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MR. HANRAHAN: No, but the type of agreement under which both were to bid was put into their hands in the spring of 1954.

MR. HORWITZ: That may very well be, but I don't think it changes the facys as we have discussed them, namely, that Eastern would have the right to throw back their position to what it was in December, '53 to preclude the Colonial stockholders from sharing in this earning position which they have maintained since the beginning of '54, and that earnings could accrue or might accrue only to the present Eastern stockholders to the exclusion of the Colonial stockholders under the terms of the agreement.

MR. HANRAHAN: Certainly it could only accrue to the stockholders of Eastern.

MR. HORWITZ: That is right.

MR. KULAND:  My name is Louis Kurland.
Is it so that National had approached the Board of Directors of Colonial and had asked for an opportunity to make an offer other than a stock exchange?

MR. HANRAHAN:  No, I think we went to them. We had a set of findings handed to us by the Civil Aeronautic Board--I guess you would call it a memorandum opinion--in which there was a real command performance for us to not wait until the control question with Eastern had been decided, but to explore the possibilities with National and other lines.
We went to National they didn't come to us--and we explored a lot of possibilities, none of which were feasible.

MR. KURLAND:  At the time Eastern proposed the one for two exchange of stock, wasn't National--

MR. HANRAHAN:  No, at the time National and we were not negotiating on anything but stock basis.

MR. KURLAND:  Why were they limiting to just stock alone?

MR. HANRAHAN:  We set the terms as to how we thought it was for the best interests of our stockholders.

MR. KURLAND:  Why stock alone?  Any particular reason?

MR. HANRAHAN:  Certainly.  National once bid and offered us debenture.

MR. KURLAND:  Prior to that they offered seven for eight.

MR. HANRAHAN:  And you stockholders turned it down.  Then they came back with an debenture.

MR. KURLAND:  If you work out the mechanics of seven to eight offer of National, I think it would figure out to a better offer of the one for two offer of Eastern now.

MR. HANRAHAN:  That can well be.

MR. KURLAND:  So if the stockholders refused seven for eight at that time, why would the Board of Directors of Colonial accept a lesser amount or recommend to the stockholders that they accept a lesser amount now?

MR. HANRAHAN:  We only had one bid before us.

MR. KURLAND:  I think we are all convinced that the merger is not the only solution for the future of Colonial, according to what I read in the Annual Report that there is great prospect for Colonial to continue as Colonial without merging with Eastern or any other line.

MR. HANRAHAN:  Let me put it another way. If you as the owners of this company vote down a merger, then we do go the other routes that we have explained in our proxy material to you.

MR. KURLAND:  Providing you got at least as good or better than a prior offer.

MR. HANRAHAN:  Assume you turn it down. Then we do go the other routes.

MR. KURLAND:  Even prior to this time, we know that the one for two offer of Eastern is less than the seven for eight of National of a few years ago, and it seems to me I recall having read some place where the basis for negotiations with Eastern were primarily based on Future participation of Colonial stockholders in the future operation of the merged company.

MR. HANRAHAN:  That is right.

MR. KURLAND:  Now, the whole tell has been based on the market value of the stock. Tomorrow Eastern may be down to 35, we don't know, and the fact is why did Eastern see fit to double their dividend at the time they did when they knew it would react favorably for the stock and therefore appreciate it 100%?
Actually, what I am getting at is Colonial is not getting a fair share as far as the exchange of the stock and participation in the future company.

MR. HANRAHAN:  Do you think we shouldn't have accepted the bid and let the stockholders decide whether they want to take it this way or not?

MR. KURLAND:  That is right, and also in view of the fact that on 

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