SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) FEBRUARY 16, 1996
NATIONAL GAS & OIL COMPANY
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(Exact name of registrant as specified in its charter)
Ohio 1-8223 31-1004640
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(State or other jurisdiction of Commission File (IRS Employer
incorporation) Number Identification No.)
1500 Granville Road, Newark, Ohio 43055
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 614-344-2102
Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index - Page 7
Page 1 of 72 Pages
<PAGE>
Item 5. OTHER EVENTS.
On February 16, 1996, the Board of Directors of National Gas & Oil
Company (the "Company") declared a dividend distribution of one Right for each
outstanding share of common stock, without par value (the "Common Stock"), of
the Company to stockholders of record at the close of business on March 1,
1996 (the "Record Date"). Except as set forth below, each Right, when
exercisable, entitles the registered holder to purchase from the Company one
five-hundredth share of a new series of preferred shares, designated as Series
A Preferred Shares (the "Preferred Stock"), at a price of $34.00 per one
five-hundredth share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and National City Bank, as Rights
Agent.
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) 10 days
following a public announcement that, without the prior consent of the
Company, a person or group of affiliated or associated persons (an "Acquiring
Person") 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 or (ii) ten days (or such later date as may be
determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) following the commencement of (or a public
announcement of an intention to make) a tender offer or exchange offer which
would result in any person or group and related persons becoming an Acquiring
Person, 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 following persons are excluded from the definition of Acquiring Person:
the Company, any subsidiary of the Company, any employee benefit plan of the
Company or any subsidiary and a nominee of the Company or a subsidiary holding
shares for or pursuant to any such plan.
The 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 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 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) March 1, 2006, (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, or (iii) the date of redemption by the Company as described
below.
The Purchase Price payable, and the number of shares of the
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 tenth date following first date of a
public announcement by the Company or an Acquiring Person that an Acquiring
Person has become such, the Company is involved in a merger or other business
combination transaction in which the Common Stock is exchanged or changed, or
50% or more of the Company's assets or earning power are sold (in one
transaction or a series of transactions), proper provision shall be made so
that each holder of a Right 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 a
person becomes an Acquiring Person (unless pursuant to a tender offer or
exchange offer for all outstanding shares of Common Stock at the same price
and on the same terms, which price and terms are determined by at least a
majority of certain members of the Board of Directors to be both adequate and
otherwise in the best interests of the Company and its shareholders (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 of the Company 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) 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 Acquiring Person engaging in any of such transactions or
receiving the benefits thereof on or after the time the Acquiring Person
become 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 fractions of shares 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 $0.01 per Right
(the "Redemption Price"), which redemption shall be effective upon the action
of the Board of Directors. Additionally, the Company may thereafter redeem the
then outstanding Rights in whole, but not in part, at the Redemption Price
provided that such redemption is incidental to a merger or other business
combination transaction or series of transactions involving the Company but
not involving an Acquiring Person or any person who was an Acquiring Person or
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 less than 15% or more of the voting power of the
Company voting securities. 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).
The terms of the Rights may be amended by the Company and the
Rights Agent without the consent of the holders of the Rights, including an
amendment to lower the threshold percentage described above so long as such
lowering would not cause any person or group to become an Acquiring Person as
a result thereof, except that from and after the Distribution Date no such
amendment may adversely affect the interests of the holders of the Rights.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
Exhibits.
4. Rights Agreement, dated as of February 16, 1996, between
National Gas & Oil Company and National City Bank.
28(a). Press Release issued February 21, 1996.
28(b). Form of letter to shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: February 26, 1996
National Gas & Oil Company
By /S/ PATRICK J. MCGONAGLE
Patrick J. McGonagle
President
<PAGE>
EXHIBIT INDEX
Exhibit No.
DESCRIPTION PAGE
4 Rights Agreement, dated as of February 16, 1996, ........ 8
between National Gas & Oil Company and National
City Bank.
28(a) Press Release issued February 21, 1996. ................ 66
28(b) Form of letter to shareholders. ........................ 67
EXHIBIT 4
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NATIONAL GAS & OIL COMPANY
and
NATIONAL CITY BANK
Rights Agent
Rights Agreement
Dated as of February 16, 1996
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<PAGE>
TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions................................... 1
Section 2. Appointment of Rights Agent........................... 5
Section 3. Issue of Right Certificates........................... 6
Section 4. Form of Right Certificates............................ 8
Section 5. Countersignature and Registration..................... 8
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates, Mutilated, Destroyed, Lost or Stolen Right
Certificates.......................................... 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights................................................ 9
Section 8. Cancellation and Destruction of Right Certificates ... 12
Section 9. Availability of Preferred Shares...................... 12
Section 10. Preferred Shares Record Date.......................... 12
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights............................................. 13
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares................................................ 22
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power......................................... 22
Section 14. Fractional Rights and Fractional Shares............... 25
Section 15. Rights of Action...................................... 27
Section 16. Agreement of Right Holders............................ 27
Section 17. Right Certificate Holder Not Deemed a
Stockholder .......................................... 28
Section 18. Concerning the Rights Agent........................... 28
Section 19. Merger or Consolidation or Change of Name of Rights
Agent................................................. 29
Section 20. Duties of Rights Agent................................ 29
Section 21. Change of Rights Agent................................ 32
Section 22. Issuance of New Right Certificates.................... 33
Section 23. Redemption............................................ 33
Section 24. Notice of Certain Events.............................. 35
Section 25. Notices............................................... 36
Section 26. Supplements and Amendments............................ 36
Section 27. Determination and Actions by the Board of
Directors, etc........................................ 37
Section 28. Successors............................................ 37
Section 29. Benefits of this Agreement............................ 38
Section 30. Severability.......................................... 38
Section 31. Governing Law......................................... 38
Section 32. Counterparts.......................................... 38
Section 33. Descriptive Headings.................................. 38
Signatures ...................................................... 38
Exhibit A - Certificate of Amendment to Articles of Incorporation Specifying
Express Terms of Series A Preferred Shares
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Rights to Purchase Preferred Shares
<PAGE>
RIGHTS AGREEMENT
Agreement, dated as of February 16, 1996, between National Gas & Oil
Company, an Ohio corporation (the "Company"), and National City Bank, a
national banking association (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common
Share (as hereinafter defined) of the Company outstanding at the close of
business on March 1, 1996 (the "Record Date"), each Right representing the
right to purchase one five-hundredth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set forth, and
has further authorized and directed the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date and
the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
Common Shares of the Company then outstanding (other than as a result of a
Permitted Offer (as hereinafter defined)), but shall not include the Company,
any Subsidiary (as such term is hereinafter defined) of the Company, any
employee benefit plan of the Company or any subsidiary of the Company, or any
entity holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to 15% or more of the Common
Shares of the Company then outstanding; PROVIDED, HOWEVER, that if a Person
shall become the Beneficial Owner of 15% or more of the Common Shares of the
Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner
of any additional Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if a
majority of the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an Acquiring
Person, as defined pursuant to the foregoing provisions of this paragraph (a),
then such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.
(b) "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.
(c) 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 to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
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), 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
or on behalf of 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; PROVIDED, HOWEVER, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own, any security
if the agreement, arrangement or understanding to vote such security (1)
arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report) or if
the agreement, arrangement or understanding to vote such security arises
solely from such Person's acting as a fiduciary or administrator of any
employee benefit plan of the Company or any subsidiary of the Company;
or
(iii) which are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities)
for the purpose of acquiring, holding, voting (except to the extent
contemplated by the proviso of Section 1(c)(ii)(B)) or disposing of any
securities of the Company; provided, however, that no person shall be
deemed the beneficial owner of any security solely by virtue of serving
as an administrator or fiduciary of any employee benefit plan of the
Company or any subsidiary 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.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of Ohio are authorized or
obligated by law or executive order to close.
(e) "Change of Control" shall mean:
(i) The acquisition (other than from the Company) by any person,
entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, (excluding, for this purpose, the Company or its
subsidiaries, or any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership of voting securities of
the Company) of beneficial ownership, (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either the then
outstanding Common Shares or the combined voting power of the Company's
then outstanding voting securities entitled to vote generally in the
election of directors; or
(ii) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (as of the date hereof the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date
hereof who was appointed to the Board by, or whose election, or
nomination for election by the Company's stockholders, was approved or
recommended by, a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an Affiliate or Associate of
an Acquiring Person) shall be, for the purposes of this Agreement,
considered as though such person were a member of the Incumbent Board;
or
(iii) Approval by the shareholders of the Company of a
reorganization, merger, or consolidation, in each case, with respect to
which persons who were the shareholders of the Company immediately prior
to such reorganization, merger or consolidation do not immediately
thereafter, own more than 50% of the combined voting power entitled to
vote generally in the election of directors of the reorganized, merged
or consolidated company's then outstanding voting securities, or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company.
(f) "Close of Business" on any given date shall mean 5:00 p.m., New York
City time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
(g) "Common Shares" when used with reference to the Company shall mean
the common shares, par value $1.00 per share, of the Company. "Common Shares"
when used with reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting power of such
other Person or, if such other Person is a Subsidiary of another Person, the
Person or Persons which ultimately control such first-mentioned Person.
(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 Shareholder" shall mean any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or any other Person in which any
such Acquiring Person, Affiliate or Associate has an interest, or any other
Person acting directly or indirectly on behalf of or in concert with any
Acquiring Person, Affiliate or Associate.
(k) "Permitted Offer" shall mean a tender or exchange offer which is for
all outstanding Common Shares of the Company at the same price and on the same
terms, which price and terms are determined, prior to the purchase of shares
under such tender or exchange offer, by at least a majority of the directors
of the Company, including at least a majority of the directors then comprising
the Incumbent Board, who are not Acquiring Persons or Affiliates, Asociates,
nominees or representatives of an Acquiring Person, to be adequate and
otherwise in the best interests of the Company and its shareholders (other
than the Person or any Affiliate or Associate thereof on whose behalf the
offer is being made) taking into account all factors that such directors may
deem relevant.
(l) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
(m) "Preferred Shares" shall mean shares of Series A Preferred Shares,
without par value, of the Company having the rights, privileges and
preferences set forth in the Form of Certificate of Amendment attached to this
Agreement as Exhibit A.
(n) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(o) "Securities Act" shall have the meaning set forth in Section 7
hereof.
(p) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person
has become such.
(q) "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 equity interest is owned, directly or indirectly, by such Person.
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 Shares) 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.
<PAGE>
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the tenth Business Day after the Shares
Acquisition Date or (ii) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors of the Company prior to such
time as any Person becomes an Acquiring Person) after the date of the
commencement (determined in accordance with Rule 14d-2 under the Exchange Act)
by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such
plan) of, or of the first public announcement of the intention of any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) to commence, a
tender or exchange offer the consummation of which would result in any Person
becoming an Acquiring Person (including any such date which is after the date
of this Agreement and prior to the issuance of the Rights, the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the Rights
will be evidenced by the certificates for Common Shares registered in the
names of the holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates, and (y) the Rights
(and the right to receive Right Certificates therefor) will be transferable
only in connection with the transfer of Common Shares. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the close
of business on the Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right for each Common
Share so held (subject to adjustment as provided herein). As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares,
in substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares as
of the close of business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof. Until the Distribution Date (or the earlier of the Redemption
Date and the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence
of this paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between National
Gas & Oil Company and National City Bank dated as of February 16,
1996, as amended from time to time (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive offices of
National Gas & Oil Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. National Gas & Oil Company will mail to the holder of
this certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. As described in the
Rights Agreement, Rights issued to any Person who becomes an
Acquiring Person (as defined in the Rights Agreement) shall become
null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after
the Record Date but prior to the Distribution Date, any Rights associated with
such Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
form of election to purchase Preferred Shares, the form of assignment and the
form of certification to be printed on the reverse thereof) shall be
substantially the same as Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereof 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 or other trading
market on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Right Certificates
shall entitle the holders thereof to purchase such number of one
five-hundredths of a Preferred Share as shall be set forth therein at the
price per one five-hundredths of a Preferred Share set forth therein (the
"Purchase Price"), but the number of such one five-hundredths of a Preferred
Share and the Purchase Price shall be subject to adjustment as provided
herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, its Chief Financial Officer, or any of
its Vice Presidents, either manually or by facsimile signature, and shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless countersigned. In case any officer of the Company who shall have signed
any of the Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the
Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased
to be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company to sign
such Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its office designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and
the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES, MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Section 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one
five-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the office
of the Rights Agent designated for such purpose. Thereupon the Rights Agent
shall countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will issue, execute and
deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Sections 11(a)(ii) and (iii), the registered holder of
any Right 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 surrender of the Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the Purchase Price for each one five-hundredth of a Preferred
Share (or such other number of shares or other securities) as to which the
Rights are exercised, at or prior to the earliest of (i) the close of business
on March 1, 2006 (the "Final Expiration Date") or (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the "Redemption Date").
(b) The Purchase Price for each one five-hundredth of a Preferred Share
pursuant to the exercise of a Right shall initially be $34.00 shall be subject
to adjustment from time to time as provided 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.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check, bank draft or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent for the Preferred Shares certificates for the number of Preferred Shares
to be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) requisition from the depositary
agent depositary receipts representing such number of one five-hundredths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof, (ii) 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 Right Certificate,
registered in such name or names as may be designated by such holder and (iv)
when appropriate, after receipt, deliver such cash to or upon the order of the
registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, the number of Preferred Shares that
will be sufficient to permit the exercise in full of all outstanding Rights in
accordance with this Section 7.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall
have (i) completed and signed the certification following the form of election
to purchase set forth on the reverse side of the Right Certificate surrendered
for such exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
(g) If then required by applicable law, the Company shall use its best
efforts to (i) prepare and file, as soon as practicable following the
Distribution Date, a registration statement under the Securities Act of 1933,
as amended (the "Securities 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 Securities Act and
the rules and regulations thereunder) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities or (B) the
Final Expiration Date. The Company will also take such action as may be
appropriate under the blue sky laws of the various states. Notwithstanding
anything in this Agreement to the contrary, the Company may temporarily
suspend the exercisability of the Rights in order to prepare, file and cause
to become effective such registration statement. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended. The Company shall thereafter issue
a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless any requisite
qualification in such jurisdiction shall have been obtained.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if delivered or surrendered to the Rights Agent, shall be canceled by it,
and no Right 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 Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the Company, or shall,
at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. AVAILABILITY OF PREFERRED SHARES. The Company covenants and
agrees that it will take all such action as may be necessary to ensure that
all Preferred Shares delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such Preferred Shares (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares 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 Right Certificates to a person other than, or
the issuance or delivery of certificates or depositary receipts for the
Preferred Shares in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
Section 10. PREFERRED SHARES RECORD DATE. Each person in whose name any
certificate for Preferred Shares or other securities is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of record of the Preferred Shares or other securities represented thereby on,
and such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered with the forms of election and
certification duly executed and payment of the Purchase Price (and any
applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the date of
such surrender and payment is a date upon which the Preferred Shares or other
securities 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 Shares or other securities transfer books of the Company are open.
Prior to such exercise of the Rights evidenced thereby, the holder of a Right
Certificate, as such, shall not be entitled to any rights of a holder of
Preferred Shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS. The Purchase Price, the number of Preferred Shares covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (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), 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 which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Shares 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; PROVIDED, HOWEVER, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon exercise of one
Right. 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) Subject to Section 11(a)(iii) of this Agreement, in the event
any Person shall become an Acquiring Person, each holder of a Right shall, for
a period of 60 days after the expiration or termination of the redemption
option set forth in Section 23(b) (provided that, if at any time prior to the
expiration or termination of such redemption option there shall be a temporary
restraining order, a preliminary injunction, an injunction or temporary
suspension by the Board of Directors, or similar obstacle to exercise of the
Rights (the "Injunction") which prevents exercise of the Rights, a new 60 day
period shall commence on the date the Injunction is removed), have a right to
receive, upon exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one five-hundredth of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this
Agreement and in lieu of Preferred Shares, such number of Common Shares of the
Company as shall equal the result obtained by (A) multiplying the then current
Purchase Price by the number of one five-hundredth of a Preferred Share for
which a Right is then exercisable and dividing that product by (B) 50% of the
then current per share market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date such Person became an Acquiring
Person; (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). In the event that
any Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights other than as
authorized by this Agreement.
(iii) Notwithstanding anything in this Agreement to the contrary,
from and after the time any Person becomes an Acquiring Person, any Rights
beneficially owned by (A) such Acquiring Person or an Associate or Affiliate
of such Acquiring Person, (B) a transferee of such Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring
Person became such, or (C) a transferee of such Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person's becoming such and receives such rights pursuant to
either a transfer (whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or to any Person with
whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights, shall become null and void
without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to insure
that the provisions of this Section 11(a)(iii) are complied with, but shall
have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. No Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate, and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights would be void
pursuant to the preceding sentence shall be canceled.
(iv) In the event that there shall not be sufficient treasury or
authorized but unissued (and unreserved) Common Shares to permit the exercise
in full of the Rights in accordance with Section 11(a)(ii) and the Rights
become so exercisable, notwithstanding any other provision of this Agreement,
to the extent necessary and permitted by applicable law, 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, (x) a
number of (or fractions of) Common Shares (up to the maximum number of Common
Shares which may permissibly be issued) and (y) a number of one
five-hundredths of a Preferred Share or a number of, or fractions of other
equity securities of the Company which the Board of Directors of the Company
has determined to have the same aggregate current market value (determined
pursuant to Section 11(d)(i) and (ii) hereof, to the extent applicable,) as
one Common Share (such number of, or fractions of, Preferred Shares or other
equity securities or debt of the Company being referred to as a "common share
equivalent"), equal in the aggregate to the number of Adjustment Shares;
PROVIDED, HOWEVER, if sufficient Common Shares and/or common share equivalents
are unavailable, then the Company shall, to the extent permitted by applicable
law, take all such action as may be necessary to authorize additional Common
Shares or common share equivalents for issuance upon exercise of the Rights,
including the calling of a meeting of shareholders; and PROVIDED, FURTHER,
that if the Company is unable to cause sufficient Common Shares and/or common
share 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 Shares upon exercise at the Adjusted Purchase Price (as
such terms are hereinafter defined). As used herein, the term "Adjusted Number
of Shares" shall be equal to that number of (or fractions of) Common Shares
(and/or common share equivalents) equal to the product of (x) the number of
Adjustment Shares and (y) a fraction, the numerator of which is the number of
Common Shares (and/or common share 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 a suficient number of Common Shares 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 Shares and common share equivalents
upon exercise of the Rights among holders of Rights. To the extent that the
Company determines that some action need be taken pursuant to this Section
11(a)(iv), the Board of Directors may temporarily suspend the exercisability
of the rights for a period of up to 60 days following the date on which the
event described in Section 11(a)(ii) shall have occurred, in order to seek any
authorization of additional Common Shares and/or to decide the appropriate
form of distribution to be made pursuant to the above provision and to
determine the value thereof. In the event of any such suspension, the Company
shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current
per share market price of the Preferred Shares (as defined in Section 11(d))
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 Preferred Shares outstanding on such record date plus the number of
Preferred Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be offered (and/or
the aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the denominator of
which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); PROVIDED,
HOWEVER, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. 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 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.
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the then current per share market price for
the Preferred Shares (as defined in Section 11(d)) on such record date, less
the fair market value (as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; PROVIDED, HOWEVER,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security 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 Security is determined during a period following the announcement by
the issuer of such Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible into such shares,
or (B) any subdivision, combination or reclassification of such Security or
securities convertible into such shares, or (C) any subdivision, combination
or reclassification of such Security 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 per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of such
Security. 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 American Stock Exchange or, if the
Security is not listed or admitted to trading on the American 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 Security is listed or admitted to trading or, if the Security is 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 Quotations System ("NASDAQ") or such
other system then in use, or, if on any such date the Security is 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 Security
selected by the Board of Directors of the Company. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in accordance
with the method set forth in Section 11(d)(i). If the Preferred Shares are not
publicly traded, the "current per share market price" of the Preferred Shares
shall be conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof) multiplied by five hundred. If neither the
Common Shares nor the Preferred Shares are publicly held or so listed or
traded, "current per share market price" 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.
(e) 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 one
one-millionth of a Preferred Share or one ten-thousandth of any other share or
security 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 requires such adjustment or (ii) the date of the expiration of the right
to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred
Shares, 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 Preferred Shares contained in Section 11(a) through (c), inclusive, and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred
Shares 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 five-hundredth of
a Preferred Share 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 five-hundredth of
a Preferred Share (calculated to the nearest one five-hundredth of a Preferred
Share) obtained by (i) multiplying (x) the number of one five-hundredth of a
Preferred Share 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 five-hundredth of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one five-hundredth of a Preferred Share 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 one 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 Right Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such
holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Right
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one five-hundredth of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
five-hundredth of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one five-hundredth of the then stated value, if any, of
the Preferred Shares 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 fully paid
and nonassessable Preferred Shares at such adjusted Purchase Price. If upon
any exercise of the Rights, a holder is to receive a combination of Common
Shares and common share equivalents, a portion of the consideration paid upon
such exercise, equal to at least the then par value of a Common Share of the
Company, shall be allocated as the payment for each Common Share 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
of the Preferred Shares 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 in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their
terms are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Shares shall not be taxable to such
shareholders.
(n) 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 Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A)
the number of one five-hundredth of a Preferred Share purchasable after such
event upon proper exercise of each Right shall be determined by multiplying
the number of one five-hundredth of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (B) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
Common Share outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
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 promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate in accordance with
Section 24 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 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, following the Shares Acquisition Date, directly
or indirectly (x) the Company shall consolidate with, or merge with and into,
any Interested Shareholder or, if in any such merger or consolidation holders
of Common Shares of the Company are not treated alike, any other Person, (y)
the Company shall consolidate with, or merge with any Interested Shareholders
or, if in any such merger or consolidation all holders of Common Shares of the
Company are not treated alike, and the Company shall be the continuing or
surviving corporation of such merger (other than, in the case of either
transaction described in (x) or (y), a merger or consolidation which would
result in all of the voting power represented by the 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 power represented by the securities of the Company
or such surviving entity outstanding immediately after such merger or
consolidation and the holders of such securities not having changed as a
result of such merger or consolidation), 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 Shareholder
or Shareholders or, if in any such transaction all holders of Common Shares of
the Company are not treated alike, any other Person, then, and in each such
case, proper provision shall be made so that (i) following the Distribution
Date, each holder of a Right, subject to Section 11(a)(iii), shall have the
right to receive, upon the exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one five-hundredth of
Preferred Share for which a Right is then exercisable in accordance with the
terms of this Agreement and in lieu of Preferred Shares, such number of shares
of freely tradable Common Shares 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 (A) multiplying the then current Purchase Price by the number of one
five-hundredth of a Preferred Share 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 (B) 50% of the then
current per share market price of the Common Shares 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 apply to such Principal Party; 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 Shares 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 Common Shares
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 Section 13(a), the Person that is the issuer of any
securities into which Common Shares 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 case, (1) if the Common Shares of such Person
are not at such time and have 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 Shares of which are and have 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
Shares 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
Shares 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
authorized shares of its Common Shares that 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 Securities
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 Securities Act) until the
Final 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.
(d) After the Shares Acquisition Date, the Company covenants and agrees
that it shall not (i) consolidate with, (ii) merge with or into, or (iii) sell
or transfer to, 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, any other Person, if at the time of or
after such consolidation, merger or sale there are any charter or bylaw
provisions or any rights, warrants or other instruments or securities
outstanding, agreements in effect or any other action taken which would
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights. 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.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purposes of this Section 14(a), the
current market value of a whole Right shall be the closing price of the Rights
for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price for any day shall
be the last sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
American Stock Exchange or, if the Rights are not listed or admitted to
trading on the American 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 in good faith
by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one
five-hundredth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one five-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
five-hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts; PROVIDED, HOWEVER, that holders of such
depositary receipts shall have all of the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one five-hundredth of a Preferred
Share, the Company shall 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 Preferred Share.
For the purposes of this Section 14(b), the current market value of a
Preferred Share shall be the closing price of a Preferred Share (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares
upon exercise of a Right (except as provided above).
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Sections 18 and 20 hereof, are vested in the respective registered holders of
the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Shares) and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the Common Shares), may,
in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations
under, and injunctive relief against actual or threatened violations of the
obligations 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 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares 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 Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 24 hereof), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
in the premises. The indemnity provided herein 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 Right Certificate or
certificate for the Preferred Shares or Common Shares 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 to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the
shareholder services or corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement any of the Right Certificates
shall have been countersigned but not delivered, any such successor Rights
Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in
its changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its choice (who
may be legal counsel for the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Financial Officer, any
Vice President, the Treasurer or the Secretary of the Company and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify
the same, but all such statements and recitals are and shall be deemed to have
been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall
it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or
any adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Section 3, 11, 13 or 23, or the ascertaining
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate pursuant to Section 12 describing such change
or adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
the Chief Financial Officer, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered by it in good faith in accordance with instructions
of any such officer or for any delay in acting while waiting for those
instructions. 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 with respect to
its duties or obligations under this Rights Agreement and the date on and/or
after which such action shall be taken or omitted and the Rights Agent shall
not be liable for any action taken or omitted in accordance with a proposal
included in any such application on or after the date specified therein (which
date shall not be less than three Business Days after the date such writing is
delivered to the Company unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking or omitting any such
action, the Rights Agent has received written instructions 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, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided 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 Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
executed, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer
agent for the Common Shares or Preferred Shares by registered or certified
mail, and to the holders of the Right 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 for the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make
such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any other state
of the United States 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 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further 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 for the
Common Shares or Preferred Shares, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. REDEMPTION.
(a) The Rights may be redeemed by action of the Board of Directors
pursuant to subsection (b) of this Section 23 and shall not be redeemed in any
other manner.
(b) The Board of Directors of the Company may, at its option, at any
time prior to the earliest of (i) the close of business on (A) the twentieth
day following the Shares Acquisition Date or (B) such date or dates more than
20 days after the Shares Acquisition Date to which such option may be extended
by the Board of Directors (for one or more successive 10 day periods) by
vote(s) first taken or written consent(s) first given on or prior to the
twentieth day following the Shares Acquisition Date and, thereafter, on or
prior to the completion of any such 10 day extension or extensions (or, if the
Shares Acquisition Date shall have occurred prior to the Record Date, the
close of business on (A) the twentieth day following the Record Date or (B)
such date or dates more than 20 days after the Record Date to which such
option may be extended by the Board of Directors (for one or more successive
10 day periods) by vote(s) first taken or written consent(s) first given on or
prior to the twentieth day following the Record Date and, thereafter, on or
prior to the completion of any such 10 day extension or extensions); (ii) such
time on or after the Shares Acquisition Date as there shall have occurred a
Change of Control; or (iii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $.01 (one cent)
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 in Common Shares (based on the
"current per share market price," as defined in Section 11(d) hereof, of the
Common Shares at the time of redemption), cash or any other form of
consideration deemed appropriate by the Board of Directors. The Company's
redemption option pursuant to this Section 23 shall terminate at such time on
or after the Shares Acquisition Date as there shall occur a Change of Control.
The redemption of the Rights by the Board of Directors may be made effective
at such time, on such basis and subject to such conditions as the Board of
Directors in its sole discretion may establish. Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be
exercisable pursuant to Section 11(a)(ii) hereof prior to the expiration or
termination of the Company's right of redemption hereunder.
(c) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to subsection (b) of this
Section 23, 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. The Company shall
promptly give public notice of any such redemption; PROVIDED, HOWEVER, that
the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after such action of the Board of
Directors ordering the redemption of the Rights pursuant to subsection (b) the
Company shall mail a notice of redemption to all the holders of the then
outstanding Rights 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 Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23, and other than in connection with the purchase of
Common Shares prior to the Distribution Date.
(d) 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 for the Common Shares, and
upon such action, all outstanding Right Certificates shall be null and void
without any further action by the Company.
Section 24. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose after the Distribution Date (i) to
pay any dividend payable in stock of any class to the holders of its Preferred
Shares or to make any other distribution to the holders of its Preferred
Shares (other than a regular quarterly cash dividend), (ii) to offer to the
holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or
any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole), to any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common Shares or
to effect a subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 25 hereof, a notice of such proposed
action, which shall specify the record date for the purpose of such stock
dividend, or 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 Common Shares and/or the Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Preferred Shares for purposes of
such action, and in the case of any such other action, at least 10 days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or the Preferred Shares,
whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall occur,
then the Company shall as soon as practicable thereafter give to each holder
of a Right Certificate and, in accordance with Section 25 hereof, a notice of
the occurrence of such event, which notice shall describe the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof.
Section 25. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Rights Agent) as follows:
National Gas & Oil Company
1500 Granville Road, P.O. Drawer 4970
Newark, OH 43058-4970
Attention: President
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
National City Bank
Corporate Trust Department
P.O. Box 94915
Cleveland, OH 44101-4915
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 26. SUPPLEMENTS AND AMENDMENTS. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with respect to the
Rights which the Company may deem necessary or desirable, any such supplement
or amendment to be evidenced by a writing signed by the Company and the Rights
Agent; PROVIDED, HOWEVER, that from and after such time as any Person becomes
an Acquiring Person, this Agreement shall not be amended in any manner which
would adversely affect the interests of the holders of Rights. Without
limiting the foregoing, the Company may, at any time prior to such time as any
Person becomes an Acquiring Person, amend this Agreement to lower the
threshold percentage set forth in Section 1(a) hereof so long as such lowering
would not cause any Person to become an Acquiring Person as a result thereof.
Upon 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 26, 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 interest under this
Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Shares.
Section 27. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding Common Shares 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). 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 Rights Agent and the holders of the Right Certificates, and (y) not
subject the Board to any liability to the holders of the Right Certificates.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. 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 Right Certificates (and, prior
to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 30. 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 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Ohio and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. 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 33. 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, parties hereto have caused this Agreement to be duly
executed, all as of the day and year first above written.
NATIONAL GAS & OIL COMPANY
Attest:
By: /S/ JOHN B. DENISON By: /S/ PATRICK J. MCGONAGLE
Title: SECRETARY Title: PRESIDENT
NATIONAL CITY BANK
Attest:
By: /S/ J. DEAN PRESSON By: /S/ DAVID B. DAVIS
Title: VICE PRESIDENT Title: VICE PRESIDENT
--------------------------------
EXHIBIT A
CERTIFICATE OF AMENDMENT TO
THE ARTICLES OF INCORPORATION OF
NATIONAL GAS & OIL COMPANY
Patrick J. McGonagle, President, and John B. Denison, Secretary, of
National Gas & Oil Company, an Ohio corporation for profit with its principal
place of business at Newark, Ohio, do hereby certify that at a meeting of the
Board of Directors held pursuant to notice on the 16th day of February, 1996,
the following resolution was adopted pursuant to Section 1701.70(B)(1) of the
Ohio Revised Code:
RESOLVED, that, pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of Chapter 1701
of the Ohio Revised Code and by Article Eighth of the Corporation's Articles
of Incorporation, Article Fourth of the Corporation's Articles of
Incorporation is amended to add a new Section A providing for a series of
preferred shares and that the designation and authorized number of shares, and
the relative rights, preferences and limitations of, such series are as
follows:
Section A. SERIES A PREFERRED SHARES. Of the 100,000 serial preferred
shares, without par value, of the Corporation, 28,000 shall constitute a
series of Preferred Shares and shall have, subject and in addition to the
other provisions of this Article Fourth, the following relative rights,
preferences and limitations:
1. DESIGNATION AND AMOUNT. The shares of such series are designated
"Series A Preferred Shares" with the rights, preferences, privileges and
restrictions specified herein (the "Series A Preferred Stock"). 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
Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the corporation convertible into Series A
Preferred Stock.
2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock, par value $1.00 per share (the "Common Stock"),
of the corporation, and of 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 March, June, September and December 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
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provision for
adjustment hereinafter set forth, 500 times the aggregate per share
amount of all cash dividends, and 500 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 Preferred Stock. In the
event the corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A 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 corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
subsection 2 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 $1 per share on the Series A
Preferred Stock shall nevertheless be payable on each subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
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 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 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 Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to one vote on all matters submitted to a vote of the
shareholders of the corporation.
(B) Except as otherwise provided herein, in any other Certificate
of Amendment creating a series of Preferred Stock, or by law, the
holders of shares of Series A Preferred Stock and the holders of shares
of Common Stock and any other capital stock of the corporation having
general voting rights shall vote together as one class on all matters
submitted to a vote of shareholders of the corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A 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.
4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
subsection 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock;
(ii) declare or pay dividends, 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 Preferred Stock, except dividends paid ratably on the Series A
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 junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock,
provided that the corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares
of any stock of the corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A 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 corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any
shares of stock of the corporation unless the corporation could, under
paragraph (A) of this subsection 4, purchase or otherwise acquire such
shares at such time and in such manner.
5. REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased
or otherwise acquired by the corporation in any manner whatsoever shall be
retired and canceled 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
subject to the conditions and restrictions on issuance set forth herein, in
the Restated Certificate of Incorporation, or in any other Certificate of
Determination of Preferences creating a series of Preferred Stock or any
similar stock or as otherwise required by law.
6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the corporation, no distribution shall be made
(1) to the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A Preferred Stock
shall have received $100 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, provided that the holders of shares of Series A Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 500 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, or (2) to the holders of shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such parity stock in proportion to the total amounts to which
the holders of all such shares are entitled upon such liquidation, dissolution
or winding up. In the event the corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares
of Series A Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) 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.
7. CONSOLIDATION, MERGER, ETC. In case the corporation 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 case each share
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 500 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 corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, 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 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 were outstanding immediately prior to such event.
8. NO REDEMPTION. The shares of Series A Preferred Stock shall not be
redeemable.
9. RANK. The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of
any other class of the corporation's Preferred Stock.
IN WITNESS WHEREOF, the undersigned have executed this certificate of
amendment on February ___, 1996.
Patrick J. McGonagle John B. Denison
President Secretary
-------------------------------------
EXHIBIT B
Form of Right Certificate
Certificate No. R- ___ Rights
NOT EXERCISABLE AFTER MARCH 1, 2006 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
NATIONAL GAS & OIL 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 Rights Agreement, dated as of February 16, 1996 (the "Rights Agreement"),
between National Gas & Oil Company, an Ohio corporation (the "Company"), and
National City Bank (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 p.m., New York time, on March 1, 2006 at the
office of the Rights Agent designated for such purpose, or at the office of
its successor as Rights Agent, one five-hundredth of a fully paid
non-assessable Series A Preferred Share, without par value (the "Preferred
Shares"), of the Company, at a purchase price of $34.00 per one five-hundredth
of a Preferred Share (the "Purchase Price"), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
one five-hundredth of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the
number and Purchase Price as of March 1, 1996, based on the Preferred Shares
as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of one five-hundredth of a Preferred Share which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, as amended from time to time, which terms,
provisions and conditions are hereby incorporated herein by reference and made
a part hereof and to which Rights Agreement reference is hereby made for a
full description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the
Right Certificates. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned offices of
the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may
be exchanged for another Right Certificate or Right Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of Preferred Shares as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price
of $.01 (one cent) per Right or (ii) may be exchanged in whole or in part for
Common Shares or Preferred Shares of the Company.
No fractional Preferred Share will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one five-hundredth of a Preferred Share, which fractional
Preferred Share 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 Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in the Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of ____________.
NATIONAL GAS & OIL COMPANY
Attest:
____________________________ By_______________________________
Countersigned:
NATIONAL CITY BANK
as Rights Agent
By__________________________
Authorized Signature
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Right Certificate.)
FOR VALUE RECEIVED ______________________________________________ hereby
sells, assigns and transfers unto
-----------------------------------------------------------------
(Please print name and address of transferee)
- ------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _________________
-----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker or other institution
which is a member of a Medallion Signature Guarantee Program.
- -----------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
-----------------------------------
Signature
-----------------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To NATIONAL GAS & OIL COMPANY
The undersigned hereby irrevocably elects to exercise
_______________________ Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number: ___________________
- -----------------------------------------------------------------
(Please print name and address)
- -----------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number: ___________________
- -----------------------------------------------------------------
(Please print name and address)
- -----------------------------------------------------------------
Dated: ______________
-----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker or other institution
which is a member of a Medallion Signature Guarantee Program.
<PAGE>
Form of Reverse Side of Right Certificate -- continued
- -----------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
-----------------------------------
Signature
- -----------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase,
as the case may be, must conform to the name as written upon the face of this
Right 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
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such assignment
or Election to Purchase will not be honored.
<PAGE>
-------------------------------------
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On February 16, 1996, the Board of Directors of National Gas & Oil
Company (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding common share, par value $1.00 per share
(the "Common Shares"), of the Company. The dividend is payable on March 1,
1996 (the "Record Date") to the shareholders of record on that date. Each
Right entitles the registered holder to purchase from the Company one
five-hundredth of a Series A Preferred Share, without par value (the
"Preferred Shares"), of the Company at a price of $34.00 (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement dated as of February 16, 1996 (the "Rights
Agreement"), between the Company and National City Bank, as Rights Agent (the
"Rights Agent").
The Rights Agreement provides that the Rights will be evidenced by the
share certificates representing the Common Shares (to which a copy of this
Summary of Rights may be attached), and no separate Right Certificates, as
defined, will be distributed until the earlier to occur of (i) 10 business
days following a public announcement that a person or group of affiliated or
associated persons (excluding, among other persons, the Company, any
subsidiary of the Company or any employee benefit plan of the Company or any
such subsidiary) have acquired, except pursuant to a Permitted Offer (as
hereinafter defined), beneficial ownership of 15% or more of the outstanding
Common Shares (an "Acquiring Person") or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such
time as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in a
person or group becoming an Acquiring Person (the earlier of such dates being
called the "Distribution Date").
Until the Distribution Date (or earlier redemption or expiration of the
Rights), the Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights) the surrender for transfer
of any certificates for Common Shares outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on March 1, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding Common
Shares at the same price and on the same terms, which price and terms are
determined by a majority of certain members of the Board of Directors to be
adequate and in the best interests of the Company, other than such Acquiring
Person, its affiliates and associates (a "Permitted Offer")), each holder of a
Right will thereafter have the right (the "Flip-In Right") to receive upon
excercise the number of Common Shares or of one five-hundredths of a Preferred
Share (or, in certain circumstances, other securities of the Company) having a
value (immediately prior to such triggering event) equal to two times the
exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficialy
owned by any Acquiring Person or any affiliate or associate thereof will be
null and void.
In the event that, at any time following the Shares Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction 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, or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate or any other
person in which such Acquiring Person, affiliate or associate has an interest
or any person acting on behalf of or in concert with such Acquiring Person,
affiliate or associate, or, if in such transaction all holders of Common
Shares are not treated alike, any other person, then each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over Right") to receive, upon exercise,
common shares of the acquiring company having a value equal to two times the
exercise price of the Right. The holder of a Right will continue to have the
Flip-Over Right whether or not such holder exercises or surrenders the Flip-In
Right.
The Purchase Price payable, and the number of Preferred Shares or other
securities 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 Shares,
(ii) upon the grant to holders of the Preferred Shares of certain rights or
warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less
than the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one five-hundredth of
a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but will be entitled to an
aggregate dividend of 500 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares will be entitled to
a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 500 times the payment made per Common
Share. Each Preferred Share will have one vote, voting together with the
Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 500 times the amount received per Common Share. These
rights are protected by customary anti-dilution provisions. Because of the
nature of the Preferred Shares' dividend and liquidation rights, the value of
one five-hundredth of a Preferred Share purchasable upon exercise of each
Right should approximate the value of one Common Share. The Preferred Shares
rank junior to any other series of the Company's preferred shares.
At any time prior to the earliest of (i) the close of business on the
twentieth day following the first public announcement that a person or group
has become an Acquiring Person (subject to extension for one or more
successive 10 day periods pursuant to the Rights Agreement), (ii) such time on
or after the first public announcement that a person or group has become an
Acquiring Person as there shall have occurred a Change of Control (as defined
in the Rights Agreement) of the Company, or (iii) the final Expiration Date,
the Board of Directors of the Company may redeem the Rights in whole, but not
in part, at a price of $.01 (one cent) per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time on such basis with
such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any 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.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one five-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash may be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including the
adoption, prior to the time that there exists an Acquiring Person, of an
amendment to lower the threshold percentage described above so long as such
lowering would not cause any person or group to become an Acquiring Person as
a result thereof, except that from and after such time as there exists an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights other than as authorized by the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, no
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated
February ___, 1996. A copy of the Rights Agreement is available free of charge
from the Company by writing to: Secretary, National Gas & Oil Company, 1500
Granville Road, P.O. Drawer 4970, Newark, Ohio 43058-4970. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
EXHIBIT 28(a)
PRESS RELEASE
IMMEDIATE
NATIONAL GAS & OIL COMPANY ADOPTS SHAREHOLDER RIGHTS PLAN
NEWARK, OHIO. February 21, 1996 -- The Board of Directors of National Gas &
Oil Company today announced that it has adopted a Shareholder Rights Plan
designed to protect shareholders from attempts to acquire control of National
at an inadequate price.
The plan provides for the distribution of one Preferred Stock Purchase
Right as a dividend for each outstanding common share. Each right entitles
shareholders to buy one five-hundredth of a share of a new series of preferred
shares for $34.00. Each one five-hundredth of a preferred share is intended to
be the practical economic equivalent of a common share. The rights may be
exercised only if a person or group acquires 15 percent or more of the
National common shares. National may redeem the rights at $0.01 (one cent)
each at any time before a buyer acquires 15 percent of the Company's common
shares, and thereafter under certain circumstances.
A Company spokesman said, "The program is not aimed at preventing a
takeover, but to encourage a buyer to negotiate appropriately with the Board
prior to attempting a takeover. The rights will help the Board ensure that all
National shareholders realize the long-term value of their investment in the
Company."
"In addition, the plan should provide additional protection to our
shareholders from the negative effects of abusive share-accumulation tactics
such as 'greenmail', 'two-tier' takeover attempts and tender offers that do
not offer an adequate price to all shareholders."
The spokesman also noted that the plan was not created in response to
any known takeover effort.
Under certain circumstances, including the acquisition of 15 percent of
National stock, all rights holders except the acquirer may purchase National
stock having a value of twice the exercise price of the rights. If National is
acquired in a merger after the acquisition of 15 percent of National stock,
rights holders may purchase the acquirer's shares at a similar discount.
The dividend distribution will be payable to shareholders of record on
March 1, 1996. The rights will expire 10 years later. The rights distribution
is not taxable to shareholders.
The rights distribution is described in more detail in a letter that is
being mailed to all National shareholders.
National, through its operating subsidiaries, is engaged in gas sales
and transportation and oil and gas production and marketing.
EXHIBIT 28(b)
[National Gas & Oil Company letterhead]
March 1, 1996
To Our Shareholders:
Your Board of Directors has adopted a Shareholder Rights Plan. The
Plan provides for a dividend distribution of one Preferred Share Purchase
Right for each National common share you own. We are enclosing with this
letter a summary description of the principal features of the Plan. This
letter summarizes the Directors' reasons for adopting it.
The Shareholders Rights Plan is designed to protect shareholders
against unsolicited attempts to acquire control of National, whether through
accumulation of shares in the open market or tender offers that involve
abusive tactics or that do not offer what the Board feels to be an adequate
price to all shareholders. The Plan also addresses some of the disruptions
created by market accumulators who may seek a sale of National to serve their
own interests rather than yours or who demand "greenmail."
Many other companies have adopted plans similar to the kind we
approved. We consider the Plan to be a valuable protection of your right to
retain an equity investment in National and the full value of that investment,
while not foreclosing a fair acquisition bid for National. The Plan has been
adopted in order to assure the Board the ability to protect your interests.
The Shareholder Rights Plan is not intended to prevent a takeover of National
or a proxy contest and will not do so.
Adoption of the Plan will not weaken the financial condition of
National or interfere with its business plans. Issuance of the Rights has no
dilutive effect, will not affect reported earning per share, is not taxable to
National or to shareholders, and will not change the way in which the common
shares are traded.
The dividend distribution will be payable to shareholders of
record on March 1, 1996. No certificates representing the Rights will be
distributed initially, and the Rights will trade with and be represented by
the certificates for common shares. As more fully described in the Summary
attached to this letter, ten days after the announcement that a person or
group has acquired 15% or more of National's common shares without the prior
approval of National's Board, or ten business days (unless such period is
extended by the Board) after the announcement that a person or group has
commenced a tender offer the consummation of which would result in such person
or group owning 15% or more of the common shares (even if no purchases
actually occur), the Rights will become exercisable, and separate certificates
representing the Rights will be distributed. The Rights will expire ten years
later on March 1, 2006.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On February 16, 1996, the Board of Directors of National Gas & Oil
Company (the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding common share, par value $1.00 per share
(the "Common Shares"), of the Company. The dividend is payable on March 1,
1996 (the "Record Date") to the shareholders of record on that date. Each
Right entitles the registered holder to purchase from the Company one
five-hundredth of a Series A Preferred Share, without par value (the
"Preferred Shares"), of the Company at a price of $34.00 (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement dated as of February 16, 1996 (the "Rights
Agreement"), between the Company and National City Bank, as Rights Agent (the
"Rights Agent").
The Rights Agreement provides that the Rights will be evidenced by the
share certificates representing the Common Shares (to which a copy of this
Summary of Rights may be attached), and no separate Right Certificates, as
defined, will be distributed until the earlier to occur of (i) 10 business
days following a public announcement that a person or group of affiliated or
associated persons (excluding, among other persons, the Company, any
subsidiary of the Company or any employee benefit plan of the Company or any
such subsidiary) have acquired, except pursuant to a Permitted Offer (as
hereinafter defined), beneficial ownership of 15% or more of the outstanding
Common Shares (an "Acquiring Person") or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such
time as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a
tender offer or exchange offer the consummation of which would result in a
person or group becoming an Acquiring Person (the earlier of such dates being
called the "Distribution Date").
Until the Distribution Date (or earlier redemption or expiration of the
Rights), the Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date upon
transfer or new issuance of Common Shares will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights) the surrender for transfer
of any certificates for Common Shares outstanding as of the Record Date, even
without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common
Shares as of the close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on March 1, 2006 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company as described below.
In the event that any person becomes an Acquiring Person (except
pursuant to a tender or exchange offer which is for all outstanding Common
Shares at the same price and on the same terms, which price and terms are
determined by a majority of certain members of the Board of Directors to be
adequate and in the best interests of the Company, other than such Acquiring
Person, its affiliates and associates (a "Permitted Offer")), each holder of a
Right will thereafter have the right (the "Flip-In Right") to receive upon
excercise the number of Common Shares or of one five-hundredths of a Preferred
Share (or, in certain circumstances, other securities of the Company) having a
value (immediately prior to such triggering event) equal to two times the
exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of the event described above, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were, beneficialy
owned by any Acquiring Person or any affiliate or associate thereof will be
null and void.
In the event that, at any time following the Shares Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction 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, or (ii) more than 50% of
the Company's assets or earning power is sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate or any other
person in which such Acquiring Person, affiliate or associate has an interest
or any person acting on behalf of or in concert with such Acquiring Person,
affiliate or associate, or, if in such transaction all holders of Common
Shares are not treated alike, any other person, then each holder of a Right
(except Rights which previously have been voided as set forth above) shall
thereafter have the right (the "Flip-Over Right") to receive, upon exercise,
common shares of the acquiring company having a value equal to two times the
exercise price of the Right. The holder of a Right will continue to have the
Flip-Over Right whether or not such holder exercises or surrenders the Flip-In
Right.
The Purchase Price payable, and the number of Preferred Shares or other
securities 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 Shares,
(ii) upon the grant to holders of the Preferred Shares of certain rights or
warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less
than the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one five-hundredth of
a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1.00 per share but will be entitled to an
aggregate dividend of 500 times the dividend declared per Common Share. In the
event of liquidation, the holders of the Preferred Shares will be entitled to
a minimum preferential liquidation payment of $100 per share but will be
entitled to an aggregate payment of 500 times the payment made per Common
Share. Each Preferred Share will have one vote, voting together with the
Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 500 times the amount received per Common Share. These
rights are protected by customary anti-dilution provisions. Because of the
nature of the Preferred Shares' dividend and liquidation rights, the value of
one five-hundredth of a Preferred Share purchasable upon exercise of each
Right should approximate the value of one Common Share. The Preferred Shares
rank junior to any other series of the Company's preferred shares.
At any time prior to the earliest of (i) the close of business on the
twentieth day following the first public announcement that a person or group
has become an Acquiring Person (subject to extension for one or more
successive 10 day periods pursuant to the Rights Agreement), (ii) such time on
or after the first public announcement that a person or group has become an
Acquiring Person as there shall have occurred a Change of Control (as defined
in the Rights Agreement) of the Company, or (iii) the final Expiration Date,
the Board of Directors of the Company may redeem the Rights in whole, but not
in part, at a price of $.01 (one cent) per Right (the "Redemption Price"). The
redemption of the Rights may be made effective at such time on such basis with
such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any 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.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one five-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash may be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including the
adoption, prior to the time that there exists an Acquiring Person, of an
amendment to lower the threshold percentage described above so long as such
lowering would not cause any person or group to become an Acquiring Person as
a result thereof, except that from and after such time as there exists an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights other than as authorized by the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, no
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated
February 26, 1996. A copy of the Rights Agreement is available free of charge
from the Company by writing to: Secretary, National Gas & Oil Company, 1500
Granville Road, P.O. Drawer 4970, Newark, Ohio 43058-4970. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.
