<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
-------------------------
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF
SECURITIES PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
North Carolina Natural Gas Corporation
(Exact name of registrant as specified in its charter)
Delaware 56-0646235
- ------------------ -----------------------
(State of Incorporation (IRS Employer
or organization) Identification No.)
150 Rowan Street, Fayetteville, North Carolina 28301
------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class if to be registered
- ------------------- ------------------------------
Common Stock New York Stock Exchange
$2.50 par value
If this form relates to the registration of a class of securities pursuant
to Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box [X].
<PAGE> 2
Index to Exhibits Appears on Page 7
ITEM 1. Description of Registrant's Securities to be Registered.
On October 7, 1997, the Board of Directors of North Carolina
Natural Gas Corporation (the "Company") declared a dividend distribution of
one right (a "Right") for each outstanding share of Common Stock, par value
$2.50 per share (the "Common Shares"), of the Company. The distribution
is payable on November 10, 1997 (the "Record Date") to the stockholders of
record as of the close of business on the Record Date. A description of
the Company's Common Shares contained in the Company's Amendment No. 1 to
Form S-2 Registration Statement as filed with the Securities and Exchange
Commission on January 27, 1993 is incorporated herein by reference. Each
Right entitles the registered holder to purchase from the Company one
Common Share at a price of $100 (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a
Rights Agreement, dated as of October 7, 1997 (the "Rights Agreement"),
between the Company and Wachovia Bank, N.A., as Rights Agent (the "Rights
Agent").
Until the earliest to occur of (i) the close of business on the
tenth calendar day (or such later date as may be specified by the Board of
Directors) following a public announcement that a person or group of
affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding Common
Shares (an "Acquiring Person"), (ii) the close of business on the tenth
calendar day following the commencement of a tender offer or exchange
offer by a person or group of affiliated or associated persons, the
consummation of which would result in beneficial ownership by such person or
group of 15% or more of the outstanding Common Shares, or (iii) the close of
business on the tenth calendar day following the first date of public
announcement of the first occurrence of a Flip-in Event or a Flip-over Event
(as such terms are hereinafter defined) (the earliest of such dates being
hereinafter called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Share certificates outstanding as of the
Record Date, by such Common Share certificates.
The Rights Agreement provides that, until the Distribution Date, 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 in respect of which Rights have been issued
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (the "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.
No Right is exercisable at any time prior to the Distribution
Date. The Rights will expire on November 10, 2007 (the "Final Expiration
Date") unless earlier redeemed or exchanged by the Company as described
below. Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the company, including without limitation the
right to vote or to receive dividends.
<PAGE> 3
The Purchase Price payable, and the number of Common 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 Common Shares, (ii) upon the grant to holders of the Common Shares of
certain rights or warrants to subscribe for or purchase Common Shares at a
price, or securities convertible into Common Shares with a conversion price,
less than the then current market price of the Common shares or (iii) upon the
distribution to holders of the Common Shares of evidences of indebtedness or
cash (excluding regular periodic cash dividends), assets, stock (excluding
dividends payable in Common Shares) or of subscription rights or warrants (other
than those referred to above).
In the event (a "Flip-in Event") that (i) any person or group of
affiliated or associated persons becomes the beneficial owner of 15% or more of
the outstanding Common Shares, (ii) any Acquiring Person merges into or combines
with the Company and the Company is the surviving corporation or any Acquiring
Person effects certain other transactions with the Company, as described in the
Rights Agreement, or (iii) during such time as there is an Acquiring Person,
there shall be any reclassification of securities or recapitalization or
reorganization of the Company which has the effect of increasing by more than 1%
the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its subsidiaries beneficially owned by the
Acquiring Person, proper provision shall be made so that each holder of a Right,
other than Rights that are or were owned beneficially by the Acquiring Person
(which, from and after the later of the Distribution Date and the date of the
earliest of any such events, will be void), will thereafter have the right to
receive, upon exercise thereof at the then current exercise price of the Right,
that number of Common Shares (or, under certain circumstances, an economically
equivalent security or securities of the Company) having a market value of two
times the exercise price of the Right.
To illustrate the operation of such an adjustment, at a Purchase
Price of $100, assuming the current market price (as determined pursuant to the
provisions of the Rights Agreement) per Common Share were $50, each Right not
owned beneficially by an Acquiring Person at or after the time of such an
occurrence would entitle its holder to purchase (after the Distribution Date)
from the Company four (4) Common Shares (having a market value of $200) for
$100.
In the event (a "Flip-over Event") that, following the first date
of public announcement that a person has become an Acquiring Person, (i) the
Company merges with or into any person and the Company is not the surviving
corporation, (ii) any person merges with or into the Company and the Company is
the surviving corporation, but its Common Shares are changed or exchanged, or
(iii) 50% or more of the Company's assets or earning power, including without
limitation securities creating obligations of the Company, are sold, proper
provision shall be made so that each holder of a Right will 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 (or, under certain
circumstances, an economically equivalent security or securities) of such other
person which at the time of such transaction would have a market value of two
times the exercise price of the Right.
At any time after the later of the Distribution Date and the first
occurrence of a Flip-in Event or Flip-over Event and prior to the acquisition by
any person or group of affiliated or associated persons of 15% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than any Rights which have become void), in whole or in part,
at an exchange ratio of one Common Share per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment in the
Purchase Price of at least 1%. The Company is not required to issue fractional
Common Shares or other securities issuable upon the exercise of Rights. In lieu
of issuing such securities, the Company may make a cash payment, as provided in
the Rights Agreement.
<PAGE> 4
The Company may redeem the Rights in whole, but not in part,
at a price of $0.01 per Right (the "Redemption Price"), at any time prior to the
close of business on the later of (i) the Distribution Date and (ii) the first
date of public announcement that a person has become an Acquiring Person.
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.
The Rights Agreement may be amended by the Company without the
approval of any holders of Right Certificates, including amendments which add
other events requiring adjustment to the purchase price payable and the number
of Common Shares or other securities issuable upon the exercise of the Rights or
which modify procedures relating to the redemption of the Rights, provided that
no amendment may be made which decreases the stated Redemption Price or the
period of time remaining until the Final Expiration Date or which modifies a
time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since (subject to the limitations described above) the
Rights may be redeemed by the Company at the Redemption Price prior to the time
that the Rights would otherwise become exercisable, or if later, the time that a
person or group has become an Acquiring Person.
By Order issued October 6, 1997, the North Carolina Utilities
Commission authorized the Company to reserve Common Shares for issuance under
the Rights Agreement and to issue such Common Shares in the future in accordance
with the terms of the Rights Agreement.
The Rights Agreement, which includes the form of Right Certificate
as an exhibit thereto, and the forms of press release and letter to stockholders
announcing the declaration of the dividend distribution of the Rights are
attached hereto as exhibits and are incorporated herein by this reference. The
foregoing description of the Rights does not purport to be complete and is
qualified in its entirety by reference to such exhibits.
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ITEM 2. Exhibits.
1. Form of Right Certificate (Exhibit A to the Rights Agreement
filed as Exhibit 2 hereto).
2. Rights Agreement.
3. Summary of Rights to Purchase Common Shares (Exhibit B to the
Rights Agreement filed as Exhibit 2 hereto).
4. Form of press release dated October 24, 1997.
5. Form of letter to stockholders dated October 27, 1997.
<PAGE> 6
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
NORTH CAROLINA NATURAL GAS CORPORATION
By: /s/ Calvin B. Wells
-------------------------------
Calvin B. Wells, President
Date: October 27, 1997
-------------------------------
<PAGE> 7
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Exhibit Page
1 Form of Right Certificate (Exhibit A to the 8
Rights Agreement filed as Exhibit 2 hereto).
2 Rights Agreement. 17
3 Summary of Rights to Purchase Common 50
Shares (Exhibit B to the Rights Agreement
filed as Exhibit 2 hereto).
4 Form of press release dated October 24, 1997. 53
5 Form of letter to stockholders dated October 54
27, 1997.
<PAGE>8
EXHIBIT 1
Form of Right Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER NOVEMBER 10, 2007 OR EARLIER IF REDEEMED. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) MAY BECOME NULL AND VOID.
Right Certificate
North Carolina Natural Gas Corporation
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 October 7, 1997 (the "Rights Agreement"), between North
Carolina Natural Gas Corporation, a Delaware corporation (the "Company"), and
Wachovia Bank, N.A., (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. (Eastern time) on (the tenth anniversary of
the Record Date) at the principal office or offices of the Rights Agent
designated for such purpose, one fully paid nonassessable share of Common Stock,
par value $2.50 per share (the "Common Shares"), of the Company, at a purchase
price of $100 per Common Share (the "Purchase Price"), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase and
related Certificate duly executed. 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. The number of Rights evidenced by this Right Certificate (and the
number of Common Shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price set forth above, are the number and Purchase Price
as of the Record Date, based on the Common Shares as constituted at such date.
<PAGE> 9
As provided in the Rights Agreement, the Purchase Price and the number
and kind of securities issuable upon the exercise of the Rights evidenced by
this Right Certificate are subject to adjustment upon the happening of certain
events.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances specified in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent.
Pursuant to the Rights Agreement, from and after the later of the
Distribution Date and the first occurrence of a Flip-in Event (as such term is
defined in the Rights Agreement), (i) any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Affiliate or Associate of
such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of the
Rights Agreement, (ii) no Right Certificate shall be issued pursuant to the
Rights Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (iii) no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person or
any Affiliate or Associate thereof or to any nominee of such Acquiring Person or
Affiliate or Associate thereof, and (iv) any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person or any Affiliate or Associate
thereof shall be cancelled.
<PAGE> 10
This Right Certificate, with or without other Right Certificates, may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the holder to purchase a like number of Common
Shares (or other securities, as the case may be) as the Right Certificate or
Right Certificates surrendered shall have entitled such holder (or former holder
in the case of a transfer) to purchase, upon presentation and surrender hereof
at the principal office of the Rights Agent designated for such purpose, with
the Form of Assignment (if appropriate) and the related Certificate duly
executed.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a redemption
price of $0.01 per Right. The Rights Agreement may be supplemented and amended
by the Company, as provided therein.
The Company is not required to issue fractional Common Shares or other
securities issuable upon the exercise of any Right or Rights evidenced hereby.
In lieu of issuing such fractional Common Shares or other securities, the
Company may make a cash payment, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the Common
Shares or of any other securities of the Company which may at any time be
issuable upon the exercise of the Right or Rights represented hereby, nor shall
anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised in accordance with
the provisions of 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.
<PAGE> 11
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of October 7, 1997.
ATTEST: North Carolina Natural Gas Corporation
By
- ------------------- ----------------------------------
Secretary Title:
[SEAL]
Countersigned:
______________________________
By ________________________
Authorized Signature
<PAGE>12
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: ____________________, 19__
____________________________________
Signature
Signature Guaranteed:
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CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned, transferred, split up, combined or exchanged by
or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________________, 19___
____________________________________
Signature
<PAGE> 14
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To North Carolina Natural Gas Corporation:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the Common
Shares or other securities issuable upon the exercise of such Rights and
requests that certificates for such securities 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)
______________________________________________________________________________
Optional Election to Exercise without Payment of Cash:
With respect to the exercise of __________ of the Rights specified above,
the undersigned hereby elects to exercise such Rights without payment of
cash and to receive a number of Common Shares or other securities having a
value (as determined pursuant to the Rights Agreement) equal to the
difference between (i) the value of the Common Shares or other securities
that would have been issuable upon the exercise thereof upon payment of the
cash amount as provided in the Rights Agreement, and (ii) the amount of such
cash payment.
Dated: ____________________, 19___
____________________________________
Signature
Signature Guaranteed:
<PAGE> 15
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________________, 19___
____________________________________
Signature
<PAGE> 16
NOTICE
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates must correspond to the name as
written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
<PAGE> 17 Exhibit 2
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of October 7, 1997, (this "Agreement"),
is made and entered into by and between North Carolina Natural Gas Corporation,
a Delaware corporation (the "Company"), and Wachovia Bank, N.A.,
(the "Rights Agent").
RECITALS
WHEREAS, on October 7, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one right ("Right") for
each share of Common Stock, par value $2.50 per share, of the Company (a
"Common Share") outstanding as of the Close of Business (as hereinafter
defined) on November 3, 1997, (the "Record Date"), each Right initially
representing the right to purchase one Common Share, upon the terms and
subject to the conditions herein set forth, and further authorized and
directed the issuance of one Right with respect to each Common Share issued or
delivered by the Company (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date (as hereinafter defined) and the Expiration Date (as
hereinafter defined).
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (other than the Company
or any Subsidiary of the Company or any employee benefit or stock ownership 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) who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the Common Shares then outstanding; provided, however, that a
Person shall not be deemed to have become an Acquiring Person solely as a result
of a reduction in the number of Common Shares outstanding unless and until (i)
such time as such Person or any Affiliate or Associate of such Person shall
thereafter become the Beneficial Owner of any additional Common Shares, other
than as a result of a stock dividend, stock split or similar transaction
effected by the Company in which all holders of Common Shares are treated
equally, or (ii) any other Person who is the Beneficial Owner of any Common
Shares shall thereafter become an Affiliate or Associate of such Person.
<PAGE>18
(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 Exchange Act, as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and to
"beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such right
is exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing), or upon the
exercise of conversion rights, exchange rights, rights, warrants or options, or
otherwise (in each case, other than upon exercise or exchange of the Rights);
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
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of,
including pursuant to any agreement, arrangement or understanding (whether or
not in writing); or
(iii) of which any other Person is the Beneficial Owner, if such
Person or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) with such other
Person (or any of such other Person's Affiliates or Associates) with respect
to acquiring, holding, voting or disposing of any securities of the Company;
provided, however, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, any security (A) if such Person has the right to
vote such security pursuant to an agreement, arrangement or understanding
(whether or not in writing) which (1) arises solely from a revocable proxy 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 of the
Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report), or (B) if such beneficial
ownership arises solely as a result of such Person's status as a "clearing
agency", as defined in Section 3(a)(23) of the Exchange Act; and provided,
further, that nothing in this paragraph (c) shall cause a Person engaged in
business as an underwriter of securities to be the Beneficial Owner of, or to
beneficially own, any securities acquired through such Person's participation in
good faith in an underwriting syndicate until the expiration of 40 calendar days
after the date of such acquisition, or such later date as the Board of Directors
of the Company may determine in any specific case.
(d) "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of North Carolina
(or such other state in which the principal office of the Rights Agent is
located) are authorized or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M.,
Eastern time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern time, on the next
succeeding Business Day.
<PAGE> 19
(f) "Common Shares" when used with reference to the Company shall mean
the Common Stock, par value $2.50 per share, of the Company; provided, however,
that, if the Company is the continuing or surviving corporation in a transaction
described in Section 11(a)(ii) or Section 13(a)(ii) hereof, "Common Shares" when
used with reference to the Company shall mean the capital stock or equity
security with the greatest aggregate voting power of the Company. "Common
Shares" when used with reference to any corporation or other legal entity, other
than the Company, including an Issuer, shall mean the capital stock or equity
security with the greatest aggregate voting power of such corporation or other
legal entity.
(g) "Company" shall mean North Carolina Natural Gas Corporation, a
Delaware corporation.
(h) "Distribution Date" shall mean the earliest of: (i) the Close of
Business on the tenth calendar day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the Share Acquisition Date, (ii) the Close of
Business on the tenth Business Day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by the Board of
Directors of the Company) after the date of the commencement of a tender or
exchange offer by any Person (other than the Company or any Subsidiary of the
Company or any employee benefit or stock ownership 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), if upon the consummation thereof such Person would
be the Beneficial Owner of 15% or more of the outstanding Common Shares, and
(iii) the Close of Business on the tenth calendar day after the first date of
public announcement by the Company or an Acquiring Person (by press release,
filing made with the Securities and Exchange Commission or otherwise) of the
first occurrence of a Triggering Event; provided, however, that if the earliest
of such dates would otherwise occur prior to the Record Date, the Distribution
Date shall mean the Close of Business on the Record Date.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
<PAGE> 20
(j) "Expiration Date" shall mean the earliest of (i) the Close of
Business on the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, and (iii) the time at which all
exercisable Rights are exchanged as provided in Section 27 hereof.
(k) "Final Expiration Date" shall mean the tenth anniversary of the
Record Date.
(1) "Flip-in Event" shall mean any event described in clauses (A), (B) or
(C) of Section 11(a)(ii) hereof.
(m) "Flip-over Event" shall mean any event described in subsections (i),
(ii) or (iii) of Section 13(a) hereof.
(n) "Issuer" shall have the meaning set forth in Section 13(b) hereof.
<PAGE> 21
(o) "NASDAQ" shall mean the National Association of Securities Dealers, Inc.
Automated Quotation System.
(p) "Person" shall mean any individual, firm, corporation, partnership or
other legal entity, and shall include any successor (by merger or otherwise)
of such entity.
(q) "Purchase Price" shall mean initially $100 per Common Share and shall
be subject to adjustment from time to time as provided in this Agreement.
(r) "Redemption Price" shall mean $0.01 per Right, subject to adjustment
by resolution of the Board of Directors of the Company to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof.
(s) "Right" shall have the meaning set forth in the Recitals to this
Agreement.
(t) "Right Certificates" shall mean certificates evidencing the Rights,
in substantially the form of Exhibit A attached hereto.
(u) "Rights Agent" shall mean Wachovia Bank, N.A., unless and until a
successor Rights Agent shall have become such pursuant to the terms of this
Agreement, and thereafter, "Rights Agent" shall mean such successor Rights
Agent.
<PAGE> 22
(v) "Securities Act" shall mean the Securities Act of 1933, as amended.
(w) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person (by press release, filing
made with the Securities and Exchange Commission or otherwise) that an
Acquiring Person has become such.
(x) "Subsidiary" when used with reference to any Person shall mean any
corporation or other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person; provided, however, that for purposes of Section 13(b) hereof,
"Subsidiary" when used with reference to any Person shall mean any corporation
or other legal entity of which at least 20% of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by such
Person.
(y) "Summary of Rights to Purchase Common Shares" shall mean the
Summary of Rights to Purchase Common Shares, in substantially the form of
Exhibit B attached hereto.
(z) "Trading Day" shall mean any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a Business Day.
(aa) "Triggering Event" shall mean any Flip-in Event or Flip-over Event.
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 also be, prior to the Distribution
Date, the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock
Exchange governing transfer agents and registrars. The Company may from time to
time act as Co-Rights Agent or appoint such Co-Rights Agents as it may deem
necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent. To the extent that any Co-Rights Agent takes any action pursuant to this
Agreement, such Co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed upon, the Rights Agent pursuant to the terms of this Agreement.
<PAGE> 23
Section 3. Issue of Right Certificates.
(a) Until the Distribution Date, (i) the Rights shall be evidenced by the
certificates representing Common Shares registered in the names of the record
holders thereof (which certificates representing Common Shares shall also be
deemed to be Right Certificates), together with a copy of the Summary of Rights,
(ii) the Rights shall be transferable only in connection with the transfer of
the underlying Common Shares, and (iii) the surrender for transfer of any
certificates evidencing Common Shares in respect of which Rights have been
issued, with or without a copy of the Summary of Rights, shall also constitute
the transfer of the Rights associated with the Common Shares evidenced by such
certificates.
(b) As promptly as practicable after the Record Date, the Company shall
send a copy of 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
as of such date.
(c) Rights shall be issued by the Company in respect of all Common Shares
(other than Common Shares issued upon the exercise or exchange of any Right)
issued or delivered by the Company (whether originally issued or delivered from
the Company's treasury) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date. Certificates evidencing such Common
Shares shall have stamped on, impressed on, printed on, written on or otherwise
affixed to them the following legend or such similar legend as the Company may
deem appropriate and as is 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 transaction reporting system on which the Common Shares may
from time to time be listed or quoted, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between North Carolina Natural
Gas Corporation and Wachovia Bank, N.A., dated as of October 7, 1997, (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
North Carolina Natural Gas Corporation. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be redeemed, may expire, may be
amended or may be evidenced by separate certificates and no longer be evidenced
<PAGE> 24
by this Certificate. North Carolina Natural Gas Corporation will mail to the
holder of this Certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under certain
circumstances as set forth in the Rights Agreement, Rights beneficially owned by
an Acquiring Person or any Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement) may become null and void.
(d) As promptly as practicable after the Distribution Date, the Company
shall prepare and execute, the Rights Agent will countersign and the Company
shall send or cause to be sent (and the Rights Agent shall, 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, evidencing
one Right for each Common Share so held, subject to adjustment. As of and after
the Distribution Date, the Rights shall be evidenced solely by such Right
Certificates.
Section 4. Form of Right Certificates. The Right Certificates (and the
form of election to purchase and form of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth as Exhibit A
hereto with such changes, marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or transaction reporting system on which the Rights may from time to
time be listed or quoted, or to conform to usage. Subject to the provisions of
Section 22 hereof, the Right Certificates, whenever issued, on their face shall
entitle the holders thereof to purchase such number of Common Shares as shall be
set forth therein at the Purchase Price set forth therein, but the Purchase
Price, the number and kind of securities issuable upon exercise of each Right
and the number of Rights outstanding shall be subject to adjustment as provided
herein.
<PAGE> 25
Section 5. Countersignature and Registration.
(a) The Right Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the 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.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices 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 any transaction
reporting system on which the Rights may from time to time be listed or quoted,
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.
(a) Subject to the provisions of Sections 7(d) and 14 hereof, at
any time after the Close of Business on the Distribution Date and prior to the
Expiration Date, any Right Certificate or Right Certificates representing
exercisable Rights 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 Common Shares (or other securities, as the case may
be) as the Right Certificate or Right Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any such
Right Certificate 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 principal office of the
Rights Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, subject to the provisions of Sections 7(d) and 14
hereof, the Company shall prepare, execute and deliver to the Rights Agent, and
the Rights Agent shall countersign and deliver 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.
<PAGE> 26
(b) 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 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 shall prepare, execute and deliver a new Right
Certificate of like tenor to the Rights Agent and the Rights Agent shall
countersign and deliver such new Right Certificate 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) 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 and prior to the Expiration 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 or
offices of the Rights Agent designated for such purpose, together with payment
in cash, in lawful money of the United States of America by certified check or
bank draft payable to the order of the Company equal to the sum of (i) the
exercise price for the total number of securities as to which such surrendered
Rights are exercised and (ii) an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in accordance with
the provisions of Section 9 hereof. In lieu of the cash payment referred to in
the immediately preceding sentence, following the occurrence of a Triggering
Event the registered holder of a Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part upon
surrender of the Right Certificate as described above together with an election
to exercise such Rights without payment of cash on the reverse side thereof duly
completed. With respect to any Rights as to which such an election is made, the
holder shall receive a number of Common Shares or other securities having a
value equal to the difference between (i) the value of the Common Shares or
other securities that would have been issuable upon payment of the cash amount
as described above, and (ii) the amount of such cash payment. For purposes of
this Section 7(a), the value of any Common Share or other security shall be the
current per share market price of a Common Share (determined pursuant to Section
11(d) hereof) on the Trading Day immediately preceding the date of the first
occurrence of a Triggering Event.
<PAGE> 27
(b) Upon receipt of a Right Certificate representing exercisable Rights
with the form of election to purchase duly executed, accompanied by either
payment as described above or a duly completed election to exercise without
payment of cash, the Rights Agent shall promptly (i) requisition from any
transfer agent of the Common Shares (or make available, if the Rights Agent is
the transfer agent) certificates representing the number of Common Shares to be
purchased (and the Company hereby irrevocably authorizes and directs its
transfer agent to comply with all such requests), (ii) after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder, (iii) when appropriate, requisition from the
Company or any transfer agent therefor (or make available, if the Rights Agent
is the transfer agent) certificates representing the number of equivalent common
shares to be issued in lieu of the issuance of Common Shares in accordance with
the provisions of Section 11(a)(iii) hereof, (iv) when appropriate, after
receipt of such certificates, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, (v) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with the provisions of Section 14
hereof or in lieu of the issuance of Common Shares in accordance with the
provisions of Section 11(a)(iii) hereof, (vi) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such Right
Certificate, and (vii) when appropriate, deliver any due bill or other
instrument provided to the Rights Agent by the Company for delivery to the
registered holder of such Right Certificate as provided by Section 11(l) hereof.
(c) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, the Company shall prepare, execute
and deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent shall countersign and deliver such
new Right Certificate to the registered holder of such Right Certificate or to
his duly authorized assigns, subject to the provisions of Section 14 hereof.
(d) 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 any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 hereof or exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of such
Right Certificate shall have (i) completed and signed the certificate following
the form of assignment or form of election to purchase, as applicable, set forth
on the reverse side of the Right Certificate surrendered for such transfer,
split up, combination, exchange or 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 have reasonably requested.
<PAGE> 28
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
stock transfer agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company. Section 9. Company
Covenants Concerning Securities and Rights. The Company covenants and agrees
that:
(a) So long as the Common Shares issuable upon the exercise of the Rights
may be listed on a national securities exchange, it shall endeavor to cause,
from and after such time as the Rights become exercisable, all securities
reserved for issuance upon the exercise of Rights to be listed on such exchange
upon official notice of issuance.
(b) It shall take all such actions as may be necessary to ensure that all
Common Shares and/or other securities delivered upon exercise of Rights,
at the time of delivery of the certificates for such securities shall be
(subject to payment of the Purchase Price) duly and validly authorized and
issued, fully paid and nonassessable securities.
<PAGE> 29
(c) It shall pay when due and payable any and all federal and state transfer
taxes and charges that may be payable in respect of the issuance or delivery of
the Right Certificates and of any certificates representing securities issued
upon the exercise of Rights; provided, however, that the Company shall not be
required to pay any transfer tax or charge 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 representing securities issued upon the
exercise of Rights in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise, or to issue or
deliver any certificates representing securities issued upon the exercise of any
Rights until any such tax or charge shall have been paid (any such tax or charge
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.
(d) It shall use its best efforts (i) to file on an appropriate form,
as soon as practicable following the later of the first occurrence of a
Triggering Event or the Distribution Date, a registration statement under the
Securities Act with respect to the securities issuable upon exercise of the
Rights, (ii) to cause such registration statement to become effective as soon as
practicable after such filing, and (iii) to cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for such securities and (B) the Expiration Date. The Company
shall also take such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. The Company may temporarily suspend, for a
period of time after the date set forth in clause (i) of the first sentence of
this Section 9(d), the exercisability of the Rights in order to prepare and file
such registration statement and to permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company shall determine that a registration statement should be filed
under the Securities Act or any state securities laws following the Distribution
Date, the Company may temporarily suspend the exercisability of the Rights in
each relevant jurisdiction until such time as a registration statement has been
declared effective and, upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding anything in this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite registration or qualification in such jurisdiction shall not have been
effected or the exercise of the Rights shall not be permitted under applicable
law.
(e) Notwithstanding anything in this Agreement to the contrary, after
the Distribution Date it shall not, except as permitted by Section 23 or Section
26 hereof, take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will
eliminate or otherwise diminish the benefits intended to be afforded by the
Rights.
<PAGE> 30
(f) In the event that the Company is obligated to issue other securities of
the Company and/or pay cash pursuant to Sections 11, 13 or 14 hereof, it shall
make all arrangements necessary so that such other securities and/or cash are
available for distribution by the Rights Agent, if and when appropriate.
Section 10. Record Date. Each Person in whose name any certificate
representing Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Common Shares transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the Common
Shares transfer books of the Company are open. Prior to the exercise of the
Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to
securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Securities or
Number of Rights. The Purchase Price, the number and kind of securities
issuable upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares into a smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), 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/or the number and/or
kind of shares of capital stock issuable on such date upon exercise of a Right,
shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive upon payment of the Purchase Price
then in effect the aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such date and at a time
when the Common Shares transfer books of the Company were open, the holder of
such Right would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof or Section 13 hereof, 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) or Section 13 hereof.
<PAGE> 31
(ii) Subject to the provisions of Section 27 hereof, in the event that:
(A) any Acquiring person or any Affiliate or Associate of any
Acquiring Person, at any time after the date of this Agreement, directly or
indirectly, shall (1) merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of such
merger or combination (other than in a transaction subject to Section 13
hereof), (2) merge or otherwise combine with any Subsidiary of the Company, (3)
in one or more transactions (other than in connection with the exercise or
exchange of Rights or the exercise or conversion of securities exercisable for
or convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries) transfer any assets to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of any class of
capital stock of the Company or any of its Subsidiaries or for securities
exercisable for or convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries, or otherwise obtain from the Company or any
of its Subsidiaries, with or without consideration, any additional shares of any
class of capital stock of the Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class of capital stock of the
Company or any of its Subsidiaries (other than as part of a pro rata
distribution to all holders of such shares of any class of capital stock of the
Company, or any of its Subsidiaries), (4) sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise dispose (in one or more transactions),
to, from, with or of, as the case may be, the Company or any of its Subsidiaries
(other than in a transaction subject to Section 13 hereof), assets, including
securities, on terms and conditions less favorable to the Company than the
Company would be able to obtain in arm's-length negotiation with an unaffiliated
third party, (5) receive any compensation from the Company or any of its
Subsidiaries other than compensation as a director or for full-time employment
as a regular employee, in either case, at rates in accordance with the Company's
(or its Subsidiaries') past practices, or (6) receive the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or other
tax advantage provided by the Company or any of its Subsidiaries; or
(B) during such time as there is an Acquiring Person, there shall
be any reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the Company
with any of its Subsidiaries or any other transaction or series of transactions
involving the Company or any of its Subsidiaries (whether or not with or into or
otherwise involving an Acquiring Person), other than a transaction subject to
Section 13 hereof, which has the effect, directly or indirectly, of increasing
by more than the proportionate share of the outstanding shares of any class of
equity securities or of securities exercisable for or convertible into equity
securities of the Company or any of its Subsidiaries of which an Acquiring
Person or any Affiliate or Associate of any Acquiring Person, is the Beneficial
Owner; or
<PAGE> 32
(C) any Person (other than the Company or any Subsidiary of the Company
or any employee benefit or stock ownership 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) who or which, together with all Affiliates and
Associates of such Person, shall at any time after date of this Agreement,
become the Beneficial Owner of 15% or more of the Common Shares then outstanding
(other than pursuant to any transaction set forth in Section 13(a) hereof );
provided, however, that a Person shall not be deemed to have become the
Beneficial owner of 15% or more of the Common Shares then outstanding for the
purposes of this Section 11(a)(ii)(C) solely as a result of a reduction in the
number of Common Shares outstanding unless and until such time as (1) such
Person or any Affiliate or Associate of such Person shall thereafter become the
Beneficial Owner of any additional Common Shares other than as a result of a
stock dividend, stock split or similar transaction effected by the Company in
which all holders of Common Shares are treated equally, or (2) any other Person
who is the Beneficial owner of any Common Shares shall thereafter become an
Affiliate or Associate of such Person,
then, and in each such case, proper provision shall be made so that each holder
of a Right, except as provided below, shall thereafter have a right to receive,
upon exercise thereof in accordance with the terms of this Agreement at an
exercise price per Right equal to the product of the then-current Purchase Price
multiplied by the number of Common Shares for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event, such number of
Common Shares as shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the number of Common Shares for which a Right was
exercisable immediately prior to the first occurrence of a Triggering Event, and
dividing that product by (y) 50% of the current per share market price of the
Common Shares (determined pursuant to Section 11(d) hereof) on the date of the
first occurrence of a Triggering Event. Notwithstanding anything in this
Agreement to the contrary, from and after the later of the Distribution Date and
the first occurrence of a Flip-in Event, (1) any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any Affiliate or
Associate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Agreement, (2) no Right Certificate shall be issued pursuant to this
Agreement that represents Rights beneficially owned by an Acquiring Person or
any Affiliate or Associate thereof, (3) no Right Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring Person or any Affiliate
or Associate thereof or to any nominee of such Acquiring Person or Affiliate or
Associate thereof, and (4) any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring Person or any Affiliate or Associate thereof shall
be cancelled.
(iii) Upon the occurrence of a Flip-in Event, if there shall not be
sufficient Common Shares authorized but unissued or issued but not outstanding
to permit the issuance of all the Common Shares issuable in accordance with
subsection (ii) hereof upon the exercise of a Right, the Board of Directors of
the Company shall use its best efforts promptly to authorize and, subject to the
provisions of Section 9(d) hereof, make available for issuance additional Common
Shares or other equity securities of the Company having equivalent voting rights
and an equivalent value (as determined in good faith by the Board of Directors
of the Company) to the Common Shares (for purposes of this Section 11(a)(iii),
"equivalent common shares"). In the event that equivalent common shares are so
authorized, upon the exercise of a Right in accordance with the provisions of
Section 7 hereof, the registered holder shall be entitled to receive (A) Common
Shares, to the extent any are available and (B) a number of equivalent common
shares, which the Board of Directors of the Company shall have determined in
good faith to have a value equivalent to the excess of (x) the aggregate current
per share market value of all the Common Shares issuable in accordance with
subsection (ii) hereof upon the exercise of a Right (the "Exercise Value") over
<PAGE> 33
(y) the aggregate current per share market value of any Common Shares available
for issuance upon the exercise of such Right; provided, however, that if at any
time after 90 calendar days after the first occurrence of a Flip-in Event, there
shall not be sufficient Common Shares and/or equivalent common shares available
for issuance upon the exercise of a Right, then the Company shall be obligated
to deliver, upon the surrender of such Right and without requiring payment of
the Purchase Price, Common Shares (to the extent available), equivalent common
shares (to the extent available) and then cash (to the extent permitted by
applicable law and any agreements or instruments to which the Company is a party
in effect immediately prior to the first occurrence of any Flip-in Event), which
securities and cash shall have an aggregate value equal to the excess of (1) the
Exercise Value over (2) the product of the then-current Purchase Price
multiplied by the number of Common Shares for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event. To the extent
that any legal or contractual restrictions prevent the Company from paying the
full amount of cash payable in accordance with the foregoing sentence, the
Company shall pay to holders of the Rights as to which such payments are being
made all amounts which are not then restricted on a pro rata basis and shall
continue to make payments on a pro rata basis as funds become available until
the full amount due to each such Rights holder has been paid.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares (or securities having
equivalent rights, privileges and preferences as the Common Shares (for purposes
of this Section 11(b), "equivalent common shares") or securities convertible
into Common Shares or equivalent common shares at a price per Common Share or
equivalent common share (or having a conversion price per share, if a security
convertible into Common Shares or equivalent common shares) less than the
current per share market price of the Common Shares (determined pursuant to
<PAGE> 34
Section 11(d) hereof) 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 Common Shares outstanding on such record date plus
the number of Common Shares which the aggregate offering price of the total
number of Common Shares and/or equivalent common 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 per share market price and the
denominator of which shall be the number of Common Shares outstanding on such
record date plus the number of additional Common Shares and/or equivalent common
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be 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.
Common 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 the event that the Company shall fix a record date for the making
of a distribution to all holders of Common 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, cash (other than a regular periodic cash dividend), assets, stock
(other than a dividend payable in Common Shares) or subscription rights, options
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 current per share market price of
the Common Shares (as determined pursuant to Section 11(d) hereof) on such
record date or, if earlier, the date on which Common Shares begin to trade on an
ex-dividend or when-issued basis for such distribution, 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 evidences of indebtedness, cash, assets or stock so
to be distributed or of such subscription rights, options or warrants applicable
to one Common Share, and the denominator of which shall be such current per
share market price of the Common Shares. 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.
<PAGE> 35
(d) For the purpose of any computation hereunder, the "current per share
market price" of Common Shares on any date shall be deemed to be the average of
the daily closing prices per share of such Common Shares for the 30 consecutive
Trading Days immediately prior to such date; provided, however, that in the
event that the current per share market price of the Common Shares is determined
during a period following the announcement by the issuer of such Common Shares
of (i) a dividend or distribution on such Common Shares payable in such Common
Shares or securities convertible into such Common Shares (other than the Rights)
or (ii) any subdivision, combination or reclassification of such Common Shares,
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 take into account
ex-dividend trading or to reflect the current per share market price per Common
Share equivalent. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Common
Shares are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Shares are listed or admitted to trading or, if the Common Shares 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 Common Shares are not quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common Shares
selected by the Board of Directors of the Company. If the Common Shares are not
publicly held or not so listed or traded, or not the subject of available bid
and asked quotes, "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) Except as set forth below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest one
ten-thousandth of a Common Share or other 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 and (ii)
the Expiration Date.
(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 securities of the Company other than Common Shares, thereafter the number of
such other securities 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 Common Shares contained in
this Section 11, and the provisions of Sections 7, 9, 10 and 13 hereof with
respect to the Common Shares shall apply on like terms to any such other
securities.
(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 Common Shares
issuable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
<PAGE> 36
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and Section 11(c) hereof made with
respect to a distribution of subscription rights, options or warrants applicable
to Common Shares, 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 Common Shares (calculated to the nearest
one-thousandth a Common Share) obtained by (i) multiplying (x) the number of
Common Shares issuable upon exercise of 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 Common Shares issuable 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 Common Shares 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-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 calendar 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 the provisions of 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 may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number or kind of securities issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number and kind of securities which were expressed in
the initial Right Certificate issued hereunder.
<PAGE> 37
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Common Shares or other
securities issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Common Shares or such other securities at such adjusted Purchase Price.
(1) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the number
of Common Shares or other securities of the Company, if any, issuable upon such
exercise over and above the number of Common Shares or other 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 Common Shares or other securities
upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, 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 in its good faith judgment the Board of Directors of the Company
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Common Shares, (ii) issuance wholly for cash of Common Shares
at less than the current per share market price therefor, (iii) issuance wholly
for cash of Common Shares or securities which by their terms are convertible
into or exchangeable for Common Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Common Shares shall not be taxable to such
stockholders.
<PAGE> 38
Section 12. Certificate of Adjusted Purchase Price or Number of Securities.
Whenever an adjustment is made as provided in Section 11 or Section 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, a copy of such certificate, and (c) if such adjustment is made after the
Distribution Date, mail a brief summary of such adjustment to each holder of a
Right Certificate in accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Share Acquisition Date, directly or
indirectly:
(i) the Company shall consolidate with, or merge with or into,
any other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger; or
(ii) any Person shall consolidate with the Company, or merge with or
into the Company and the Company shall be the continuing or surviving
corporation of such merger or consolidation and, in connection with such merger
or consolidation, all or part of the Common Shares shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property; or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power (including, without limitation, securities creating any
obligation on the part of the Company and/or any of its Subsidiaries)
representing in the aggregate more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any Person or Persons,
then, and in each such case, proper provision shall be made so that (A)
each holder of a Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof in accordance with the
terms of this Agreement at an exercise price per Right equal to the product of
the then-current Purchase Price multiplied by the number of Common Shares for
which a Right was exercisable immediately prior to the first occurrence of a
Triggering Event, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Issuer, free and clear
of any liens, encumbrances and other adverse claims and not subject to any
rights of call or first refusal, as shall be equal to the result obtained by (x)
multiplying the then-current Purchase Price by the number of Common Shares for
which a Right is exercisable immediately prior to the first occurrence of a
Triggering Event and dividing that product by (y) 50% of the current per share
market price of the Common Shares of the Issuer (determined pursuant to Section
11(d) hereof), on the date of consummation of such Flip-over Event; (B) the
Issuer shall thereafter be liable for, and shall assume, by virtue of the
consummation of such Flip-over Event, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term "Company" shall thereafter be
deemed to refer to the Issuer; and (D) the Issuer shall take such steps
(including, without limitation, the reservation of a sufficient number of its
Common Shares to permit the exercise of all outstanding Rights) 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 possible, in
relation to its Common Shares thereafter deliverable upon the exercise of the
Rights.
<PAGE> 39
(b) For purposes of this Section 13, "Issuer" shall mean (i) in the
case of any Flip-over Event described in Sections 13(a)(i) or (ii) above, the
Person that is the continuing, surviving, resulting or acquiring Person
(including the Company as the continuing or surviving corporation of a
transaction described in Section 13(a)(ii) above), and (ii) in the case of any
Flip-over Event described in Section 13(a)(iii) above, the Person that is the
party receiving the greatest portion of the assets or earning power (including,
without limitation, securities creating any obligation on the part of the
Company and/or any of its Subsidiaries) transferred pursuant to such transaction
or transactions; provided, however, that, in any such case, (A) if (1) no class
of equity security of such Person is, at the time of such merger, consolidation
or transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
subsidiary, directly or indirectly, of another Person,.a class of equity
security of which is and has been so registered, the term "Issuer" shall mean
such other Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, a class of equity security of two or more
of which are and have been so registered, the term "Issuer" shall mean whichever
of such Persons is the issuer of the equity security having the greatest
aggregate market value. Notwithstanding the foregoing, if the Issuer in any of
the Flip-over Events listed above is not a corporation or other legal entity
having outstanding equity securities, then, and in each such case, (x) if the
Issuer is directly or indirectly wholly owned by a corporation or other legal
entity having outstanding equity securities, then all references to Common
Shares of the Issuer shall be deemed to be references to the Common Shares of
the corporation or other legal entity having outstanding equity securities which
ultimately controls the Issuer, and (y) if there is no such corporation or other
legal entity having outstanding equity securities, (I) proper provision shall be
made so that the Issuer shall create or otherwise make available for purposes of
the exercise of the Rights in accordance with the terms of this Agreement, a
kind or kinds of security or securities having a fair market value at least
equal to the economic value of the Common Shares which each holder of a Right
would have been entitled to receive if the Issuer had been a corporation or
other legal entity having outstanding equity securities; and (II) all other
provisions of this Agreement shall apply to the issuer of such securities as if
such securities were Common Shares.
(c) The Company shall not consummate any Flip-over Event, unless the
Issuer shall have a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior to such consummation the Company and the
Issuer shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in subsections (a) and (b) of this
Section 13 and further providing that as promptly as practicable after the
consummation of any Flip-over Event, the Issuer shall:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities issuable upon exercise of the
Rights on an appropriate form, and shall use its best efforts to cause such
registration statement to (A) become effective as soon. as practicable after
such filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(ii) take all such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights; and
(iii) deliver to holders of the Rights historical financial statements
for the Issuer and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
<PAGE> 40
(d) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Flip-over Event occurs at any time after the occurrence of a Flip-in Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a) hereof.
Section 14. Fractional Rights and Fractional Securities.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, the Company shall pay as promptly as practicable to the
registered holders of the Right Certificates with regard to which such
fractional Rights otherwise would 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 otherwise would have been issuable. The closing
price for any day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-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 Common
Shares or other securities issuable upon exercise or exchange of the Rights or
to distribute certificates which evidence any such fractional securities. In
lieu of issuing any such fractional securities, the Company may pay to any
Person to whom or which such fractional securities would otherwise be issuable
an amount in cash equal to the same fraction of the current market value of one
such security. For purposes of this, Section 14(b), the current market value of
a Common Share or other security issuable upon the exercise or exchange of
Rights shall be the closing price thereof (as determined in the same manner as
set forth for Common Shares in the second sentence of Section 11(d) hereof) for
the Trading Day immediately prior to the date of such exercise or exchange;
provided, however, that if neither the Common Shares nor any such other
securities are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the
current market value of one Common Share or such other security shall be
determined in good faith by the Board of Directors of the Company.
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
Section 18 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 holder of any 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 or Common
Share 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
shall be entitled to specific performance of the obligations under this
Agreement, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to this Agreement.
<PAGE> 41
Section 16. Agreement of Rights Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights shall 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 designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(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 Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificate or the associated Common Share 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;
(d) Such holder expressly waives any right to receive any fractional
Rights and any fractional securities upon exercise or exchange of a Right,
except as otherwise provided in Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company shall use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
<PAGE> 42
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Common Shares or any other
securities of the Company which may at any time be issuable upon the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of Directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 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 of this Agreement or exchanged pursuant to the provisions of Section
27 hereof.
Section 18. Concerning the Rights Agent.
(a) 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, suit, action, proceeding or expense, incurred without negligence, bad
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability arising therefrom, directly or indirectly.
(b) 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 evidencing Common Shares or 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.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 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.
<PAGE> 43
(b) 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 (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
President or any Vice President of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the 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 and delivery hereof by the Rights Agent) or in respect of the validity
or execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof (including any adjustment which results in Rights becoming
void) or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice of any such adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of stock or other securities to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
shares of stock or other securities will, when issued, be validly authorized and
issued, fully paid and nonassessable.
<PAGE> 44
(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 President or any Vice President 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 to
be taken by it in good faith in accordance with instructions of any such
officer.
(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. The Rights Agent shall not be under any duty
or responsibility to insure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of Right
Certificates.
(j) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise, transfer, split up, combination or exchange, the certificate
attached to the form of assignment or form of election to purchase, as the case
may be, has either not been completed or indicates an affirmative response to
clause 1 or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise, transfer, split up, combination or exchange,
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 calendar days' notice in writing mailed to the Company and to each
transfer agent of the Common 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 calendar days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common 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 calendar 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 the States of North Carolina
or Delaware (or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the States
of North Carolina or New York), in good standing, having a principal office in
the States of North Carolina or New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority 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 of the Common 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.
<PAGE> 45
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 per share and the number or kind of securities
issuable upon exercise of the Rights made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance or sale by the
Company of Common Shares following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to Common Shares so issued
or sold pursuant to the exercise or conversion of securities issued prior to the
Distribution Date which are exercisable for, or convertible into, Common Shares,
and (b) may, in any other case, if deemed necessary, appropriate or desirable by
the Board of Directors of the Company, issue Right Certificates representing an
equivalent number of Rights as would have been issued in respect of such Common
Shares if they had been issued or sold prior to the Distribution Date, as
appropriately adjusted as provided herein as if they had been so issued or sold;
provided, however, that (i) no such Right Certificate shall be issued if, and to
the extent that, in its good faith judgment the Board of Directors of the
Company shall have determined that the issuance of such Right Certificate could
have a material adverse tax consequence to the Company or to the Person to whom
or which such Right Certificate otherwise would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustment otherwise shall have been made in lieu of the issuance thereof.
Section 23. Redemption.
(a) Prior to the Expiration Date, the Board of Directors of the Company
may, at its option, redeem all but not less than all of the then-outstanding
Rights at the Redemption Price at any time prior to the Close of Business on the
later of (i) the Distribution Date and (ii) the Share Acquisition Date. However
the Board of Directors of the Company may, in its discretion, extend the date
for redemption.
<PAGE> 46
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights shall terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of its Board of Directors ordering
the redemption of the Rights, the Company shall publicly announce such action,
and within 10 calendar days thereafter, the Company shall give notice of such
redemption to the holders of the then-outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Company; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of the redemption of the
Rights. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. The notice of redemption
mailed to the holders of Rights shall state the method by which the payment of
the Redemption Price will be made. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based upon the current per share market
price of the common Shares (determined pursuant to Section 11(d) hereof) at the
time of redemption) or any other form of consideration deemed appropriate by the
Board of Directors of the Company (based upon the fair market value of such
other consideration, determined by the Board of Directors of the Company in good
faith) or any combination thereof.
(c) At any time following the Share Acquisition Date, the Board of
Directors of the Company may relinquish the right to redeem the Rights under
this Section 23 by duly adopting a resolution to that effect. Immediately upon
adoption of such resolution, the rights of the Board of Directors of the Company
to redeem the Rights shall terminate without further action and without any
notice. Promptly after adoption of such a resolution, the Company shall publicly
announce such action; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of the action of the Board of
Directors of the Company.
Section 24. Notice of Certain Events.
(a) In case, after the Distribution Date, the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
Common Shares or to make any other distribution to the holders of Common Shares
(other than a regular periodic cash dividend), (ii) to offer to the holders of
Common Shares rights, options or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Common Shares (other than a reclassification involving only the subdivision of
outstanding Common 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 assets or earning power (including, without limitation, securities creating
any obligation on the part of the Company and/or any of its Subsidiaries)
representing more than 50% of the assets and earning power of the Company and
its Subsidiaries, taken as a whole, to any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Right Certificate, in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution or
offering of rights, options 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, 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 calendar days prior to the record date for
determining holders of the Common Shares for purposes of such action, and, in
the case of any such other action, at least 10 calendar 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, whichever shall be the earlier.
<PAGE> 47
(b) In case any Triggering Event shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to the Rights Agent and
each holder of a Right Certificate, in accordance with Section 25 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights.
Section 25. Notices.
(a) 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:
North Carolina Natural Gas Corporation
Attn: Calvin B. Wells, President
P.O. Box 909
Fayetteville, NC 28302
(b) 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:
Wachovia Bank N.A.
Attn: Wachovia Shareholder Services
301 N. Church Street, 2nd Floor
Winston-Salem, NC 27101
(c) 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 (or,
if prior to the Distribution Date, to the holder of any certificate evidencing
Common Shares) 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. Prior to the Distribution Date
and subject to the last sentence of this Section 26, if the Company so directs,
the Company and the Rights Agent shall supplement or amend any provision of this
Agreement without the approval of any holders of certificates representing
Common Shares. From and after the Distribution Date and subject to the last
sentence of this Section 26, if the Company so directs, the Company and the
Rights Agent shall supplement or amend this Agreement without the approval of
any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable, including, without
limitation, the addition of other events requiring adjustment to the Rights
under Sections 11 or 13 hereof or procedures relating to the redemption of the
Rights, which supplement or amendment shall not, in the good faith determination
of the Board of Directors of the Company, adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Upon the delivery of a certificate from an
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; provided, however, that the failure or refusal of
the Rights Agent to execute such supplement or amendment shall not affect the
validity of any supplement or amendment adopted by the Company, any of which
shall be effective in accordance with the terms thereof. Notwithstanding
anything in this Agreement to the contrary, no supplement or amendment shall be
made which decreases the stated Redemption Price or the period of time remaining
until the Final Expiration Date or which modifies a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable.
<PAGE> 48
Section 27. Exchange.
(a) The Board of Directors of the Company may, at its option, at any
time after the later of the Distribution Date and the first occurrence of a
Triggering Event, exchange all or part of the then-outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), who or which, together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the Common Shares
then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to Section 27(a) hereof, and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right with respect to such Rights thereafter
of the holder of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. Promptly after the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to Section 27(a) hereof,
the Company shall publicly announce such action, and within 10 calendar days
thereafter shall give notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent; provided, however, that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange shall state the method
by which the exchange of the Common Shares for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 27, the Company,
at its option, may substitute for any Common Share exchangeable for a Right, (i)
equivalent common shares (as such term is used in Section 11(a)(iii) hereof),
(ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value which the
Board of Directors of the Company shall have determined in good faith to be
equal to the current market value of one Common Share (determined pursuant to
Section 11(d) hereof) on the Trading Day immediately preceding the date of
exchange pursuant to this Section 27.
Section 28. Successors; Certain Covenants. 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 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 (or prior to the Distribution Date, the Common Shares).
<PAGE> 49
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 internal substantive
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the internal substantive 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, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
North Carolina Natural Gas Corporation
By: _________________________________
Attest:
_____________________________
__________ Secretary
(SEAL]
Wachovia Bank, N.A.
By: _________________________________
Attest:
______________________________
__________ Secretary
[SEAL]
<PAGE> 50
Exhibit 3
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On October 7, 1997, the Board of Directors of North Carolina Natural Gas
Corporation (the "Company") declared a dividend distribution of one Right for
each outstanding share of Common Stock to stockholders of record at the close of
business on November 10, 1997 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one share of Common Stock, par
value $2.50 per share (the "Common Stock"), at a Purchase Price of $100.00,
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and Wachovia
Bank, N.A., as Rights Agent.
Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding and no separate Rights certificates will be
distributed. The Rights will separate from the Common Stock upon the earlier of:
(i) the close of business on the tenth calendar day (or such later date
as the Board shall determine) following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of fifteen percent (15%)
or more of the outstanding shares of Common Stock or,
(ii) the close of business on the tenth calendar day (or such later date
as the Board shall determine) following the commencement of a tender offer or
exchange offer by a person or by a group of affiliated or associated persons,
the consummation of which would result in beneficial ownership by such person or
group of 15% or more of the outstanding Common Stock, or
(iii) the close of business on the tenth calendar day following the first
date of public announcement of the first occurrence of a Flip-in Event or a
Flip-over Event (as such terms are defined in the Rights Agreement).
The earlier of (i), (ii), and (iii) is referred to herein as the
"Distribution Date". Until the Distribution Date, (i) the Rights will be
evidenced by the Common Stock certificates and will be transferred with and only
with such Common Stock certificates, (ii) new Common Stock certificates issued
after the Record Date will contain a notation incorporating the Rights Agreement
by reference, and (iii) the surrender for transfer of any certificates for
Common Stock outstanding will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
<PAGE> 51
The Rights are not exercisable until there is a Distribution Date and will
expire at the close of business on November 10, 2007, unless earlier redeemed or
exchanged by the Company as described below.
As soon as practicable after a Distribution Date, if any, Rights
certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
certificates alone will represent the Rights. Except as otherwise determined by
the Board, only shares of Common Stock issued before the Distribution Date will
be issued with Rights.
In the event that a person becomes an Acquiring Person (except pursuant to
an offer for all outstanding shares of Common Stock that the directors determine
to be fair to and otherwise in the best interest of the Company and its
shareholders), each holder of a Right will thereafter have the right to receive,
upon exercise, (i) Common Stock, the issuance of which has been preapproved by
the North Carolina Utilities Commission (the "Commission") and/or (ii) cash,
property or other securities of the Company, each of (i) and (ii) having a value
equal to two times the purchase price of the Right. Notwithstanding any of the
foregoing, following the occurrence of the event set forth in this paragraph,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void. However, Rights are not exercisable following the occurrence of the event
set forth above until such time as the Rights are no longer redeemable by the
Company as set forth below.
For example, at a purchase price of $100 per Right, each Right not owned by
an Acquiring Person (or by certain related parties) following an event set forth
in the preceding paragraph would entitle its holder to purchase $200 worth of
Common Stock (or other consideration, as noted above) for $100. Assuming that
the Common Stock had a market value of $50 per share at such time, the holder of
each valid Right would be entitled to purchase four shares of Common Stock for
$100.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation (other than a merger which
follows an offer described in the second preceding paragraph), or (ii) fifty
percent (50%) or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the purchase price of the Right. The events set forth in this paragraph
and in the second preceding paragraph are referred to as the "Triggering
Events."
At any time after a person becomes an Acquiring Person and prior to the
acquisition by such person or group of fifty percent (50%) or more of the
outstanding Common Stock, the Board may exchange the Rights (other than Rights
owned by such person or group which have become void), in whole or in part, at
an exchange ratio of one share of Common Stock, (or of a share of a class or
series of the Company's stock having equivalent rights, preferences and
privileges) per Right (subject to adjustment).
<PAGE> 52
At any time until ten (10) days following the Share Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (payable in cash, Common Stock, or other consideration deemed appropriate
by the Board). Immediately upon the action of the Board ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock, or other consideration of the Company or for
common stock of the acquiring company as set forth above.
Any of the provisions of the Rights Agreement may be amended by the Board
before the Distribution Date. After the Distribution Date, the provisions of the
Rights Agreement may be amended by the Board in order to cure any ambiguity, to
make changes which do not adversely affect the interests of holders of Rights,
or to shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment may be made at such time as the Rights are not
redeemable (i.e., more than ten (10) days after the Distribution Date if they
were not redeemed before that date).
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. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in
its entirety by references to the Rights Agreement, which is incorporated herein
by reference.
<PAGE> 53
Exhibit 4
Contact: Gerald A. Teele October 24, 1997
(910) 323-6203
NORTH CAROLINA NATURAL GAS CORPORATION
ANNOUNCES ADOPTION OF SHAREHOLDER RIGHTS PLAN
FAYETTEVILLE, NC --- North Carolina Natural Gas Corporation (NYSE:NCG)
announced today that its Board of Directors adopted a Shareholder Rights Plan
(the "Plan") in which Rights will be distributed as a dividend at the rate of
one Right for each share of common stock, par value $2.50 per share, of the
Company held by shareholders of record as of the close of business on November
10, 1997.
The North Carolina Utilities Commission, by Order dated October 6, 1997,
approved NCNG's application to establish the Plan, reserve shares of common
stock for issuance under the Plan and to issue and sell that common stock in the
future in accordance with the terms of the Plan.
Calvin B. Wells, Chairman, President and Chief Executive Officer, stated,
"The plan was designed to deter coercive takeover tactics, including the
accumulation of shares in the open market or through private transactions, and
to prevent an acquiror from gaining control of the Company without offering a
fair price to all of the Company's shareholders." He stated further that he was
unaware of any pending effort by any party to acquire NCNG.
The Rights generally will be exercisable only if a person or group acquires
beneficial ownership of 15% or more of the Company's common stock or commences a
tender or exchange offer upon consummation of which such person or group, then
known as the acquiror, would beneficially own 15% or more of the Company's
common stock. Upon the occurrence of such a "triggering event," then each Right
held by shareholders, other than the person or persons deemed to be an acquiror,
will entitle shareholders to buy one share of the Company's common stock at 50%
of its then market value, thus diluting the interest of the acquiror. The Rights
have no value until exercised or redeemed, and they will expire on November 10,
2007. A letter containing a summary of the Plan will be mailed to all
shareholders.
North Carolina Natural Gas Corporation is headquartered in Fayetteville,
North Carolina, and provides natural gas and propane service to approximately
166,000 customers in southcentral and eastern North Carolina.
<PAGE> 54
Exhibit 5
October 27, 1997
Dear Shareholder:
On October 7, 1997, the Company's Board of Directors adopted a Shareholder
Rights Plan. A summary of the Plan in enclosed for your information.
Our Shareholder Rights Plan was adopted to prevent coercive or unfair
takeover tactics or an unsolicited attempt to acquire control of the Company in
a transaction that the Board believes is not in the best interest of NCNG
shareholders. Approximately 3,000 other publicly-traded companies have adopted
shareholder rights plans.
After consultation with its financial advisors and careful consideration,
the Board concluded that a Shareholder Rights Plan was an appropriate method of
obtaining fair treatment for all shareholders and the realization of the full
value of shareholders' equity in the event that the Company should become the
target of a hostile takeover attempt. The Rights to purchase additional shares
of NCNG's common stock will not become exercisable under the conditions set
forth in the Plan until some future date, if at all.
The Shareholder Rights Plan was not adopted as a response to any effort to
acquire the Company or voting control of the Company, and the Board is not aware
of any such effort. Nor is the Plan intended to prevent a takeover of NCNG at a
fair price. However, it should discourage any attempt to acquire the Company in
a way or on terms that the Board of Directors could not recommend as being in
the best interest of shareholders.
The Board believes the Company is an important and valuable supplier of
energy in its territory, and the Company is planning its operations for the long
term. However, should any attempt be made to acquire the Company, we believe the
Shareholder Rights Plan will give the Board a tool to help realize full value
for you and all the Company's shareholders that have an interest in NCNG prior
to any hostile takeover attempt.
Sincerely,
/s/ Calvin B. Wells
Calvin B. Wells
Chairman and President
CBW:ss
Enclosure
