other than a tender or
exchange offer which constitutes a Transaction) for all outstanding
shares of Common Stock at a price and on terms determined by at least
a majority of the members of the Board of Directors who are not
officers of the Company to be both adequate and otherwise in the best
interests of the Company and its stockholders (a "Permitted Offer")),
proper provision shall be made so that each holder of a Right will for
a 60-day period thereafter have the right to receive upon exercise
that number of shares of Common Stock having a market value of two
times the exercise price of the Right, to the extent available, and
then (after all authorized and unreserved shares of Common Stock have
been issued) a common stock equivalent (such as the Preferred Stock or
another equity security with at least the same economic value as the
Common Stock or common stock equivalent) having a market value of two
times the exercise price of the Right, with Common Stock to the extent
available being issued first (such right being called the
"Subscription Right"). The holder of a Right will continue to have the
Merger Right whether or not such holder exercises the Subscription
Right. Upon the occurrence of any of the events giving rise to the
exercisability of the Subscription Right or the Merger Right, any
Rights that are or were at any time owned by an Interested Stockholder
engaging in any of such transactions or receiving the benefits thereof
on or after the time the Interested Stockholder becomes such shall
become void insofar as they relate to the Subscription Right or the
Merger Right.
With certain exceptions, no adjustments in the Purchase
Price will be required until cumulative adjustments require an
adjustment of at least 1% in such Purchase Price. No fractional
one-hundredths of a share of Preferred Stock will be issued and, in
lieu thereof, an adjustment in cash will be made based on the market
price of the Common Stock on the last trading date prior to the date
of exercise.
At any time prior to the earlier to occur of (i) a person
becoming an Acquiring Person or (ii) the expiration of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price"), which redemption shall be
effective upon the action of the Board of Directors. Additionally, the
Company may redeem the then outstanding Rights in whole, but not in
part, at the Redemption Price (i) provided that such redemption is
incidental to a merger or other business combination transaction or
series of transactions involving the Company in which all holders of
Common Stock are offered the same consideration but not involving a
Transaction Person (as defined below), (ii) following an event giving
rise to, and the expiration of the exercise period for, the
Subscription Right if and for as long as no person beneficially owns
securities representing 15% or more of the voting power of the
Company's voting securities or (iii) if the Acquiring Person reduces
his ownership below 5% in transactions not involving the Company. The
redemption of Rights described in the preceding sentence shall be
effective only as of such time when the Subscription Right is not
exercisable, and in any event, only after 10 business days' prior
notice. Upon the effective date of the redemption of 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.
The Preferred Stock purchasable upon exercise of the Rights
will be non-redeemable and junior to any other series of preferred
stock the Company may issue (unless otherwise provided in the terms of
such stock). Each share of Preferred Stock will have a preferential
quarterly dividend in an amount equal to 100 times the dividend
declared on each share of Common Stock, but in no event less than $25
(the equivalent of $.25 per common share). In the event of
liquidation, the holders of Preferred Stock will receive a preferred
liquidation payment equal to the greater of 100 times $75 or 100 times
the payment made per each share of Common Stock. Each share of
Preferred Stock will have 100 votes, voting together with the shares
of Common Stock. In the event of any merger, consolidation or other
transaction in which shares of Common Stock are exchanged, each share
of Preferred Stock will be entitled to receive 100 times the amount
and type of consideration received per share of Common Stock. The
rights of the Preferred Stock as to dividends, liquidation and voting,
and in the event of mergers and consolidations, are protected by
customary anti-dilution provisions. Fractional shares of Preferred
Stock will be issuable; however, the Company may elect to distribute
depositary receipts in lieu of such fractional shares. In lieu of
fractional shares other than fractions that are multiples of one
one-hundredth of a share, an adjustment in cash will be made based on
the market price of the Preferred Stock on the last trading date prior
to the date of exercise.
In the event that a majority of the Board of Directors of
the Company is comprised of persons elected at a meeting of
stockholders who were not nominated by the Board of Directors in
office immediately prior to such meeting (including successors of such
persons elected to the Board of Directors), then for 365 days
following such meeting, the Shareholder Rights Agreement may not be
amended and the Rights may not be redeemed if such amendment or
redemption, as the case may be, is reasonably likely to facilitate a
combination or sale, mortgage or other transfer of assets or earning
power (a "Transaction") with a Transaction Person (as defined below).
The Shareholder Rights Agreement may not be amended and the Rights may
not be redeemed thereafter if during such 365 day period the Company
enters into any agreement reasonably likely to facilitate a
Transaction with a Transaction Person and the amendment or redemption,
as the case may be, is reasonably likely to facilitate a Transaction
with a Transaction Person.
A "Transaction Person" with respect to a Transaction means
(x) any Person who (i) is or will become an Acquiring Person or a
Principal Party (as such term is defined in the Shareholder Rights
Agreement) if the Transaction were to be consummated and (ii) either
(A) such Person directly or indirectly proposed or nominated a
director of the Company which director is in office at the time of
consideration of the Transaction, or (B) the Transaction with such
Person was approved by persons elected to the Board of Directors with
the objective, for the purpose or with the effect of facilitating a
merger or consolidation of the Company, a sale, mortgage or transfer,
in one or more transactions, of assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
subsidiaries (taken as a whole) or any transaction which would result
in a Person becoming an Acquiring Person, or (y) an Affiliate or
Associate of such a Person.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends. While
the distribution of the Rights will not be taxable to stockholders of
the Company, stockholders may, depending upon the circumstances,
recognize taxable income should the Rights become exercisable or upon
the occurrence of certain events thereafter.
A copy of the Shareholder Rights Agreement has been filed
with the Securities and Exchange Commission as an Exhibit to the
Company's amendment on Form 8-A/A to the Registration Statement on
Form 8-A. A copy of the Shareholder Rights Agreement is available free
of charge from the Company. This summary description of the Rights
does not purport to be complete and is qualified in its entirety by
reference to the Shareholder Rights Agreement, which is incorporated
herein by reference.
