ECOLAB INC.
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Rights Agent
Rights Agreement
Dated as of February 24, 1996
Table of Contents
Section Page
1. Certain Definitions . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . 6
3. Issue of Rights Certificates. . . . . . 6
4. Form of Rights Certificates . . . . . . 9
5. Countersignature and Registration . . . 10
6. Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates. . . . . . . . . . 11
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. . . . . . . 12
8. Cancellation and Destruction of
Rights Certificates . . . . . . . . . . 15
9. Reservation and Availability of
Capital Stock . . . . . . . . . . . . . 16
10. Preferred Stock Record Date. . . . . . 18
11. Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. . 19
12. Certificate of Adjusted Purchase Price or
Number of Shares. . . . . . . . . . . 33
13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. . . . . . 33
14. Fractional Rights and Fractional Shares 37
15. Rights of Action . . . . . . . . . . . 38
16. Agreement of Rights Holders. . . . . . 39
17. Rights Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . 40
18. Concerning the Rights Agent. . . . . . 40
19. Merger or Consolidation or Change of Name
of Rights Agent . . . . . . . . . . . 41
20. Duties of Rights Agent . . . . . . . . 42
21. Change of Rights Agent . . . . . . . . 45
22. Issuance of New Rights Certificates. . 46
23. Redemption and Termination . . . . . . 47
24. Exchange . . . . . . . . . . . . . . . 48
25. Notice of Certain Events . . . . . . . 50
26. Notices. . . . . . . . . . . . . . . . 51
27. Supplements and Amendments . . . . . . 52
28. Successors . . . . . . . . . . . . . . 52
29. Determinations and Actions by the Board of
Directors, etc. . . . . . . . . . . . 53
30. Benefits of This Agreement . . . . . . 53
31. Severability . . . . . . . . . . . . . 53
32. Governing Law. . . . . . . . . . . . . 54
33. Counterparts . . . . . . . . . . . . . 54
34. Descriptive Headings . . . . . . . . . 54
Exhibit A -- Preferences and Rights of Series A Junior
Participating Preferred Stock
Exhibit B -- Form of Rights Certificate
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 24, 1996
(the "Agreement"), between Ecolab Inc., a Delaware corpo-
ration (the "Company"), and First Chicago Trust Company
of New York, a New York corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on February 24, 1996 (the "Rights
Dividend Declaration Date"), the Board of Directors of
the Company authorized and declared a dividend
distribution of one Right for each share of common stock,
par value $1.00 per share, of the Company (the "Common
Stock") outstanding at the close of business on March 11,
1996 (the "Record Date"), and has authorized the issuance
of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p) hereof) for
each share of Common Stock of the Company issued between
the Record Date (whether originally issued or delivered
from the Company's treasury) and the Distribution Date,
each Right initially representing the right to purchase
one one-hundredth of a share of Series A Junior Partici-
pating Preferred Stock (the "Preferred Stock") of the
Company having the rights, powers and preferences set
forth in Exhibit A attached hereto, upon the terms and
subject to the conditions hereinafter set forth (the
"Rights");
NOW, THEREFORE, in consideration of the premis-
es and the mutual agreements herein set forth, the par-
ties hereby agree as follows:
Section 1. Certain Definitions. For purposes
of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any
Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock then out-
standing, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit
plan of the Company or of any Subsidiary of the Company,
(iv) any Person or entity organized, appointed or estab-
lished by the Company for or pursuant to the terms of any
such plan, (v) Xxxxxx Kommanditgesellschaft auf Aktien
("Henkel"), if Henkel shall have executed a written
agreement with the Company (and approved by the Company's
Board of Directors) on or prior to the date on which
Henkel (together with its Affiliates) became the Benefi-
cial Owner of 15% or more of the shares of Common Stock
then outstanding, which agreement imposes one or more
limitations on the amount of Xxxxxx'x Beneficial Owner-
ship of shares of Common Stock, and if, and so long as,
such written agreement (or any amendment thereto approved
by the Company's Board of Directors) continues to be
binding on Henkel and Henkel is in compliance (as deter-
mined by the Company's Board of Directors in its discre-
tion) with the terms of such written agreement (including
any such amendment); provided, however, that no amendment
of any such agreement shall cure any prior breach of such
agreement or any amendment thereto or (vi) any such
Person who has reported or is required to report such
ownership (but less than 25%) on Schedule 13G under the
Exchange Act (or any comparable or successor report) or
on Schedule 13D under the Exchange Act (or any comparable
or successor report) which Schedule 13D does not state
any intention to or reserve the right to control or
influence the management or policies of the Company or
engage in any of the actions specified in Item 4 of such
Schedule (other than the disposition of the Common Stock)
and, within 10 Business Days of being requested by the
Company to advise it regarding the same, certifies to the
Company that such Person acquired shares of Common Stock
in excess of 14.9% inadvertently or without knowledge of
the terms of the Rights and who, together with all Affil-
iates and Associates, thereafter does not acquire addi-
tional shares of Common Stock while the Beneficial Owner
of 15% or more of the shares of Common Stock then out-
standing; provided, however, that if the Person requested
to so certify fails to do so within 10 Business Days,
then such Person shall become an Acquiring Person immedi-
ately after such 10 Business Day Period. Notwithstanding
the foregoing, no Person shall become an "Acquiring
Person" solely as the result of an acquisition of Common
Stock by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of
shares beneficially owned by a Person to 15% or more of
the Common Stock of the Company then outstanding as
determined above; provided, however, that if a Person
becomes the Beneficial Owner of 15% or more of the Common
Stock of the Company then outstanding (as determined
above) solely by reason of purchases of Common Stock by
the Company and shall, after such purchases by the Compa-
ny, become the Beneficial Owner of any additional shares
of Common Stock by any means whatsoever, then such Person
shall be deemed to be an "Acquiring Person."
(b) "Adverse Person" shall mean any
Person declared to be an Adverse Person by the Board of
Directors upon determination that the criteria set forth
in Section 11(a)(ii)(B) apply to such Person; provided,
however, that the Board of Directors shall not declare
(i) Henkel or any of its Affiliates to be an Adverse
Person and (ii) the Board of Directors shall not declare
any Person who is the Beneficial Owner of 10% or more of
the outstanding Common Stock of the Company to be an
Adverse Person if such Person has reported or is required
to report such ownership on Schedule 13G under the Ex-
change Act (or any comparable or successor report) or on
Schedule 13D under the Exchange Act (or any comparable or
successor report) which Schedule 13D does not state any
intention to or reserve the right to control or influence
the management or policies of the Company or engage in
any of the actions specified in Item 4 of such Schedule
(other than the disposition of the Common Stock) so long
as such Person neither reports nor is required to report
such ownership other than as described in this clause
(ii).
(c) "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended and in effect
on the date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the
"Beneficial Owner" of, and shall be deemed to "benefi-
cially own," any securities:
(i) which such Person or any of
such Person's Affiliates or Associates,
directly or indirectly, has the right to ac-
quire (whether such right is exercisable im-
mediately 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; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's
Affiliates or Associates until such tendered
securities are accepted for purchase or exchange,
or (B) securities issuable upon exer-
cise of Rights at any time prior to the occur-
rence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after
the occurrence of a Triggering Event which
Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section
3(a) or Section 22 hereof (the "Original
Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect
to any Original Rights;
(ii) which such Person or any of
such Person's Affiliates or Associates, direct-
ly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the Gener-
al Rules and Regulations under the Exchange
Act), including pursuant to any agreement,
arrangement or understanding, whether or not in
writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this
subparagraph (ii) as a result of an agreement,
arrangement or understanding to vote such secu-
rity if such agreement, arrangement or under-
standing: (A) arises solely from a revocable
proxy given in response to a public proxy or
consent solicitation made pursuant to, and in
accordance with, the applicable provisions of
the General Rules and Regulations under the Ex-
change Act, and (B) is not also then reportable
by such Person on Schedule 13D under the Ex-
change Act (or any comparable or successor re-
port); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or
any Affiliate or Associate thereof) with which
such Person (or any of such Person's Affiliates
or Associates) has any agreement, arrangement
or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as de-
scribed in the proviso to subparagraph (ii) of
this paragraph (c)) or disposing of any voting
securities of the Company; provided, however,
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 ac-
quired through such person's participation in
good faith in a firm commitment underwriting
until the expiration of forty days after the
date of such acquisition.
(e) "Business Day" shall mean any day
other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) "Close of business" on any given date
shall mean 5:00 P.M., New York City time, on such date;
provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the
next succeeding Business Day.
(g) "Common Stock" shall mean the common
stock, par value $1.00 per share, of the Company, except
that "Common Stock" when used with reference to any
Person other than the Company shall mean the capital
stock of such Person with the greatest voting power, or
the equity securities or other equity interest having
power to control or direct the management, of such Per-
son.
(h) "Person" shall mean any individual,
firm, corporation, partnership or other entity.
(i) "Preferred Stock" shall mean shares
of Series A Junior Participating Preferred Stock, without
par value, of the Company, and, to the extent that there
are not a sufficient number of shares of Series A Junior
Participating Preferred Stock authorized to permit the
full exercise of the Rights, any other series of Pre-
ferred Stock, without par value, of the Company desig-
nated for such purpose containing terms substantially
similar to the terms of the Series A Junior Participating
Preferred Stock.
(j) "Section 11(a)(ii) Event" shall mean
any event described in Section 11(a)(ii) hereof.
(k) "Section 13 Event" shall mean any
event described in clauses (x), (y) or (z) of Section
13(a) hereof.
(l) "Stock Acquisition Date" shall mean
the first date of public announcement (which, for pur-
poses of this definition, shall include, without limita-
tion, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such.
(m) "Subsidiary" shall mean, with refer-
ence to any Person, any corporation of which an amount of
voting securities sufficient to elect at least a majority
of the directors of such corporation is beneficially
owned, directly or indirectly, by such Person, or other-
wise controlled by such Person.
(n) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 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 prior to the
Distribution Date also be the holders of the Common
Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appoint-
ment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issue of Rights Certificates.
(a) Until the earliest of (i) the close
of business on the tenth day after the Stock Acquisition
Date (or, if the tenth day after the Stock Acquisition
Date occurs before the Record Date, the close of business
on the Record Date), (ii) the close of business on the
tenth business day (or such later date as the Board shall
determine) after the date that a tender or exchange offer
by any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or
pursuant to the terms of any such plan) is first pub-
lished or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the
Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the
shares of Common Stock then outstanding or (iii) the
close of business on the tenth Business Day after the
Board of Directors determines, pursuant to the criteria
set forth in Section 11(a)(ii)(B) hereof, that a Person
is an Adverse Person (the earliest of (i), (ii) and (iii)
being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions
of paragraph (b) of this Section 3) by the certificates
for the Common Stock registered in the names of the
holders of the Common Stock (which certificates for
Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the
transfer of the underlying shares of Common Stock (in-
cluding a transfer to the Company). As soon as practica-
ble after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to
each record holder of the Common Stock as of the close of
business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more
right certificates, in substantially the form of Exhibit
B hereto (the "Rights Certificates"), evidencing one
Right for each share of Common Stock so held, subject to
adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common
Stock has been made pursuant to Section 11(p) hereof, at
the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers
of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution
Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) With respect to certificates for the
Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock and the registered
holders of the Common Stock shall also be the registered
holders of the associated Rights. Until the earlier of
the Distribution Date or the Expiration Date (as such
term is defined in Section 7 hereof), the transfer of any
certificates representing shares of Common Stock in
respect of which Rights have been issued shall also
constitute the transfer of the Rights associated with
such shares of Common Stock.
(c) Rights shall be issued in respect of
all shares of Common Stock which are issued (whether
originally issued or from the Company's treasury) after
the Record Date but prior to the earlier of the Distribu-
tion Date or the Expiration Date or in certain circum-
stances provided in Section 22 hereof, after the Distri-
bution Date. Certificates representing such shares of
Common Stock shall also be deemed to be certificates for
Rights, and shall bear the following legend:
This certificate also evidences and enti-
tles the holder hereof to certain Rights as set
forth in the Rights Agreement between Ecolab
Inc. (the "Company") and First Chicago Trust
Company of New York (the "Rights Agent") dated
as of February 24, 1996, as amended from time
to time (the "Rights Agreement"), the terms of
which are hereby incorporated herein by refer-
ence and a copy of which is on file at the
principal offices of the Company. Under cer-
tain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. The Company
will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly
after receipt of a written request therefor.
Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring
Person or an Adverse Person or any Affiliate or
Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held
by or on behalf of such Person or by any subse-
xxxxx xxxxxx, may become null and void.
With respect to such certificates containing the forego-
ing legend, until the earlier of (i) the Distribution
Date or (ii) the Expiration Date, the Rights associated
with the Common Stock represented by such certificates
shall be evidenced by such certificates alone and regis-
tered holders of Common Stock shall also be the regis-
tered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the
forms of election to purchase and of assignment to be
printed on the reverse thereof) shall each be substan-
tially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule
or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage.
Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed,
shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number
of one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein
(such exercise price per one one-hundredth of a share,
the "Purchase Price"), but the amount and type of securi-
ties purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pur-
suant to Section 3(a) or Section 22 hereof that repre-
sents Rights beneficially owned by: (i) an Acquiring
Person or Adverse Person or any Associate or Affiliate of
an Acquiring Person or Adverse Person, (ii) a transferee
of an Acquiring Person or Adverse Person (or of any such
Associate or Affiliate) who becomes a transferee after
the Acquiring Person or Adverse Person becomes such, or
(iii) a transferee of an Acquiring Person or Adverse
Person (or of any such Associate or Affiliate) who be-
comes a transferee prior to or concurrently with the
Acquiring Person or Adverse Person becoming such and re-
ceives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring
Person or Adverse Person to holders of equity interests
in such Acquiring Person or Adverse Person or to any
Person with whom such Acquiring Person or Adverse Person
has any continuing agreement, arrangement or understand-
ing regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has deter-
mined is part of a plan, arrangement or understanding
which has as a primary purpose or effect avoidance of
Section 7(e) hereof, and any Rights Certificate issued
pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain
(to the extent feasible) the following legend:
The Rights represented by this Rights Certifi-
cate are or were beneficially owned by a Person
who was or became an Acquiring Person or Ad-
verse Person or an Affiliate or Associate of an
Acquiring Person or Adverse Person (as such
terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the
Rights represented hereby may become null and
void in the circumstances specified in Section
7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the
Board, its President or any Vice President, either
manually or by facsimile signature, and shall have af-
fixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be counter-
signed by the Rights Agent, either manually or by facsim-
ile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the
Company who shall have signed any of the Rights Certifi-
xxxxx shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance
and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same
force and effect as though the person who signed such
Rights Certificates had not ceased to be such officer of
the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual
date of the execution of such Rights Certificate, shall
be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its prin-
cipal office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise
or transfer, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of
the Rights Certificates, the number of Rights evidenced
on its face by each of the Rights Certificates and the
date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates. (a) Subject to the
provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of busi-
ness on the Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates representing
Rights that have been exchanged pursuant to Section 24
hereof) may be transferred, split up, combined or ex-
changed for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number
of one one-hundredths of a share of Preferred Stock (or,
following a Triggering Event, Common Stock, other securi-
ties, cash or other assets, as the case may be) as the
Rights Certificate or 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 Rights Cer-
tificate or Certificates shall make such request in
writing delivered to the Rights Agent, and shall sur-
render the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the
principal office or offices of the Rights Agent desig-
nated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the
form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section
4(b), Section 7(e), Section 14 and Section 24 hereof,
countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment
of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any trans-
fer, split up, combination or exchange of Rights Certifi-
xxxxx.
(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 Rights
Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them,
and reimbursement to the Company and the Rights Agent of
all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the
Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the
Rights Agent for countersignature and delivery to the
registered owner in lieu of the Rights Certificate so
lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e)
hereof, the registered holder of any Rights Certificate
may exercise the Rights evidenced thereby (except as oth-
erwise provided herein including, without limitation, the
restrictions on exercisability set forth in Section 9(c),
Section 11(a)(iii) and Section 23(a) hereof) in whole or
in part at any time after the Distribution Date upon sur-
render of the Rights Certificate, with the form of elec-
tion to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the princi-
pal office or offices of the Rights Agent designated for
such purpose, together with payment of the aggregate Pur-
chase Price with respect to the total number of one
one-hundredths of a share (or other securities, cash or
other assets, as the case may be) as to which such sur-
rendered Rights are then exercisable, at or prior to the
earliest of (i) the close of business on March 11, 2006
(the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof or
(iii) the time at which such Rights are exchanged pursu-
ant to Xxxxxxx 00 xxxxxx (xxx xxxxxxxx xx (x), (xx) and
(iii) being herein referred to as the "Expiration Date").
(b) The Purchase Price for each one
one-hundredth of a share of Preferred Stock pursuant to
the exercise of a Right shall initially be $115.00, and
shall be subject to adjustment from time to time as pro-
vided in Sections 11 and 13(a) hereof and shall be pay-
able in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of elec-
tion to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so
exercised, of the Purchase Price per one one-hundredth of
a share of Preferred Stock (or other shares, securities,
cash or other assets, as the case may be) to be purchased
as set forth below and an amount equal to any applicable
transfer tax, the Rights Agent shall, subject to Section
20(k) hereof, thereupon promptly (i) (A) requisition from
any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one
one-hundredths of a share of Preferred Stock to be pur-
chased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B)
if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exer-
cise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a share
of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represent-
ed by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will
direct the depositary agent to comply with such request,
(ii) requisition from the Company the amount of cash, if
any, to be paid in lieu of fractional shares in accor-
dance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder
of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon
the order of the registered holder of such Rights Certif-
icate. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii) hereof)
shall be made in cash or by certified bank check or bank
draft payable to the order of the Company. In the event
that the Company is obligated to issue other securities
(including Common Stock) of the Company, pay cash and/or
distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary
so that such other securities, cash and/or other property
are available for distribution by the Rights Agent, if
and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event
that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock
would be issued.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder
of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first
occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or Adverse
Person or an Associate or Affiliate of an Acquiring Per-
son or Adverse Person, (ii) a transferee of an Acquiring
Person or Adverse Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring
Person or Adverse Person becomes such, or (iii) a trans-
feree of an Acquiring Person or Adverse Person (or of any
such Associate or Affiliate) who becomes a transferee
prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse
Person to holders of equity interests in such Acquiring
Person or Adverse Person or to any Person with whom the
Acquiring Person or Adverse Person has any continuing
agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board of
Directors of the Company has determined is part of a
plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e),
shall become null and void without any further action and
no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision
of this Agreement or otherwise. The Company shall use
all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure
to make any determinations with respect to an Acquiring
Person or Adverse Person or any of their respective
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence
of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed
and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. Cancellation and Destruction of
Rights Certificates. All Rights Certificates surrendered
for the purpose of exercise, transfer, split up, com-
bination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent
for cancellation or in cancelled form, or, if surrendered
to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of
this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Cer-
tificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy
such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of
Capital Stock. (a) The Company covenants and agrees
that it will cause to be reserved and kept available out
of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out
of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and
issued shares held in its treasury), the number of shares
of Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities)
that, as provided in this Agreement including Section
11(a)(iii) hereof, will be sufficient to permit the
exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred
Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed
on any national securities exchange, the Company shall
use its best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(c) The Company shall use its best ef-
forts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has
been determined in accordance with Section 11(a)(iii)
hereof, a registration statement under the Securities Act
of 1933 (the "Act"), with respect to the securities
purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effec-
tive (with a prospectus at all times meeting the requirements
of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such
securities, and (B) the date of the expiration of the
Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time not
to exceed ninety (90) days after the date set forth in
clause (i) of the first sentence of this Section 9(c),
the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exer-
cisability 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 is
required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights
until such time as a registration statement has been
declared effective. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been
obtained, the exercise thereof shall not be permitted
under applicable law or a registration statement shall
not have been declared effective.
(d) The Company covenants and agrees that
it will take all such action as may be necessary to
ensure that all one one-hundredths of a share of
Preferred Stock (and, following the occurrence of a
Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and
agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the
Rights Certificates and of any certificates for a number
of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be)
upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be
payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or
delivery of a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities,
as the case may be) in respect of a name other than that
of, the registered holder of the Rights Certificates
evidencing Rights surrendered for exercise or to issue or
deliver any certificates for a number of one
one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) in a
name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each
person in whose name any certificate for a number of one
one-hundredths of a share of Preferred Stock (or Common
Stock and/or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such
fractional shares of Preferred Stock (or Common Stock
and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights
was duly 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 Preferred Stock (or Common Stock
and/or other securities, as the case may be) transfer
books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares
(fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities,
as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be
exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The
Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event the Company
shall at any time after the date of this
Agreement (A) declare a dividend on the
Preferred Stock payable in shares of Preferred
Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a
reclassification of the Preferred Stock
(including any such reclassification in connec-
tion with a consolidation or merger in which
the Company is the continuing or surviving
corporation), except as otherwise provided in
this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the
record date for such dividend or of the effec-
tive date of such subdivision, combination or
reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as
the case may be, issuable on such date, shall
be proportionately adjusted so that the holder
of any Right exercised after such time shall be
entitled to receive, upon payment of the Pur-
chase Price then in effect, the aggregate num-
ber and kind of shares of Preferred Stock or
capital stock, as the case may be, which, if
such Right had been exercised immediately prior
to such date and at a time when the Preferred
Stock transfer books of the Company were open,
he or she would have owned upon such exercise
and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassi-
fication. If an event occurs which would re-
quire an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) 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) hereof.
(ii) In the event that:
(A) any Person (other than the Com-
pany, any Subsidiary of the Company, any em-
ployee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or en-
tity organized, appointed or established by the
Company for or pursuant to the terms of any
such plan), alone or together with its Affiliates
and Associates, shall, at any time after
the Rights Dividend Declaration Date, become an
Acquiring Person, unless the event causing the
Person to become an Acquiring Person is (1) a
transaction set forth in Section 13(a) hereof,
(2) an acquisition of shares of Common Stock
pursuant to a tender offer or an exchange offer
for all outstanding shares of Common Stock at a
price and on terms determined by at least a
majority of the members of the Board of Direc-
tors who are not officers of the Company and
who are not representatives, nominees, Affili-
ates or Associates of an Acquiring Person, af-
ter receiving advice from one or more invest-
ment banking firms, to be (a) at a price which
is fair to stockholders (taking into account
all factors which such members of the Board
deem relevant including, without limitation,
prices which could reasonably be achieved if
the Company or its assets were sold on an or-
xxxxx basis designed to realize maximum value)
and (b) otherwise in the best interests of the
Company and its stockholders (a "Qualifying
Offer") or (3) an acquisition of shares of
Common Stock by Henkel or its Affiliates, if
Henkel shall have executed a written agreement
with the Company (and approved by the Company's
Board of Directors) on or prior to the date on
which Henkel (together with its Affiliates)
became the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding,
which agreement imposes one or more limitations
on the amount of Xxxxxx'x Beneficial Ownership
of shares of Common Stock, and if, and so long
as, such written agreement (or any amendment
thereto approved by the Company's Board of
Directors) continues to be binding on Henkel
and Henkel is in compliance (as determined by
the Company's Board of Directors in its discre-
tion) with the terms of such written agreement
(including any such amendment); provided, how-
ever, that no amendment of any such agreement
shall cure any prior breach of such agreement
or any amendment thereto; or
(B) The Board of Directors of the
Company shall declare any Person to be an Ad-
verse Person, upon a determination that such
Person, alone or together with its Affiliates
and Associates, has, at any time after this
Agreement has been filed with the Securities
and Exchange Commission as an exhibit to a fil-
ing under the Exchange Act, become the Benefi-
cial Owner of a number of shares of Common
Stock which the Board of Directors of the Com-
pany determines to be substantial (which number
of shares shall in no event represent less than
10% of the outstanding shares of Common Stock)
and a determination by the Board of Directors
of the Company, after reasonable inquiry and
investigation, including consultation with such
persons as such directors shall deem appropri-
ate and consideration of such factors as are
permitted by applicable law, that (a) such
Beneficial Ownership by such Person is intended
to cause the Company to repurchase the shares
of Common Stock beneficially owned by such
Person or to cause pressure on the Company to
take action or enter into a transaction or se-
xxxx of transactions intended to provide such
Person with short-term financial gain under
circumstances where the Board of Directors de-
termines that the best long-term interests of
the Company would not be served by taking such
action or entering into such transaction or se-
xxxx of transactions at the time or (b) such
Beneficial Ownership is causing or reasonably
likely to cause a material adverse impact (in-
cluding, but not limited to, impairment of
relationships with customers or impairment of
the Company's ability to maintain its competi-
tive position) on the business or prospects of
the Company;
then, promptly following the occurrence of any event
described in Section 11(a)(ii)(A) or (B) hereof,
proper provision shall be made so that each holder
of a Right (except as provided below and in Section
7(e) hereof) shall thereafter have the right to re-
ceive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-hundredths
of a share of Preferred Stock, such number of shares
of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current
Purchase Price by the then number of one
one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event,
and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as
the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the current
market price (determined pursuant to Section 11(d)
hereof) per share of Common Stock on the date of
such first occurrence (such number of shares, the
"Adjustment Shares").
(iii) In the event that the number
of shares of Common Stock which are authorized
by the Company's Certificate of Incorporation
but not outstanding or reserved for issuance
for purposes other than upon exercise of the
Rights are not sufficient to permit the exer-
cise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section
11(a), the Company shall (A) determine the
value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value"),
and (B) with respect to each Right (subject to
Section 7(e) hereof), make adequate provision
to substitute for the Adjustment Shares, upon
the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a
reduction in the Purchase Price, (3) Common
Stock or other equity securities of the Company
(including, without limitation, shares, or
units of shares, of preferred stock, such as
the Preferred Stock, which the Board has deemed
to have essentially the same value or economic
rights as shares of Common Stock (such shares
of preferred stock being referred to as "Common
Stock Equivalents")), (4) debt securities of
the Company, (5) other assets, or (6) any com-
bination of the foregoing, having an aggregate
value equal to the Current Value (less the
amount of any reduction in the Purchase Price),
where such aggregate value has been determined
by the Board based upon the advice of a
nationally recognized investment banking firm
selected by the Board; provided, however, that
if the Company shall not have made adequate
provision to deliver value pursuant to clause
(B) above within thirty (30) days following the
later of (x) the first occurrence of a Section
11(a)(ii) Event and (y) the date on which the
Company's right of redemption pursuant to Sec-
tion 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)-
(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for
exercise of a Right and without requiring pay-
ment of the Purchase Price, shares of Common
Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have
an aggregate value equal to the Spread. For
purposes of the preceding sentence, the term
"Spread" shall mean the excess of (i) the Cur-
rent Value over (ii) the Purchase Price. If
the Board determines in good faith that it is
likely that sufficient additional shares of
Common Stock could be authorized for issuance
upon exercise in full of the Rights, the thirty
(30) day period set forth above may be extended
to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii)
Trigger Date, in order that the Company may
seek shareholder approval for the authorization
of such additional shares (such thirty (30) day
period, as it may be extended, is herein called
the "Substitution Period"). To the extent that
action is to be taken pursuant to the first
and/or third sentences of this Section 11(a)(i-
ii), the Company (1) shall provide, subject to
Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights, and
(2) may suspend the exercisability of the
Rights until the expiration of the Substitution
Period in order to seek such shareholder ap-
proval for such authorization of additional
shares and/or to decide the appropriate form of
distribution to be made pursuant to such first
sentence and to determine the value thereof.
In the event of any such suspension, the Compa-
ny 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. For purposes of this
Section 11(a)(iii), the value of each Adjust-
ment Share shall be the Current Market Price
per share of the Common Stock on the Section
11(a)(ii) Trigger Date and the per share or per
unit value of any Common Stock Equivalent shall
be deemed to equal the Current Market Price per
share of the Common Stock on such date.
(b) In case the Company shall fix a
record date for the issuance of rights (other than the
Rights), options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days
after such record date) Preferred Stock (or shares having
the same rights, privileges and preferences as the shares
of Preferred Stock ("equivalent preferred stock")) or
securities convertible into Preferred Stock or equivalent
preferred stock at a price per share of Preferred Stock
or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible
into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on
such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall
be the number of shares of Preferred Stock outstanding on
such record date, plus the number of shares of Preferred
Stock which the aggregate offering price of the total
number of shares of Preferred Stock and/or equivalent
preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so
to be offered) would purchase at such current market
price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record
date, plus the number of additional shares of Preferred
Stock and/or equivalent preferred stock to be offered for
subscription or purchase (or into which the convertible
securities so to be offered are initially convertible).
In case such subscription price may be paid by delivery
of consideration part or all of which may 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 and shall be bind-
ing on the Rights Agent and the holders of the Rights.
Shares of Preferred Stock owned by or held for the ac-
count of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is
fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Company shall fix a
record date for a distribution to all holders of
Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash
dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in
stock other than Preferred Stock) or subscription rights
or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Pur-
chase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the
current market price (as determined pursuant to Section
11(d) hereof) per share of Preferred Stock on such record
date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights) of the portion of
the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denomi-
nator of which shall be such current market price (as
determined pursuant to Section 11(d) hereof) per share of
Preferred Stock. Such adjustments shall be made succes-
sively whenever such a record date is fixed, and in the
event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation
hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the Current Market Price per
share of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such
Common Stock for the thirty (30) consecutive Trading Days
immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof,
the Current Market Price per share of Common Stock on any
date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the ten
(10) consecutive Trading Days immediately following such
date; provided, however, that in the event that the
Current Market Price per share of the Common Stock is
determined during a period following the announcement by
the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of
such Common Stock or securities convertible into shares
of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such
Common Stock, and the ex-dividend date for such dividend
or distribution, or the record date for such subdivision,
combination or reclassification shall not have occurred
prior to the commencement of the requisite thirty (30)
Trading Day or ten (10) Trading Day period, as set forth
above, then, and in each such case, the Current Market
Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction
reporting system with respect to securities listed or ad-
mitted to trading on the New York Stock Exchange or, if
the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system
with respect to securities listed on the principal na-
tional securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares
of Common Stock are not listed or admitted to trading on
any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished
by a professional market maker making a market in the
Common Stock selected by the Board. If on any such date
no market maker is making a market in the Common Stock,
the fair value of such shares on such date as determined
in good faith by the Board shall be used. The term
"Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open
for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or
traded, Current Market Price per share shall mean the
fair value per share as determined in good faith by the
Board, whose determination shall be described in a state-
ment filed with the Rights Agent and shall be conclusive
for all purposes.
(ii) For the purpose of any computation
hereunder, the Current Market Price per share of
Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in clause (i) of
this Section 11(d) (other than the last sentence
thereof). If the Current Market Price per share of Pre-
ferred Stock cannot be determined in the manner provided
above or if the Preferred Stock is not publicly held or
listed or traded in a manner described in clause (i) of
this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately
adjusted for such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by
the Current Market Price per share of the Common Stock.
If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, Current Market
Price per share of the Preferred Stock shall mean the
fair value per share as determined in good faith by the
Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be
conclusive for all purposes. For all purposes of this
Agreement, the Current Market Price of a Unit shall be
equal to the Current Market Price of one share of
Preferred Stock divided by 100.
(e) Anything herein to the contrary not-
withstanding, no adjustment in the Purchase Price shall
be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under
this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or
other share or one-millionth of a share of Preferred
Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than the ear-
lier of (i) three (3) years from the date of the transac-
tion which mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof,
the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other
than Preferred Stock, thereafter the number of such other
shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment
from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect
to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provi-
sions of Sections 7, 9, 10, 13 and 14 hereof with respect
to the Preferred Stock shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at
the adjusted Purchase Price, the number of one
one-hundredths of a share of Preferred Stock purchasable
from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exer-
cised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to pur-
chase, at the adjusted Purchase Price, that number of one
one-hundredths of a share of Preferred Stock (calculated
to the nearest one-millionth) obtained by (i) multiplying
(x) the number of one one-hundredths of a share covered
by a Right immediately prior to this adjustment, by (y)
the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the
product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust
the number of Rights, in lieu of any adjustment in the
number of one one-hundredths of a share of Preferred
Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number
of Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment
of the number of Rights shall become that number of
Rights (calculated to the nearest one-ten-thousandth)
obtained by dividing the Purchase Price in effect im-
mediately prior to adjustment of the Purchase Price by
the Purchase Price in effect immediately after adjustment
of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment
to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall
be at least ten (10) days later than the date of the
public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record
date Rights Certificates evidencing, subject to Section
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 Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates eviden-
cing all the Rights to which such holders shall be en-
titled after such adjustment. Rights Certificates so to
be distributed shall be issued, executed and counter-
signed 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 hold-
ers of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or
change in the Purchase Price or the number of one
one-hundredths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredths of a share and
the number of one one-hundredths of a share which were
expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would
cause an adjustment reducing the Purchase Price below the
then stated value, if any, of the number of one
one-hundredths of a share of Preferred Stock issuable
upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its coun-
sel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable such
number of one one-hundredths of a share of Preferred
Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11
shall require that an adjustment in the Purchase Price be
made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exer-
cised after such record date the number of one
one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of
one one-hundredths of a share of Preferred Stock and
other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such
holder's right to receive such additional shares (frac-
tional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled
to make such reductions in the Purchase Price, in ad-
dition to those adjustments expressly required by this
Section 11, as and to the extent that in their 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 Preferred Stock, (ii) issuance wholly
for cash of any shares of Preferred Stock at
less than the current market price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for
shares of Preferred Stock, (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 Preferred Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that
it shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a Sub-
sidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or
(iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger
or sale there are any rights, warrants or other instru-
ments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such
consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the "Prin-
cipal Party" for purposes of Section 13(a) hereof shall
have received a distribution of Rights previously owned
by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees
that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 27 hereof, take (or
permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the
contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a
dividend on the outstanding shares of Common Stock pay-
able in shares of Common Stock, (ii) subdivide the out-
standing shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number
of shares, the number of Rights associated with each
share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date,
shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common
Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated
with each share of Common Stock immediately prior to such
event by a fraction the numerator which shall be the
total number of shares of Common Stock outstanding im-
mediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares
of Common Stock outstanding immediately following the
occurrence of such event.
(q) The failure of the Board of Directors
to declare a Person to be an Adverse Person following
such Person becoming the Beneficial Owner of shares of
Common Stock representing 10% or more of the outstanding
shares of Common Stock shall not imply that such Person
is not an Adverse Person or limit the Board of Directors'
right at any time in the future to declare such Person to
be an Adverse Person.
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is
made as provided in Section 11 and Section 13 hereof, the
Company shall (a) promptly prepare a certificate setting
forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with
the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such cer-
tificate, and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate repre-
senting shares of Common Stock) in accordance with Sec-
tion 26 hereof. The Rights Agent shall be fully protect-
ed in relying on any such certificate and on any adjustment
therein contained.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
(a) In the event that, following the
Stock Acquisition Date, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) here-
of), and the Company shall not be the continuing or sur-
viving corporation of such consolidation or merger, (y)
any Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof)
shall consolidate with, or merge with or into, the Com-
pany, and the Company shall be the continuing or sur-
viving corporation of such consolidation or merger and,
in connection with such consolidation or merger, all or
part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities
of any other Person or cash or any other property, or (z)
the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise trans-
fer), in one transaction or a series of related transac-
tions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with
Section 11(o) hereof), then, and in each such case
(except as may be contemplated by Section 13(d) hereof),
proper provision shall be made so that: (i) each holder
of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in
accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, non-assess-
able and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined),
not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current
Purchase Price by the number of one one-hundredths of a
share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event,
multiplying the number of such one one-hundredths of a
share for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event by
the Purchase Price in effect immediately prior to such
first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event,
shall be referred to as the "Purchase Price" for each
Right and for all purposes of this Agreement) by (2) 50%
of the current market price (determined pursuant to
Section 11(d)(i) hereof) per share of the Common Stock of
such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall there-
after be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Com-
pany" shall thereafter be deemed to refer to such Prin-
cipal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a
Section 13 Event; (iv) such Principal Party shall take
such steps (including, but not limited to, the xxxxx-
vation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such
transaction as may be necessary to assure that the provi-
sions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii)
hereof shall be of no effect following the first occur-
rence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transac-
tion described in clause (x) or (y) of the
first sentence of Section 13(a), the Person
that is the issuer of any securities into which
shares of Common Stock of the Company are con-
verted in such merger or consolidation, and if
no securities are so issued, the Person that is
the other party to such merger or consolidation; and
(ii) in the case of any xxxx-
saction described in clause (z) of the first
sentence of Section 13(a), the Person that is
the party receiving the greatest portion of the
assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has
not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange
Act, and such Person is a direct or indirect Subsidiary
of another Person the Common Stock of which is and has
been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a Subsidiary,
directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any
such consolidation, merger, sale or transfer unless the
Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been
issued or reserved for issuance to permit the exercise in
full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth
in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of
any consolidation, merger or sale of assets mentioned in
paragraph (a) of this Section 13, the Principal Party
will
(i) prepare and file a
registration statement under the Act, with
respect to the Rights and the securities pur-
chasable upon exercise of the Rights on an
appropriate form, and will 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 Act) until the Expiration Date; and
(ii) will deliver to holders of
the Rights historical financial statements for
the Principal Party and each of its Affiliates
which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall
occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the
manner described in Section 13(a).
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 shall not be ap-
plicable to a transaction described in subparagraphs (x)
and (y) of Section 13(a) if (i) such transaction is
consummated with a Person or Persons who acquired shares
of Common Stock pursuant to a Qualifying Offer (or a
wholly owned subsidiary of any such Person or Persons),
(ii) the price per share of Common Stock offered in such
transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common
Stock whose shares were purchased pursuant to such tender
offer or exchange offer and (iii) the form of consider-
ation being offered to the remaining holders of shares of
Common Stock pursuant to such transaction is the same as
the form of consideration paid pursuant to such tender
offer or exchange offer. Upon consummation of any such
transaction contemplated by this Section 13(d), all
Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or
to distribute Rights Certificates which evidence frac-
tional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole
Right. For purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to
the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for
any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transac-
tion 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 shares of Preferred Stock (other than
fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exer-
cise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock). In lieu of
fractional shares of Preferred Stock that are not in-
tegral multiples of one one-hundredth of a share of Pre-
ferred Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one
one-hundredth of a share of Preferred Stock. For pur-
poses of this Section 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be
one one-hundredth of the closing price of a share of Pre-
ferred Stock (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date
of such exercise.
(c) Following the occurrence of a Trig-
xxxxxx Event, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the
Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional
shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the current market
value of one (1) share of Common Stock. For purposes of
this Section 14(c), the current market value of one share
of Common Stock shall be the closing price of one share
of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the accep-
tance of the Rights expressly waives his or her right to
receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of
action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder
of any Rights Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the
Rights Agent or of the holder of any other Rights Cer-
tificate (or, prior to the Distribution Date, of the
Common Stock), may, in his or her own behalf and for his
or her own benefit, enforce, and may institute and main-
tain any suit, action or proceeding against the Company
to enforce, or otherwise act in respect of, his or her
right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certif-
icate and in this Agreement. Without limiting the fore-
going 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 specif-
ic performance of the obligations hereunder and injunc-
tive relief against actual or threatened violations of
the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right by accepting the same consents
and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of Common Stock;
(b) after the Distribution Date, the
Rights Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper
instrument of transfer and with the appropriate forms and
certificates fully executed;
(c) subject to Section 6(a) and Section
7(f) hereof, the Company and the Rights Agent may deem
and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (not-
withstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock cer-
tificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last
sentence of Section 7(e) hereof, shall be required to be
affected by any notice to the contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a
Right or 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 com-
petent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts
to have any such order, decree or ruling lifted or other-
wise overturned as soon as possible.
Section 17. Rights Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of
one one-hundredths of a share of Preferred Stock or any
other securities of the Company which may at any time be
issuable on the exercise of the Rights represented
thereby, nor shall anything contained herein or in any
Rights Certificate be construed to confer upon the holder
of any Rights Certificate, as such, any of the rights of
a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or with-
hold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders
(except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Cer-
tificate shall have been exercised in accordance with the
provisions 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 disbursements and other disbursements
incurred in the administration and execution of this
Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of
this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(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 Rights Certificate or certificate for Common
Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorse-
ment, 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 result-
ing from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or
any corporation succeeding to the corporate trust or
shareholder services 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, however, that such
corporation would be eligible for appointment as a suc-
cessor 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 Rights Certificates shall have been counter-
signed but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights
Agent and deliver such Rights Certificates so counter-
signed; and in case at that time any of the Rights Cer-
tificates shall not have been countersigned, any succes-
sor Rights Agent may countersign such Rights Certificates
either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such
Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the
Rights Agent shall be changed and at such time any of the
Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersig-
nature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of
the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights
Certificates either in its prior name or in its changed
name; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Cer-
tificates and in this Agreement.
Section 20. Duties of Rights Agent. The
Rights Agent undertakes the duties and obligations im-
posed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and
in accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter
(including, without limitation, the identity of any
Acquiring Person or Adverse Person and the determination
of "current market price") 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 the Chairman of the Board, the
Chief Executive Officer, the President, the Treasurer,
the Secretary or any Assistant Secretary of the Company
and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such cer-
tificate.
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable
for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as
to its countersignature on such Rights Certificates), but
all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under
any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Cer-
tificate (except its countersignature thereof); nor shall
it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section
11, Section 13 or Section 24 hereof or responsible for
the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the
exercise of Rights evidenced by Rights Certificates after
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 Common Stock or Preferred Stock to be issued
pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or Preferred
Stock will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the car-
rying 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 the Chairman of
the Board, the Chief Executive Officer, the President,
the Secretary, any Assistant Secretary or the Treasurer
of the Company, and to apply to such officers for advice
or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instruc-
tions 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,
however, reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds
or otherwise incur any financial liability in the perfor-
xxxxx of any of its duties hereunder or in the exercise
of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indem-
nification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Right Cer-
tificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of as-
signment or form of election to purchase, as the case may
be, has either not been completed or indicates an affir-
mative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to
such requested exercise of transfer without first consul-
ting 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
thirty (30) days' notice in writing mailed to the Com-
pany, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and to
the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of
the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Cer-
tificates 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 thirty (30) days after
giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the
holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdic-
tion 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 State of New York (or of any other state of the
United States so long as such corporation is authorized
to do business as a banking institution in the State of
New York), in good standing, which is authorized under
such laws to exercise corporate trust or stock transfer
powers and (a) 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 $100,000,000 or (b) a subsidiary of a
corporation described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsi-
bilities 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 hereun-
der, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment,
the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the
Common Stock and the Preferred Stock, and mail a notice
thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided
for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resigna-
tion or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evi-
dencing Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under
the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection
with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the redemp-
tion or expiration of the Rights, the Company (a) shall,
with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded as of
the Distribution Date, or upon the exercise, conversion
or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed neces-
sary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the
appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent
that, the Company shall be advised by counsel that such
issuance would create a significant risk of material
adverse tax consequences to the Company or the Person to
whom such Rights Certificate would be issued, and (ii) no
such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company
may, at its option, at any time prior to the earlier of
(i) the close of business on the tenth day following the
Stock Acquisition Date (or, if the Stock Acquisition Date
shall have occurred prior to the Record Date, the close
of business on the tenth day following the Record Date),
or (ii) the Final Expiration Date, redeem all but not
less than all the then outstanding Rights at a redemption
price of $0.01 per Right, as such amount may be appro-
priately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred
to as the "Redemption Price"). The Board of Directors
may not redeem any Rights following a determination
pursuant to Section 11(a)(ii)(B) that any Person is an
Adverse Person. Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be
exercisable after the first occurrence of a Section
11(a)(ii) Event until such time as the Company's right of
redemption hereunder has expired. The Company may, at
its option, pay the Redemption Price in cash, shares of
Common Stock (based on the "current market price", as
defined in Section 11(d)(i) hereof, of the Common Stock
at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the
Board of Directors of the Company ordering the redemption
of the Rights, evidence of which shall have been filed
with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price for each
Right so held. Promptly after the action of the Board of
Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the
Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at each
holder's last address as it appears upon the registry
books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of
redemption will state the method by which the payment of
the Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company
may, at its option, at any time after any Person becomes
an Acquiring Person or is determined to be an Adverse
Person pursuant to Section 11(a)(ii)(B), exchange all or
part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for
shares of Common Stock at an exchange ratio of one share
of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar trans-
action 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 Stock for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of fifty per-
cent (50%) or more of the Common Stock then outstanding.
(b) Immediately upon the action of the
Board of Directors of the Company ordering the exchange
of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice,
the right to exercise such Rights shall terminate and the
only right thereafter of a holder of such Rights shall be
to receive that number of shares of Common Stock equal to
the number of such Rights held by such holder multiplied
by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last ad-
dresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Common
Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Sec-
tion 24, the Company, at its option, may substitute
shares of Preferred Stock (or equivalent preferred stock,
as such term is defined in paragraph (b) of Section 11
hereof) for shares of Common Stock exchangeable for
Rights, at the initial rate of one one-hundredth of a
share of Preferred Stock (or equivalent preferred stock)
for each share of Common Stock, as appropriately adjusted
to reflect adjustments in the voting rights of the Pre-
ferred Stock pursuant to Section 3(A) of the rights,
powers and preferences attached hereto as Exhibit A, so
that the fraction of a share of Preferred Stock delivered
in lieu of each share of Common Stock shall have the same
voting rights as one share of Common Stock.
(d) In the event that there shall not be
sufficient shares of Common Stock issued but not out-
standing or authorized but unissued to permit any ex-
change of Rights as contemplated in accordance with this
Section 24, the Company shall take all such action as may
be necessary to authorize additional shares of Common
Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to
issue fractions of shares of Common Stock or to distrib-
ute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of
Common Stock, there shall be paid to the registered
holders of the Right Certificates with regard to which
such fractional share of Common Stock would otherwise be
issuable, an amount in cash equal to the same fraction of
the current market value of a whole share of Common
Stock. For the purposes of this subsection (e), the
current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular quarter-
ly cash dividend out of earnings or retained earnings of
the Company), or (ii) to offer to the holders of
Preferred Stock rights or warrants to subscribe for or to
purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification
of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares
of Preferred Stock), or (iv) to effect any consolidation
or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one
transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of
its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), 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 Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the
holders of the shares of Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii)
above at least twenty (20) days prior to the record date
for determining holders of the shares of Preferred Stock
for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of
participation therein by the holders of the shares of
Preferred Stock whichever shall be the earlier.
(b) In case any of the events set forth
in Section 11(a)(ii) hereof shall occur, then, in any
such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate,
to the extent feasible and in accordance with Section 26
hereof, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event
to holders of Rights under Section 11(a)(ii) hereof, and
(ii) all references in the preceding paragraph to
Preferred Stock shall be deemed thereafter to refer to
Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate
to 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:
Ecolab Inc.
Ecolab Center
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or
demand authorized by this Agreement to be given or made
by the Company or by the holder of any Rights Certificate
to or on the Rights Agent shall be sufficiently given or
made if sent by first-class mail, postage prepaid, ad-
dressed (until another address is filed in writing with
the Company) as follows:
First Chicago Trust Company
of New York
X.X. Xxx 0000
Xxxxx 0000
Xxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: Tenders and Exchanges
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates
representing shares of Common Stock) shall be sufficiently
given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior
to the Distribution Date and subject to the penultimate
sentence of this Section 27, the Company and the Rights
Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the ap-
proval of any holders of certificates representing shares
of Common Stock. From and after the Distribution Date
and subject to the penultimate sentence of this Section
27, the Company and the Rights Agent shall, if the Com-
pany so directs, supplement or amend this Agreement
without the approval of any holders of Rights 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 change or supplement the provisions
hereunder in any manner which the Company may deem necessary
or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates
(other than an Acquiring Person or Adverse Person or an
Affiliate or Associate of an Acquiring Person or Adverse
Person); provided this Agreement may not be supplemented
or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights
may be redeemed at such time as the Rights are not then
redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the
holders of Rights (other than an Acquiring Person or
Adverse Person and its Affiliates and Associates). Upon
the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement
or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supple-
ment or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident
with the interests of the holders of Common Stock.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns
hereunder.
Section 29. Determinations and Actions by the
Board of Directors, etc. For all purposes of this
Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time,
including for purposes of determining the particular
percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board of Directors of the Company
shall have the exclusive power and authority to adminis-
ter this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or
as may be necessary or advisable in the administration of
this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agree-
ment, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions,
calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omis-
sions with respect to the foregoing) which are done or
made by the Board in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent,
the holders of the Rights and all other parties, and (y)
not subject the Board to any liability to the holders of
the Rights.
Section 30. Benefits of This Agreement. Noth-
ing in this Agreement shall be construed to give to any
Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of the
Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be
for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 31. 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; provided, however, that notwithstanding
anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable
and the Board of Directors of the Company determines in
its good faith judgment that severing the invalid lan-
guage from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the close of busi-
ness on the tenth day following the date of such determi-
nation by the Board of Directors. Without limiting the
foregoing, if any provision requiring a majority of the
members of the Board of Directors who are not officers of
the Company and who are not representatives, nominees,
Affiliates or Associates of an Acquiring Person to act is
held by any court of competent jurisdiction or other
authority to be invalid, void or unenforceable, such
determination shall be made by the Board of Directors of
the Company in accordance with applicable law and the
Company's Certificate of Incorporation and bylaws.
Section 32. Governing Law. This Agreement,
each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract made under the laws of
the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of
such State applicable to contracts made and to be per-
formed entirely within such State.
Section 33. Counterparts. This Agreement may
be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together
constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have
caused this Rights Agreement to be duly executed and
their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above
written.
Attest: ECOLAB INC.
By/s/Xxxxxxxx X. Xxxx By/s/Xxxxxxx X. Xxxxxxx
Name: Xxxxxxxx X. Xxxx Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Secretary Title: Vice President and Secretary
Attest: FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By/s/Xxxxx Xxxxxxx By/s/Xxxxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxxx Name: Xxxxxx Xxxxxxxxxx
Title: Customer Service Title: Assistant Vice President
Officer
Exhibit A
PREFERENCES AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
of
ECOLAB INC.
The voting powers, preferences and relative,
participating, optional and other special rights of the shares of
Series A Junior Participating Preferred Stock, and the
qualifications, limitations or restrictions thereof, are as
follows:
Section 1. Designation and Amount. The shares of
such series shall be designated as "Series A Junior Participating
Preferred Stock" and the number of shares constituting such series
shall be 1,000,000.
Section. 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the
holders of any shares of any series of Preferred Stock, if any,
issued from time to time ranking prior and superior to the shares
of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating
Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the
fifteenth day of February, May, August and November in each year
(each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment
Date after the first issuance of a share or fraction of a share of
Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a)
$1.00 or (b) subject to the provision for adjustment hereinafter
set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision
of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $1.00 per
share, of the Corporation (the "Common Stock") since the
immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A
Junior Participating Preferred Stock. In the event the
Corporation shall at any time after February 24, 1996 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to
which holders of shares of Series A Junior Participating Preferred
Stock were entitled immediately prior to such event under clause
(b) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred Stock
as provided in paragraph (A) above immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Divided Payment
Date, a dividend of $1.00 per share as such amount may be adjusted
pursuant to the last sentence of the preceding paragraph on the
Series A Junior Participating Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be
cumulative on outstanding shares of Series A Junior Participating
Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Junior
Participating Preferred Stock, unless the date of issue of such
shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders
of shares of Series A Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly
Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Junior
Participating Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors
may fix a record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series A Junior Participating Preferred Stock shall have the
following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Junior Participating
Preferred Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the
number of votes per share to which holders of shares of Series A
Junior Participating Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number
by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law,
the holders of shares of Series A Junior Participating Preferred
Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any
Series A Junior Participating Preferred Stock shall be in
arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall xxxx the
beginning of a period (herein called a "default period")
which shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods
and for the current quarterly dividend period on all shares
of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart
for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in
an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the
right to elect two (2) Directors.
(ii) During any default period, such voting
right of the holders of Series A Junior Participating
Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this
Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, provided that
neither such voting right nor the right of the holders of
any other series of Preferred Stock, if any, to increase, in
certain cases, the authorized number of Directors shall be
exercised unless the holders of ten percent (10%) in number
of shares of Preferred Stock outstanding shall be present in
person or by proxy. The absence of a quorum of the holders
of Common Stock shall not affect the exercise by the holders
of Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock shall exercise such
voting right initially during an existing default period,
they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of
Directors as may then exist up to two (2) Directors or, if
such right is exercised at an annual meeting, to elect two
(2) Directors. If the number which may be so elected at any
special meeting does not amount to the required number, the
holders of the Preferred Stock shall have the right to make
such increase in the number of Directors as shall be
necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have
exercised their right to elect Directors in any default
period and during the continuance of such period, the number
of Directors shall not be increased or decreased except by
vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock
shall, during an existing default period, have previously
exercised their right to elect Directors, the Board of
Directors may order, or any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of
the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of a
special meeting of the holders of Preferred Stock, which
meeting shall thereupon be called by the President, a Vice-
President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of
Preferred stock are entitled to vote pursuant to this
paragraph (C) (iii) shall be given to each holder of record
of Preferred Stock by mailing a copy of such notice to him
at his last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such
meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder
or stockholders owning in the aggregate not less than ten
percent (10%) of the total number of shares of Preferred
Stock outstanding. Notwithstanding the provisions of this
paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the
date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of
Common Stock, and other classes of stock of the Corporation
if applicable, shall continue to be entitled to elect the
whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which
right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their
successors shall have been elected by such holders or until
the expiration of the default period, and (y) any vacancy in
the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority
of the remaining Directors theretofore elected by the
holders of the class of stock which elected the Director
whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a
particular class of stock shall include Directors elected by
such Directors to fill vacancies as provided in clause (y)
of the foregoing sentence.
(v) Immediately upon the expiration of a
default period, (x) the right of the holders of Preferred
Stock as a class to elect Directors shall cease, (y) the
term of any Directors elected by the holders of Preferred
Stock as a class shall terminate, and (z) the number of
Directors shall be such number as may be provided for in the
Certificate of Incorporation or by-laws irrespective of any
increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law
or in the Certificate of Incorporation or by-laws). Any
vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A
Junior Participating Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been
paid in full, the Corporation shall not
(i) declare or pay dividends on,
make any other distributions on, or redeem or purchase
or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series
A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or
make any other distributions on any shares of stock
ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior
Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem or purchase or
otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the
Series A Junior Participating Preferred Stock,
provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends
or upon dissolution, liquidation or winding up) to the
Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire
for consideration any shares of Series A Junior
Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior
Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by
publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the
Board of Directors, after consideration of the
respective annual dividend rates and other relative
rights and preferences of the respective series and
classes, shall determine in good faith will result in
fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary
of the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless the
Corporation could, under paragraph (A) of this Section 4, purchase
or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A
Junior Participating Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to
the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment (the"Series A
Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A
Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount
per share (the "Common Adjustment") equal to the quotient obtained
by dividing (i) the Series A Liquidation Preference by (ii) 100
(as appropriately adjusted as set forth in subparagraph (C) below
to reflect such events as stock splits, stock dividends and
recapitalization with respect to the Common Stock) (such number in
clause (ii), the "Adjustment Number"). Following the payment of
the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series A
Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred
Stock and holders of shares of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with
respect to such Preferred Stock and Common Stock, on a per share
basis, respectively.
(B) In the event, however, that there are not
sufficient assets available to permit payment in full of the
Series A Liquidation Preference and the liquidation preferences of
all other series of preferred stock, if any, which rank on a
parity with the Series A Junior Participating Preferred Stock,
then such remaining assets shall be distributed ratably to the
holders of such parity shares in proportion to their respective
liquidation preferences. In the event, however, that there are
not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time
after the Rights Declaration Date (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the
Adjustment Number in effect immediately prior to such event shall
be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares
of Series A Junior Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share
(subject to the provision for adjustment hereinafter set forth)
equal to 100 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the
amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Junior Participating
Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A
Junior Participating Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior
Participating Preferred Stock shall rank junior to all other
series of the Corporation s Preferred Stock which may be issued
from time to time as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall
provide otherwise.
Section 10. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be further amended in
any manner which would materially alter or change the powers,
preferences or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.
Section 11. Fractional Shares. Series A Junior
Participating Preferred Stock may be issued in fractions of a
share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of
all other rights of holders of Series A Junior Participating
Preferred Stock.
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER MARCH 11, 2006 OR EARLIER IF RE-
DEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMP-
TION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR ADVERSE PERSON (AS SUCH TERM IS DE-
FINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENE-
FICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON OR ADVERSE PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]
Rights Certificate
ECOLAB INC.
This certifies that , or
registered assigns, is the registered owner of the number
of Rights set forth above, each of which entitles the
owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of February
24, 1996 (the "Rights Agreement"), between Ecolab Inc., a
Delaware corporation (the "Company"), and First Chicago
Trust Company of New York, a New York corporation (the
"Rights Agent"), to purchase from the Company at any time
prior to 5:00 P.M. (New York City time) on March 11, 2006
at the office or offices of the Rights Agent designated
for such purpose, or its successors as Rights Agent, one
one-hundredth of a fully paid, non-assessable share of
Series A Junior Participating Preferred Stock (the "Pre-
ferred Stock") of the Company, at a purchase price of
$115.00 per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set
forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of February
24, 1996, based on the Preferred Stock as constituted at
such date. The Company reserves the right to require
prior to the occurrence of a Triggering Event (as such
term is defined in the Rights Agreement) that a number of
Rights be exercised so that only whole shares of Pre-
ferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii)
Event (as such term is defined in the Rights Agreement),
if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or Adverse
Person or an Affiliate or Associate of any such Acquiring
Person or Adverse Person (as such terms are defined in
the Rights Agreement), (ii) a transferee of any such
Acquiring Person or Adverse Person, Associate or Affili-
ate, or (iii) under certain circumstances specified in
the Rights Agreement, a transferee of a person who, after
such transfer, became an Acquiring Person or Adverse
Person, or an Affiliate or Associate of an Acquiring Per-
son or Adverse Person, such Rights shall become null and
void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Pur-
chase Price and the number and kind of shares of Pre-
ferred Stock or other securities which may be purchased
upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment
upon the happening of certain events, including Trigger-
ing Events.
This Rights Certificate is subject to all of
the terms, provisions and conditions of the Rights Agree-
ment, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such
Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on
file at the above-mentioned office of the Rights Agent
and are also available upon written request to the Rights
Agent.
This Rights Certificate, with or without other
Rights Certificates, upon surrender at the principal
office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate
or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate
number of one one-hundredths of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled
such holder to purchase. If this Rights Certificate
shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Rights Certifi-
cate or Rights Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agree-
ment, the Rights evidenced by this Certificate may be
redeemed by the Company at its option at a redemption
price of $0.01 per Right at any time prior to the earlier
of the close of business on (i) the tenth day following
the Stock Acquisition Date (as such time period may be
extended pursuant to the Rights Agreement), and (ii) the
Final Expiration Date. In addition, the Rights may be
exchanged, in whole or in part, for shares of the Common
Stock, or shares of preferred stock of the Company having
essentially the same value or economic rights as such
shares. Immediately upon the action of the Board of
Directors of the Company authorizing any such exchange,
and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange)
will terminate and the Rights will only enable
holders to receive the shares issuable upon such exchange.
No fractional shares of Preferred Stock will be
issued upon the exercise of any Right or Rights evidenced
hereby (other than fractions which are integral multiples
of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be
entitled to vote or receive dividends or be deemed for
any purpose the holder of shares of Preferred Stock or of
any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed
to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agree-
ment), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by this
Rights Certificate shall have been exercised as provided
in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of ,
ATTEST: ECOLAB INC.
____________________ By_______________________
Secretary Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By______________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfer unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably consti-
tute and appoint _________________ Attorney, to transfer
the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated: ,
___________________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking
the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is
not being sold, assigned and transferred by or on behalf
of a Person who is or was an Acquiring Person or Adverse
Person or an Affiliate or Associate of any such Acquiring
Person or Adverse 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 Rights Certificate
from any Person who is, was or subsequently became an
Acquiring Person or Adverse Person or an Affiliate or
Associate of an Acquiring Person or Adverse Person.
Dated: ,
______________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and
Certificate must correspond to the name as written upon
the face of this Rights Certificate in every particular,
without alteration or enlargement or any change
whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: ECOLAB INC.
The undersigned hereby irrevocably elects to
exercise __________ Rights represented by this Rights
Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which
may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in
the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new Rights
Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: ,
______________________
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking
the appropriate boxes that:
(1) the Rights evidenced by this Rights Cer-
tificate [ ] are [ ] are not being exercised by or on
behalf of a Person who is or was an Acquiring Person or
Adverse Person or an Affiliate or Associate of any such
Acquiring Person or Adverse Person (as such terms are de-
fined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowl-
edge of the undersigned, it [ ] did [ ] did not acquire
the Rights evidenced by this Rights Certificate from any
Person who is, was or became an Acquiring Person or
Adverse Person or an Affiliate or Associate of an Acquir-
ing Person or Adverse Person.
Dated: , ________________________
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Pur-
chase and Certificate must correspond to the name as
written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any
change whatsoever.
