Exhibit 4.f
RIGHTS AGREEMENT
dated as of
December 6, 1995
between
Masco Corporation
and
The Bank of New York,
as Rights Agent
TABLE OF CONTENTS [1]
Page
Section 1. Definitions...........................1
Section 2. Appointment of Rights Agent...........5
Section 3. Issue of Right Certificates...........5
Section 4. Form of Right Certificates............6
Section 5. Countersignature and Registration.....7
Section 6. Transfer and Exchange of Right
Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates...8
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights...........9
Section 8. Cancellation and Destruction of Right
Certificates........................11
Section 9. Reservation and Availability of
Capital Stock.......................11
Section 10. Preferred Stock Record Date...........12
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number
of Rights...........................13
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares...........22
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.23
Section 14. Fractional Rights and Fractional
Shares..............................25
Section 15. Rights of Action......................27
Section 16. Agreement of Right Holders............27
[1] The Table of Contents is not a part of this Agreement.
Page
Section 17. Right Certificate Holder Not Deemed
a Stockholder.......................28
Section 18. Concerning the Rights Agent...........28
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.............29
Section 20. Duties of Rights Agent................30
Section 21. Change of Rights Agent................32
Section 22. Issuance of New Right Certificates....33
Section 23. Redemption............................33
Section 24. Exchange..............................34
Section 25. Notice of Proposed Actions............35
Section 26. Notices...............................36
Section 27. Supplements and Amendments............37
Section 28. Successors............................37
Section 29. Determinations and Actions
by the Board of Directors, etc....38
Section 30. Benefits of this Agreement............38
Section 31. Severability..........................38
Section 32. Governing Law.........................39
Section 33. Counterparts..........................39
Section 34. Descriptive Headings..................39
ii
Exhibit A - Form of Certificate of Designation
of Preferred Stock
Exhibit B - Form of Right Certificate
Exhibit C - Summary Description of the
Stockholder Rights Plan
iii
RIGHTS AGREEMENT
AGREEMENT dated as of December 6, 1995, between Masco
Corporation, a Delaware corporation (the "Company"), and The Bank of New
York, as Rights Agent (the "Rights Agent"),
W I T N E S S E T H
WHEREAS, on December 6, 1995 the Board of Directors of the
Company authorized and declared a dividend of one preferred stock purchase
right (a "Right") for each share of Common Stock (as hereinafter defined)
outstanding at the close of business on December 18, 1995 (the "Record
Date") and has authorized the issuance, upon the terms and subject to the
conditions hereinafter set forth, of one Right in respect of each share of
Common Stock issued after the Record Date, each Right representing the
right to purchase, upon the terms and subject to the conditions hereinafter
set forth, one one-thousandth of a share of Preferred Stock (as hereinafter
defined);
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. The following terms, as used herein,
have the following meanings:
"Acquiring Person" means any Person who, 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 outstanding,
but shall not include the Company, any of its Subsidiaries, any
employee benefit plan of the Company or any of its Subsidiaries or
any Person organized, appointed or established by the Company or any
of its Subsidiaries for or pursuant to the terms of any such plan.
"Affiliate" and "Associate" have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act as in
effect on the date hereof.
A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own", any securities:
(a) which such Person or any of its Affiliates or
Associates, directly or indirectly, beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act as in
effect on the date hereof);
(b) which such Person or any of its Affiliates or
Associates, directly or indirectly, has
(i) the right to acquire (whether such right is
exercisable immediately or only upon the occurrence of
certain events or the passage of time or both) pursuant
to any agreement, arrangement or understanding (whether
or not in writing) or otherwise (other than pursuant to
the Rights); provided that a Person shall not be deemed
the "Beneficial Owner" of or to "beneficially own"
securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of its
Affiliates or Associates until such tendered securities
are accepted for payment or exchange; or
(ii) the right to vote (whether such right is
exercisable immediately or only upon the occurrence of
certain events or the passage of time or both) pursuant
to any agreement, arrangement or understanding (whether
or not in writing) or otherwise; provided that a Person
shall not be deemed the "Beneficial Owner" of or to
"beneficially own" any security under this clause (ii) as
a result of an agreement, arrangement or understanding to
vote such security if such agreement, arrangement or
understanding (A) arises solely from a revocable proxy or
consent given in response to a public proxy or consent
solicitation made pursuant to the applicable rules and
regulations under the Exchange Act and (B) is not also
then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(c) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof)
with which such Person or any of its 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
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proxy as described in subparagraph (b)(ii) immediately above)
or disposing of any such securities.
"Business Day" means 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.
"Close of business" on any given date means 5:00 P.M., New York
City time, on such date; provided that if such date is not a Business
Day "close of business" means 5:00 P.M., New York City time, on the
next succeeding Business Day.
"Common Stock" means the Common Stock, par value $1.00 per
share, of the Company, except that, when used with reference to any
Person other than the Company, "Common Stock" means 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 Person.
"Continuing Director" means any member of the Board of
Directors of the Company, while such Person is a member of the Board,
who is not an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or a representative or nominee of an Acquiring
Person or of any such Affiliate or Associate and either (a) was a
member of the Board immediately prior to the time any Person becomes
an Acquiring Person or (b) subsequently becomes a member of the
Board, if such Person's nomination for election or election to the
Board is recommended or approved by a majority of the Continuing
Directors.
"Distribution Date" means the earlier of (a) the close of
business on the tenth day (or such later day as may be designated by
action of a majority of the Continuing Directors) after the Stock
Acquisition Date and (b) the close of business on the tenth Business
Day (or such later day as may be designated by action of a majority
of the Continuing Directors) after the date of the commencement of a
tender or exchange offer by any Person if, upon consummation thereof,
such Person would be an Acquiring Person.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expiration Date" means the earlier of (a) the Final Expiration
Date and (b) the time at which all
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Rights are redeemed as provided in Section 23 or exchanged as
provided in Section 24.
"Final Expiration Date" means the close of business on
December 6, 2005.
"Person" means an individual, corporation, partnership,
association, trust or any other entity or organization.
"Preferred Stock" means the Series A Participating Cumulative
Preferred Stock, par value 1.00 per share, of the Company, having the
terms set forth in the form of certificate of designation attached
hereto as Exhibit A.
"Purchase Price" means the price (subject to adjustment as
provided herein) at which a holder of a Right may purchase one
one-thousandth of a share of Preferred Stock (subject to adjustment
as provided herein) upon exercise of a Right, which price shall
initially be $100.00.
"Section 11(a)(ii) Event" means any event described in the
first clause of Section 11(a)(ii).
"Section 13 Event" means any event described in clauses (x),
(y) or (z) of Section 13(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Acquisition Date" means the date of the first public
announcement (including the filing of a report on Schedule 13D under
the Exchange Act (or any comparable or successor report)) by the
Company or an Acquiring Person indicating that an Acquiring Person
has become such.
"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having ordinary voting power,
in the absence of contingencies, to elect a majority of the board of
directors or other Persons performing similar functions are at the
time directly or indirectly owned by such first Person.
"Trading Day" means 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.
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"Triggering Event" means 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 in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or desirable
upon ten (10) days' prior written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and shall in no event be liable for,
the acts or omissions of any such Co-Rights Agent. If the Company appoints
one or more Co-Rights Agents, the respective duties of the Rights Agent and
any Co-Rights Agents shall be as the Company shall determine.
Section 3. Issue of Right Certificates. (a) Prior to the
Distribution Date, (i) the Rights will be evidenced by the certificates for
the Common Stock and not by separate Right Certificates (as hereinafter
defined) and the registered holders of the Common Stock shall be deemed to
be the registered holders of the associated Rights, and (ii) the Rights
will be transferable only in connection with the transfer of the underlying
shares of Common Stock. As soon as practicable after the Record Date, the
Company will send a summary of the Rights substantially in the form of
Exhibit C hereto, by first-class, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Record Date
at the address of such holder shown on the records of the Company.
(b) As soon as practicable after the Company has notified the
Rights Agent of the occurrence of 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 evidencing one Right (subject to adjustment
as provided herein) for each share of Common Stock so held. If an
adjustment in the number of Rights per share of Common Stock has been made
pursuant to Section 11(p), the Company shall, at the time of distribution
of the Right Certificates, make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a)) so that Right Certificates
representing only whole numbers of Rights are distributed and cash is paid
in lieu of any fractional Rights. From and after the Distribution Date,
the Rights will be evidenced solely by such Right Certificates.
(c) Rights shall be issued in respect of all shares of Common
Stock outstanding as of the Record Date or
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issued (on original issuance or out of treasury) after the Record Date but
prior to the earlier of the Distribution Date and the Expiration Date. In
addition, in connection with the issuance or sale of shares of Common Stock
following the Distribution Date and prior to the Expiration Date, the
Company (i) shall, with respect to shares of Common Stock so issued or sold
(x) pursuant to the exercise of stock options or under any employee plan or
arrangement or (y) upon the exercise, conversion or exchange of other
securities issued by the Company prior to the Distribution Date and
(ii) may, in any other case, if deemed necessary or appropriate by the
Board of Directors of the Company, issue Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided that no such Right Certificate shall be issued if, and to the
extent that, (i) 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 Right Certificate would be issued or
(ii) appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
(d) Certificates for the Common Stock issued after the Record
Date but prior to the earlier of the Distribution Date and the Expiration
Date shall have impressed on, printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences certain Rights as set forth in a
Rights Agreement between Masco Corporation and The Bank of New York,
dated as of December 6, 1995 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which
is on file at the principal executive offices of the Company. The
Company will mail to the holder of this certificate a copy of the
Rights Agreement without charge promptly after receipt of a written
request therefor. Under certain circumstances, as set forth in the
Rights Agreement, such Rights may be evidenced by separate
certificates and no longer be evidenced by this certificate, may be
redeemed or exchanged or may expire. As set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or an 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 subsequent holder, may
be null and void.
Section 4. Form of Right Certificates. (a) The certificates
evidencing the Rights (and the forms of assignment, election to purchase
and certificates to be printed on the reverse thereof) (the "Right
Certificates")
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shall be substantially in the form of 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, rule or regulation 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. The Right Certificates shall be
in a machine printable format and in a form reasonably satisfactory to the
Rights Agent. The Right Certificates, whenever distributed, shall be dated
as of the Record Date and shall show the date of countersignature.
(b) Any Right Certificate representing Rights beneficially
owned by any Person referred to in clauses (i), (ii) or (iii) of the first
sentence of Section 7(d) shall (to the extent feasible) contain the
following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement). This Right Certificate and the
Rights represented hereby may be or may become null and void in the
circumstances specified in Section 7(d) of such Agreement.
Section 5. Countersignature and Registration. (a) The Right
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 affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by an authorized
signatory of the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company whose manual or
facsimile signature is affixed to the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may,
nevertheless, be countersigned by the Rights Agent and issued and delivered
with the same force and effect as though the Person who signed such Right
Certificates had not ceased to be such officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any Person who, at
the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such Person was not
such an officer.
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(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its principal office or offices designated as
the place for surrender of Right Certificates upon exercise, transfer or
exchange, books for registration and transfer of the Right Certificates.
Such books shall show with respect to each Right Certificate the name and
address of the registered holder thereof, the number of Rights indicated on
the certificate and the certificate number.
Section 6. Transfer and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) At any time
after the Distribution Date and prior to the Expiration Date, any Right
Certificate or Certificates may, upon the terms and subject to the
conditions set forth below in this Section 6(a), be transferred or
exchanged for another Right Certificate or Certificates evidencing a like
number of Rights as the Right Certificate or Certificates surrendered. Any
registered holder desiring to transfer or exchange any Right Certificate or
Certificates shall surrender such Right Certificate or Certificates (with,
in the case of a transfer, the form of assignment and certificate on the
reverse side thereof duly executed) to the Rights Agent at the principal
office or offices of the Rights Agent designated 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 Right
Certificate or Certificates until the registered holder of the Rights has
complied with the requirements of Section 7(e). Upon satisfaction of the
foregoing requirements, the Rights Agent shall, subject to Sections 4(b),
7(d), 14 and 24, countersign and deliver to the Person entitled thereto a
Right Certificate or Certificates as so requested. The Company may require
payment by the holders of Rights of a sum sufficient to cover any transfer
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of any Right Certificate or Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company's request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Company will issue and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered owner in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
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Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein,
including Sections 7(d) and (e), 9(c), 11(a) and 24) in whole or in part at
any time after the Distribution Date and prior to the Expiration Date upon
surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the
Rights Agent at the principal office or offices of the Rights Agent
designated for such purpose, together with payment (in lawful money of the
United States of America by certified check or bank draft payable to the
order of the Company) of the aggregate Purchase Price with respect to the
Rights then to be exercised and an amount equal to any applicable transfer
tax or other governmental charge.
(b) Upon satisfaction of the requirements of Section 7(a) and
subject to Section 20(k), the Rights Agent shall thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Stock (or make
available, if the Rights Agent is the transfer agent therefor) certificates
for the total number of one one-thousandths of a share of Preferred Stock
to be purchased (and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests) or (B) if the Company shall have
elected to deposit the shares of Preferred Stock issuable upon exercise of
the Rights with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a
share of Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
will direct the depositary agent to comply with such request,
(ii) requisition from the Company the amount of cash, if any, to be paid in
lieu of issuance of fractional shares in accordance with Section 14 and
(iii) after receipt of such certificates or depositary receipts and cash,
if any, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate (with such certificates or
receipts registered in such name or names as may be designated by such
holder). If the Company is obligated to deliver Common Stock, other
securities or assets pursuant to this Agreement, the Company will make all
arrangements necessary so that such other securities and assets are
available for delivery by the Rights Agent, if and when appropriate.
(c) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing the number of Rights remaining unexercised shall be
issued by
9
the Rights Agent and delivered to, or upon the order of, the registered
holder of such Right Certificate, registered in such name or names as may
be designated by such holder, subject to the provisions of Section 14.
(d) 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 an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or any such Associate or Affiliate) to holders
of equity interests in such Acquiring Person (or in any such Associate or
Affiliate) or to any Person with whom the Acquiring Person (or any such
Associate or Affiliate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the
Continuing Directors have determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of
this Section 7(d) 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(d) and Section 4(b) are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result
of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates and Associates or any transferee of any of them
hereunder.
(e) 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 of Rights upon the
occurrence of any purported transfer pursuant to Section 6 or exercise
pursuant to this Section 7 unless such registered holder (i) shall have
completed and signed the certificate contained in the form of assignment or
election to purchase, as the case may be, set forth on the reverse side of
the Right Certificate surrendered for such transfer or exercise, as the
case may be, (ii) shall not have indicated an affirmative response to
clause 1 or 2 thereof and (iii) 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.
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Section 8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for exercise, transfer or exchange
shall, if surrendered to the Company or to any of its agents, be delivered
to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted
by this Agreement. The Company shall deliver to the Rights Agent for
cancellation, and the Rights Agent shall cancel, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the
Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available a number of shares of Preferred Stock which are authorized but
not outstanding or otherwise reserved for issuance sufficient to permit the
exercise in full of all outstanding Rights as provided in this Agreement.
(b) So long as the Preferred Stock issuable upon the exercise
of 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 securities reserved for such issuance to be listed
on any such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts (i) to file, as
soon as practicable following the earliest date after the occurrence of a
Section 11(a)(ii) Event as of which the consideration to be delivered by
the Company upon exercise of the Rights has been determined in accordance
with Section 11(a)(iii), or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act with respect to the securities issuable upon exercise of the
Rights, (ii) to cause such registration statement to become effective as
soon as practicable after such filing and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the
Expiration Date. The Company 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
11
suspend, for a period of time not to exceed 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 exercisability
of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any such provision of this Agreement to the contrary, the
Rights shall not be exercisable for securities in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained,
such exercise therefor shall not be permitted under applicable law or a
registration statement in respect of such securities shall not have been
declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to insure that all one one-thousandths of a
share of Preferred Stock issuable upon exercise of Rights shall, at the
time of delivery of the certificates for such securities (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 other
governmental charges which may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates for Preferred
Stock upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax or other governmental charge which may be
payable in respect of any transfer involved in the issuance or delivery of
any Right Certificates or of any certificates for Preferred Stock to a
Person other than the registered holder of the applicable Right
Certificate, and prior to any such transfer, issuance or delivery any such
tax or other governmental charge shall have been paid by the holder of such
Right Certificate or it shall have been established to the Company's
satisfaction that no such tax or other governmental charge is due.
Section 10. Preferred Stock Record Date. Each Person (other
than the Company) in whose name any certificate for Preferred Stock is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such Preferred Stock represented thereby on,
and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any transfer taxes or other governmental charges) was
made; provided that if the date of such surrender and payment is a date
upon which the transfer books of the Company relating
12
to the Preferred Stock are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the applicable transfer
books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled
to any rights of a stockholder of the Company with respect to shares for
which the Rights shall be exercisable, including 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. (a)(i) If the Company shall at any time after
the date of this Agreement (A) pay a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock into a greater number of shares, (C) combine the
outstanding Preferred Stock into a smaller number of shares or (D) issue
any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a
consolidation or merger involving the Company), the Purchase Price in
effect immediately prior to the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and
the number and kind of shares of Preferred Stock or other capital stock
issuable on such date shall be proportionately adjusted so that each holder
of a Right shall (except as otherwise provided herein, including Section
7(d)) thereafter be entitled to receive, upon exercise thereof at the
Purchase Price in effect immediately prior to such date, the aggregate
number and kind of shares of Preferred Stock or other 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 applicable transfer books of the Company
were open, such holder would have been entitled to receive upon such
exercise and by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which requires an adjustment under
both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) If any Person, alone or together with its Affiliates and
Associates, shall, at any time after the date of this Agreement, become an
Acquiring Person, then proper provision shall promptly be made so that each
holder of a Right shall (except as otherwise provided herein, including
Section 7(d)) thereafter be entitled to receive, upon exercise thereof at
the Purchase Price in effect immediately
13
prior to the first occurrence of a Section 11(a)(ii) Event, in lieu of
Preferred Stock, such number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock of the Company (such shares being
referred to herein as the "Adjustment Shares") as shall be equal to the
result obtained by dividing
(x) the product obtained by multiplying the Purchase Price in
effect immediately prior to the first occurrence of a Section
11(a)(ii) Event by the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior
to such first occurrence (such product being thereafter referred to
as the "Purchase Price" for each Right and for all purposes of this
Agreement) by
(y) 50% of the current market price (determined pursuant to
Section 11(d)(i)) per share of Common Stock on the date of such first
occurrence;
provided that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13, then
only the provisions of Section 13 shall apply and no adjustment shall be
made pursuant to this Section 11(a)(ii).
(iii) If the number of shares of Common Stock which are
authorized by the Company's certificate of incorporation but not
outstanding or reserved for issuance other than upon exercise of the Rights
is not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), the Company shall, with respect to each
Right, make adequate provision to substitute for the Adjustment Shares,
upon payment of the Purchase Price then in effect, (A) (to the extent
available) Common Stock and then, (B) (to the extent available) other
equity securities of the Company which a majority of the Continuing
Directors has determined to be essentially equivalent to shares of Common
Stock in respect to dividend, liquidation and voting rights (such
securities being referred to herein as "common stock equivalents") and
then, if necessary, (C) other equity or debt securities of the Company,
cash or other assets, a reduction in the Purchase Price or any combination
of the foregoing, having an aggregate value (as determined by the
Continuing Directors based upon the advice of a nationally recognized
investment banking firm selected by the Continuing Directors) equal to the
value of the Adjustment Shares; provided that (x) the Company may, and (y)
if the Company shall not have made adequate provision as required above to
deliver value within 30 days following the later of the first occurrence of
a Section 11(a)(ii) Event and the first date that the right to redeem the
Rights pursuant to Section 23 shall expire, then the Company shall be
obligated
14
to, deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, (1) (to the extent available)
Common Stock and then (2) (to the extent available) common stock
equivalents and then, if necessary, (3) other equity or debt securities of
the Company, cash or other assets or any combination of the foregoing,
having an aggregate value (as determined by the Continuing Directors based
upon the advice of a nationally recognized investment banking firm selected
by the Continuing Directors) equal to the excess of the value of the
Adjustment Shares over the Purchase Price. If the Continuing Directors of
the Company shall determine 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 30 day period set forth above (such
period, as it may be extended, being referred to herein as the
"Substitution Period") may be extended to the extent necessary, but not
more than 90 days following the first occurrence of a Section 11(a)(ii)
Event, in order that the Company may seek stockholder approval for the
authorization of such additional shares. To the extent that the Company
determines that some action is to be taken pursuant to the first and/or
second sentence of this Section 11(a)(iii), the Company (X) shall provide,
subject to Section 7(d), that such action shall apply uniformly to all
outstanding Rights and (Y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form
and value of any consideration to be delivered as referred to in such first
and/or second sentence. If any such suspension occurs, the Company shall
issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the current
market price per share of Common Stock (as determined pursuant to Section
11(d)) on the later of the date of the first occurrence of a Section
11(a)(ii) Event and the first date that the right to redeem the Rights
pursuant to Section 23 shall expire; any common stock equivalent shall be
deemed to have the same value as the Common Stock on such date; and the
value of other securities or assets shall be determined pursuant to Section
11(d)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
45 calendar days after such record date) Preferred Stock (or securities
having the same rights, privileges and preferences as the shares of
Preferred Stock ("equivalent preferred stock")) or securities convertible
into or exercisable for Preferred Stock (or equivalent preferred stock) at
a price per share of Preferred
15
Stock (or equivalent preferred stock) (in each case, taking account of any
conversion or exercise price) less than the current market price (as
determined pursuant to Section 11(d)) per share of Preferred Stock on such
record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such 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 price (taking
account of any conversion or exercise price) of the total number of shares
of Preferred Stock (and/or equivalent preferred stock) 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) so to be offered. In case such subscription
price may be paid by delivery of consideration part or all of which shall
be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent
and shall be conclusive for all purposes. Shares of Preferred Stock owned
by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed, and if such rights,
options or warrants are not so issued, the Purchase Price shall be adjusted
to be the Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger involving
the Company) of evidences of indebtedness, equity securities other than
Preferred Stock, assets (other than a regular periodic cash dividend out of
the earnings or retained earnings of the Company) or rights, options or
warrants (excluding those referred to in Section 11(b)), the Purchase Price
to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d)) per share of Preferred Stock on such
record date, less the value (as determined pursuant to Section 11(d)(iii))
of such evidences of indebtedness, equity securities, assets, rights,
options or warrants so to be distributed with respect to one share of
Preferred Stock and the denominator of which shall be such current market
price
16
per share of Preferred Stock. Such adjustment shall be made successively
whenever such a record date is fixed, and if such distribution is not so
made, 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.
(d)(i) For the purpose of any computation hereunder other than
computations made pursuant to Section 11(a)(iii) or 14, the "current market
price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
30 consecutive Trading Days immediately prior to such date; for purposes of
computations made pursuant to Section 11(a)(iii), the "current market
price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the
10 consecutive Trading Days immediately following such date; and for
purposes of computations made pursuant to Section 14, the "current market
price" per share of Common Stock for any Trading Day shall be deemed to be
the closing price per share of Common Stock for such Trading Day; provided
that if 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 exercisable for or convertible
into shares of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock, and
prior to the expiration of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current market price"
shall be properly adjusted to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the
New York Stock Exchange, on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if
the shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use or,
if on any such date the shares of Common Stock are not quoted by any
17
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Common
Stock selected by the Board of Directors of the Company, or, if at the time
of such selection there is an Acquiring Person, by a majority of the
Continuing Directors. 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 of Directors of the Company (or, if
at the time of such determination there is an Acquiring Person, by a
majority of the Continuing Directors) shall be used. If the Common Stock
is not publicly held or not so listed or traded, the "current market price"
per share means the fair value per share as determined in good faith by the
Board of Directors of the Company, or, if at the time of such determination
there is an Acquiring Person, by a majority of the Continuing Directors, or
if there are no Continuing Directors, by a nationally recognized investment
banking firm selected by the Board of Directors, which determination shall
be described in a statement 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 Section 11(d)(i) (other
than the last sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in such manner, the "current market
price" per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1000 (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 Common Stock (as determined
pursuant to Section 11(d)(i) (other than the last sentence thereof)). If
neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, the "current market price" per share of the Preferred
Stock shall be determined in the same manner as set forth in the last
sentence of Section 11(d)(i). For all purposes of this Agreement, the
"current market price" of one one-thousandth of a share of Preferred Stock
shall be equal to the "current market price" of one share of Preferred
Stock divided by 1000.
(iii) For the purpose of any computation hereunder, the value of
any securities or assets other than Common Stock or Preferred Stock shall
be the fair value as determined in good faith by the Board of Directors of
the Company, or, if at the time of such determination there is an Acquiring
Person, by a majority of the Continuing
18
Directors then in office, or, if there are no Continuing Directors, by a
nationally recognized investment banking firm selected by the Board of
Directors, which determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
provided 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 ten-millionth of a share of Preferred Stock,
as the case may be.
(f) If at any time, as a result of an adjustment made pursuant
to Section 11(a)(ii) or Section 13(a), the holder of any Right shall be
entitled to receive upon exercise of such Right 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 Section 11(a), (b), (c), (e), (g), (h), (i),
(j), (k) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 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 hereunder shall evidence the right to purchase, at the
Purchase Price then in effect, the then applicable number of one
one-thousandths of a share of Preferred Stock and other capital stock of
the Company issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest ten-millionth) obtained by (i) multiplying
(x) the number of one one-thousandths of a share for which a Right was
exercisable 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
19
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-thousandths of a share of Preferred
Stock issuable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred
Stock for which such Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price
in effect immediately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14, the additional Rights
to which such holders shall be entitled as a result of such adjustment, or,
at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held
by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Right Certificates evidencing all
the Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record
date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a share of Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per one one-thousandth of a share and the number of shares which
20
were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value, if any, of the number of
one one-thousandths 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 counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable such number of one
one-thousandths 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 exercised after such
record date the number of one one-thousandths of a share of Preferred Stock
or other capital stock of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a share of Preferred
Stock or other capital stock of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided 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 upon the occurrence of the event requiring
such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that it, in its sole discretion,
shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Stock, issuance wholly for cash of any
Preferred Stock at less than the current market price, issuance wholly for
cash of Preferred Stock or securities which by their terms are convertible
into or exercisable for Preferred Stock, stock dividends or issuance of
rights, options or warrants referred to in this Section 11, hereafter made
by the Company to the holders of its Preferred Stock, shall not be taxable
to such stockholders.
(n) The Company covenants and agrees that it will not at any
time after the Distribution Date (i) consolidate, merge or otherwise
combine with or (ii) sell or otherwise transfer (and/or permit any of its
Subsidiaries to sell or otherwise 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
21
or Persons if (x) at the time of or immediately after such consolidation,
merger, combination or sale there are any rights, warrants or other
instruments or securities outstanding or any agreements or arrangements 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,
combination or sale, the stockholders of a Person who constitutes, or would
constitute, the "Principal Party" for the purposes of Section 13 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 Sections 23, 24 and
27, 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
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the
contrary, if at any time after the date hereof and prior to the
Distribution Date the Company shall (i) pay a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock into a larger number of shares or
(iii) combine the outstanding 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 as contemplated by Section
3(c), shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event
by a fraction the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to the occurrence of the event
and the denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Sections 11 and
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Preferred Stock and the Common Stock a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in the
22
manner set forth in Section 26. The Rights Agent shall be fully protected
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) If, following the Stock Acquisition Date,
directly or indirectly,
(x) the Company shall consolidate with, merge into, or
otherwise combine with, any other Person, and the Company shall not
be the continuing or surviving corporation of such consolidation,
merger or combination,
(y) any Person shall merge into, or otherwise combine with,
the Company, and the Company shall be the continuing or surviving
corporation of such merger or combination and, in connection with
such merger or combination, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for other stock or
securities of the Company or any other Person, cash or any other
property, or
(z) the Company and/or one or more of its Subsidiaries shall
sell or otherwise 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,
then, and in each such case, proper provision shall promptly be made so
that
(1) each holder of a Right shall thereafter be entitled to
receive, upon exercise thereof at the Purchase Price in effect immediately
prior to the first occurrence of any Triggering Event, such number of duly
authorized, validly issued, fully paid and nonassessable shares of freely
tradeable Common Stock of the Principal Party (as hereinafter defined), not
subject to any rights of call or first refusal, liens, encumbrances or
other claims, as shall be equal to the result obtained by dividing
(A) the product obtained by multiplying the Purchase Price in
effect immediately prior to the first occurrence of any Triggering
Event by the number of one one-thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
first occurrence (such product being thereafter referred to as the
"Purchase Price" for each Right and for all purposes of this
Agreement) by
23
(B) 50% of the current market price (determined pursuant to
Section 11(d)(i)) per share of the Common Stock of such Principal
Party on the date of consummation of such consolidation, merger,
combination, sale or transfer;
(2) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, combination, sale or
transfer, all the obligations and duties of the Company pursuant to this
Agreement;
(3) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and
(4) such Principal Party shall take such steps (including the
authorization and reservation of a sufficient number of shares of its
Common Stock to permit exercise of all outstanding Rights in accordance
with this Section 13(a)) in connection with the consummation of any such
transaction as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to
the shares of its Common Stock thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" means
(i) in the case of any transaction described in Section
13(a)(x) or (y), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such
merger, consolidation or combination, and if no securities are so
issued, the Person that survives or results from such merger,
consolidation or combination; and
(ii) in the case of any transaction described in Section
13(a)(z), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such
transaction or transactions;
provided that in any such case, (A) if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall refer to such other
Person; and (B) in case such Person is a Subsidiary, directly or
indirectly, of more
24
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, combination, sale or transfer unless the Principal Party shall have
a sufficient number of authorized shares of its Common Stock which are not
outstanding or otherwise 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 Section 13(a) and (b) and providing that, as soon as
practicable after the date of any consolidation, merger, combination, sale
or transfer mentioned in Section 13(a), the Principal Party will
(i) prepare and file a registration statement under the
Securities Act with respect to the securities issuable upon exercise
of the Rights, and will use its best efforts to cause such
registration statement (A) to become effective as soon as practicable
after such filing and (B) to remain effective (with a prospectus at
all times meeting the requirements of the Securities Act) until the
Expiration Date and
(ii) 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, consolidations, combinations, sales or other transfers. If any
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).
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), or to distribute Right
Certificates which evidence fractional Rights. In lieu of any such
fractional Rights, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional Rights would
otherwise be issuable an amount in cash equal to the same fraction of the
current market price of a whole Right. For purposes of this Section 14(a),
the current market price of a whole Right shall be
25
the closing price of a Right for the Trading Day immediately prior to the
date on which such fractional Rights would otherwise have been issuable.
The closing price of a Right for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, 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, or, if at the time of
such selection there is an Acquiring Person, by a majority of the
Continuing Directors. If on any such date no such market maker is making a
market in the Rights, the current market price of the Rights on such date
shall be as determined in good faith by the Board of Directors of the
Company, or, if at the time of such determination there is an Acquiring
Person, by a majority of the Continuing Directors.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights
or to distribute certificates which evidence fractional shares of Preferred
Stock (other than fractions which are multiples of one one-thousandth of a
share of Preferred Stock). In lieu of any such fractional shares of
Preferred Stock, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market price of
one one-thousandth of a share of Preferred Stock. For purposes of this
Section 14(b), the current market price of one one-thousandth of a share of
Preferred Stock shall be one one-thousandth of the closing price of a share
of Preferred Stock (as determined pursuant to Section 11(d)) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of any Triggering Event or upon
any exchange pursuant to Section 24, the Company shall not be required to
issue fractions of shares of Common Stock upon exercise of the Rights or to
distribute
26
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised or
exchanged as herein provided an amount in cash equal to the same fraction
of the current market price of a share of Common Stock. For purposes of
this Section 14(c), the current market price of a share of Common Stock
shall be the closing price of a share of Common Stock (as determined
pursuant to Section 11(d)(i)) for the Trading Day immediately prior to the
date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right except as 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
Right Certificates (and, prior to the Distribution Date, the registered
holders of certificates representing Common Stock); and any registered
holder of any Right Certificate (or, prior to the Distribution Date, of any
certificate representing Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of any certificate representing Common Stock), may, in
his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and
in this Agreement. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically acknowledged that
the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of, any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or
27
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 Sections 6 and 7, the Company and the Rights
Agent may deem and treat the Person in whose name a Right Certificate (or,
prior to the Distribution Date, a certificate representing shares of Common
Stock) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on
the Right Certificate or the certificate representing shares of Common
Stock 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(d), shall be affected by any notice to
the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability
to any holder of a Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation;
provided that the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
capital stock which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent such
28
compensation as shall be agreed to in writing between the Company and the
Rights Agent for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees, expenses and disbursements and other disbursements incurred in the
execution or administration of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the administration of this Agreement or
the exercise or performance of its duties hereunder, including the costs
and expenses of defending against any claim of liability. The provisions
of this Section 18(a) shall survive the expiration of the Rights and the
termination of this Agreement.
(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 the administration of this Agreement or the exercise or
performance of its duties hereunder in reliance upon any Right Certificate
or certificate for Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, opinion, instruction, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed and executed by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. (a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust or stock transfer business of
the Rights Agent or any successor Rights Agent, shall be the successor to
the Rights Agent under this Agreement without the execution or filing of
any paper or any further act on the part of any of the parties hereto;
provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by
this Agreement, any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent
may
29
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders
of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to
any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
"Acquiring Person" and the determination of "current market price") be
proved or established by the Company prior to taking, suffering or omitting
to take 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 President or any Vice President and by the Treasurer or
any Assistant Treasurer or 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, suffered or
omitted in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
30
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except its countersignature thereof) or be required
to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Right Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant
to Section 7(d)) or any adjustment in the terms of the Rights (including
the manner, method or amount thereof) provided for in Sections 3, 11, 13,
23 or 24, or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Common Stock or Preferred Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Common
Stock or Preferred Stock will, when issued, be duly authorized, validly
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged
and delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the President or any Vice President or the
Secretary or any Assistant Secretary or the Treasurer or any Assistant
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, suffered or omitted to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the
31
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 the 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 Person.
(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
or to any holders of Rights resulting from any such act, default, neglect
or misconduct, provided that reasonable care was exercised in the selection
thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the
form of assignment or form of election to purchase, as the cases may be,
has either not been completed or indicates an affirmative response to
clause 1 or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock and Preferred Stock by registered
or certified mail, and, subsequent to the Distribution Date, to the holders
of the Right Certificates by first-class mail. The Company may remove the
Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Stock and Preferred Stock by
registered or certified mail, and, subsequent to the Distribution Date, to
the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company
32
shall fail to make such appointment within a period of 30 days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be
(a) a corporation organized and doing business under the laws of the United
States or of any state of the United States, in good standing, having a
principal office in the State of New York, which is authorized under such
laws to exercise stock transfer or corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at
the time of its appointment as Rights Agent a combined capital and surplus
of at least $50,000,000 or (b) an Affiliate of a corporation described in
clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or
deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
the Preferred Stock, and, subsequent to the Distribution Date, mail a
notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors
to reflect any adjustment or change in the Purchase Price and the number or
kind or class of shares of stock issuable upon exercise of the Rights made
in accordance with the provisions of this Agreement.
Section 23. Redemption. (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 after the Stock Acquisition Date (or
such later
33
date as a majority of the Continuing Directors may designate prior to such
time as the Rights are no longer redeemable) and (ii) the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided that after any Person has
become an Acquiring Person, any redemption of the Rights shall be effective
only if there are Continuing Directors then in office, and such redemption
shall have been approved by a majority of such Continuing Directors.
Notwithstanding anything 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.
(b) Immediately upon the action of the Board of Directors of
the Company electing to redeem the Rights and without any further action
and without any notice, the right to exercise the Rights will terminate and
thereafter the only right of the holders of Rights shall be to receive the
Redemption Price for each Right so held. The Company shall promptly
thereafter give notice of such redemption to the Rights Agent and the
holders of the Rights in the manner set forth in Section 26; provided that
the failure to give, or any defect in, such notice shall not affect the
validity of such redemption. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method by which
the payment of the Redemption Price will be made. Neither the Company nor
any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in Section 23 or 24, and other than in connection with the purchase,
acquisition or redemption of shares of Common Stock prior to the
Distribution Date.
Section 24. Exchange. (a) At any time after any Person
becomes an Acquiring Person, a majority of the Continuing Directors may, at
their option, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to
Section 7(d)) 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 transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of Directors shall not
be empowered to effect such exchange at any time after any Person (other
than the Company, any of its Subsidiaries, any employee benefit plan of the
Company
34
or any of its Subsidiaries or any Person organized, appointed or
established by the Company or any of its Subsidiaries for or pursuant to
the terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the shares of
Common Stock then outstanding.
(b) Immediately upon the action of the Continuing Directors
electing to exchange any Rights pursuant to Section 24(a) and without any
further action and without any notice, the right to exercise such Rights
will terminate and thereafter the only right 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 thereafter give notice of such exchange to the
Rights Agent and the holders of the Rights to be exchanged in the manner
set forth in Section 26; provided that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange. Any notice
which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the shares of
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to Section 7(d)) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute common stock equivalents (as defined in Section
11(a)(iii)) for shares of Common Stock exchangeable for Rights, at the
initial rate of one common stock equivalent for each share of Common Stock,
as appropriately adjusted to reflect adjustments in dividend, liquidation
and voting rights of common stock equivalents pursuant to the terms
thereof, so that each common stock equivalent delivered in lieu of each
share of Common Stock shall have essentially the same dividend, liquidation
and voting rights as one share of Common Stock.
Section 25. Notice of Proposed Actions. (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 quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of its 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
35
any reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision or combination of outstanding shares of
Preferred Stock) or (iv) to effect any consolidation or merger with any
other Person, or to effect and/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 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, or (v) to effect the
liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Right, to the extent
feasible and in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of any such
dividend, distribution or offering of rights or warrants, or the date on
which any 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 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 20 days prior to the record
date for determining holders of the Preferred Stock entitled to participate
in such dividend, distribution or offering, and in the case of any such
other action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of
Preferred Stock, whichever shall be the earlier. The failure to give
notice required by this Section or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon
any such action.
(b) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date a public filing by the Company
with the Securities and Exchange Commission shall constitute sufficient
notice to the holders of securities of the Company, including the Rights,
for purposes of this Agreement and no other notice need be given to such
holders.
(c) If a Triggering Event shall occur, then, in any such case,
(1) the Company shall as soon as practicable thereafter give to each holder
of a Right, in accordance with Section 26, 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) or 13, as the case may be, and
(2) all references in Section 25(a) to Preferred Stock shall be deemed
thereafter to refer to Common Stock or other capital stock, as the case may
be.
Section 26. Notices. Notices or demands authorized by this
Agreement to be given or made by the
36
Rights Agent or by the holder of any Right to or on the Company shall be
sufficiently given or made if sent by first-class mail (postage prepaid) to
the address of the Company indicated on the signature page hereof or such
other address as the Company shall specify in writing to the Rights Agent.
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
Right to or on the Rights Agent shall be sufficiently given or made if sent
by first-class mail (postage prepaid) to the address of the Rights Agent
indicated on the signature page hereof or such other address as the Rights
Agent shall specify in writing to the Company. Notices or demands
authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Right Certificate (or, prior to the
Distribution Date, to the holder of any certificate representing shares of
Common Stock) shall be sufficiently given or made if sent by first-class
mail (postage prepaid) to the address of such holder shown on the registry
books of the Company.
Section 27. Supplements and Amendments. Prior to the
Distribution Date, the Company and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common
Stock. From and after the Distribution Date, the Company and the Rights
Agent shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Right Certificates in order (a) to
cure any ambiguity, (b) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
herein or (c) to change or supplement the provisions hereof in any manner
which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).
Notwithstanding the foregoing, after any Person has become an Acquiring
Person, any supplement or amendment shall be effective only if there are
Continuing Directors then in office, and such supplement or amendment shall
have been approved by a majority of such Continuing Directors. 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, the Rights Agent shall execute such supplement 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
37
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) under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company (or, after any Person has
become an Acquiring Person, a majority of the Continuing Directors) shall
have the exclusive power and authority to administer 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 the right and power to (i) interpret the provisions of
this Agreement and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including a
determination to redeem or exchange or not to redeem or exchange the Rights
or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) which are done or made
by the Board (or, after any Person has become an Acquiring Person, by the
Continuing Directors) 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 of Directors of the Company or
the Continuing Directors to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the Company,
the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the certificates representing the shares of
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 Right
Certificates (and, prior to the Distribution Date, the certificates
representing the shares of 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
38
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated; provided 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 (or, after any
Person has become an Acquiring Person, a majority of the Continuing
Directors) determines in its good faith judgment that severing the invalid
language 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 business on the
tenth day following the date of such determination by the Board of
Directors or Continuing Directors, as the case may be.
Section 32. Governing Law. This Agreement, each Right and
each Right Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such
State, except that the rights and obligations of the Rights Agent shall be
governed by the law of the State of New York.
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 one and the same instrument.
Section 34. Descriptive Headings. The captions herein are
included for convenience of reference only, do not constitute a part of
this Agreement and shall be ignored in the construction and interpretation
hereof.
39
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
MASCO CORPORATION
By: /s/Xxxxxx X. Xxxxxxx, Xx.
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Vice President
00000 Xxx Xxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention:
THE BANK OF NEW YORK
By: /s/Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Stock Transfer
Administration
40
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
MASCO CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
We, _______________, [Title], and ____________, [Title], of
Masco Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware ("Delaware Law"), in accordance
with the provisions thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the Corporation, the Board
of Directors on December 6, 1995, adopted the following resolution creating
a series of Preferred Stock in the amount and having the designation,
voting powers, preferences and relative, participating, optional and other
special rights and qualifications, limitations and restrictions thereof as
follows:
Section 1. Designation and Number of Shares. The shares of
such series shall be designated as "Series A Participating Cumulative
Preferred Stock" (the "Series A Preferred Stock"), and the number of shares
constituting such series shall be 175,106. Such number of shares of the
Series A Preferred Stock may be increased or decreased by resolution of the
Board of Directors; provided that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares issuable upon
A-1
exercise or conversion of outstanding rights, options or other securities
issued by the Corporation.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A 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 on
February 15, May 15, August 15 and November 15 of 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 any share or fraction of a share of Series A Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 and (b) subject to the provision for adjustment hereinafter
set forth, 1,000 times the aggregate per share amount of all cash dividends
or other distributions and 1,000 times the aggregate per share amount of
all non-cash dividends or other distributions (other than (i) a dividend
payable in shares of Common Stock, par value $1.00 per share, of the
Corporation (the "Common Stock") or (ii) a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise)), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series A
Preferred Stock. If the Corporation shall at any time after December 6,
1995 (the "Rights Declaration Date") pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination of
the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common
Stock (other than as described in clauses (i) and (ii) of the first
sentence of paragraph (A)); provided that if no dividend or distribution
shall have been declared on the Common Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date (or, with respect
A-2
to the first Quarterly Dividend Payment Date, the period between the first
issuance of any share or fraction of a share of Series A Preferred Stock
and such first Quarterly Dividend Payment Date), a dividend of $1.00 per
share on the Series A 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 Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is on or before
the record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue and be cumulative from
the date of issue of such shares, or unless the date of issue is a date
after the record date for the determination of holders of shares of Series
A Preferred Stock entitled to receive a quarterly dividend and on or before
such Quarterly Dividend Payment Date, in which case 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
shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the
time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which
record date shall not be more than 60 days prior to the date fixed for the
payment thereof.
Section 3. Voting Rights. In addition to any other voting
rights required by law, the holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of stockholders
of the Corporation. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the number
of votes per share to which holders of shares of Series A 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
A-3
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 Preferred Stock and the holders of shares of Common
Stock shall vote together as a single class on all matters submitted to a
vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six 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 Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period,
all holders of Preferred Stock and any other series of Preferred Stock then
entitled as a class to elect directors, voting together as a single class,
irrespective of series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the
holders of Series A 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 10% in number of shares of Preferred Stock outstanding shall
be present in person or by proxy. The absence of a quorum of holders of
Common Stock shall not affect the exercise by holders of Preferred Stock of
such voting right. At any meeting at which 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 Directors or, if such right is exercised at an annual meeting, to
elect two 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
A-4
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
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 10% of the total number
of shares of Preferred Stock outstanding, irrespective of series, may
request, the calling of special meeting of 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 10% of the total number of shares of Preferred
Stock outstanding, irrespective of series. 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 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 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.
A-5
(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 bylaws 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 bylaws). 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) The Certificate of Incorporation of the Corporation shall
not be amended in any manner (whether by merger or otherwise) so as to
adversely affect the powers, preferences or special rights of the Series A
Preferred Stock without the affirmative vote of the holders of a majority
of the outstanding shares of Series A Preferred Stock, voting separately as
a class.
(E) Except as otherwise provided herein, holders of Series A
Preferred Stock shall have no special voting rights, and their consent
shall not be required for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A 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 outstanding shares
of Series A Preferred Stock shall have been paid in full, the Corporation
shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends 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 Preferred Stock, except dividends paid ratably on the Series
A Preferred Stock and all such other parity stock on which dividends
are payable or in arrears in proportion
A-6
to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem, purchase or otherwise acquire for value any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock; provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of stock of the Corporation ranking junior (as to dividends
and upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of Series A
Preferred Stock and all such other parity stock 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 value 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
Preferred Stock redeemed, purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock
without designation as to series 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 as permitted by the Certificate of Incorporation or as
otherwise permitted under Delaware Law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the
A-7
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock
unless, prior thereto, the holders of shares of Series A Preferred Stock
shall have received $1.00 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment; provided that the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
Common Stock, or (2) to the holders of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such other parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the Corporation shall at any
time after the Rights Declaration Date pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination of
the outstanding shares of Common Stock (by reclassification or otherwise)
into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. If 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 or any other property, then in
any such case the shares of Series A Preferred Stock shall at the same time
be similarly exchanged for or changed into an amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 1,000 times
the aggregate amount of stock, securities, cash or any other property, as
the case may be, into which or for which each share of Common Stock is
changed or exchanged. If the Corporation shall at any time after the
Rights Declaration Date pay any dividend on Common Stock payable in shares
of Common Stock or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change
of shares of
A-8
Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The Series A Preferred Stock shall
not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank
junior (as to dividends and upon liquidation, dissolution and winding up)
to all other series of the Corporation's preferred stock except any series
that specifically provides that such series shall rank junior to the Series
A Preferred Stock.
Section 10. Fractional Shares. Series A 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 Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate this __ day of December, 1995.
_________________________
[Title]
Attest:
______________________
[Title]
A-9
Exhibit B
[Form of Right Certificate]
No. R- ____________Rights
NOT EXERCISABLE AFTER THE EARLIER OF DECEMBER 6, 2005 AND THE DATE ON
WHICH
THE RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE
COMPANY AS SET
FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN 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 SUBSEQUENT HOLDER, MAY BE NULL AND VOID.
[THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY
BE OR MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION
7(d) OF THE RIGHTS AGREEMENT.][2]
RIGHT CERTIFICATE
MASCO CORPORATION
This Right Certificate certifies that ______________________,
or registered assigns, is the registered holder of the number of Rights set
forth above, each of which entitles the holder (upon the terms and subject
to the conditions set forth in the Rights Agreement dated as of December 6,
1995 (the "Rights Agreement") between Masco Corporation, a Delaware
corporation (the "Company"), and The Bank of New York (the "Rights Agent"))
to purchase from the Company, at any time after the Distribution Date and
prior to the Expiration Date, ___ one-thousandth[s] of a fully paid,
nonassessable share of Series A Participating Cumulative Preferred Stock
(the
[2] If applicable, insert this portion of the legend and delete the
preceding sentence.
B-1
"Preferred Stock") of the Company at a purchase price of $100.00 per one
one-thousandth of a share (the "Purchase Price"), payable in lawful money
of the United States of America, upon surrender of this Right Certificate,
with the form of election to purchase and related certificate duly
executed, and payment of the Purchase Price at an office of the Rights
Agent designated for such purpose.
Terms used herein and not otherwise defined herein have the
meanings assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and
the number and kind of shares issuable upon exercise of each Right) and the
Purchase Price set forth above are as of December 18, 1995, and may have
been or in the future be adjusted as a result of the occurrence of certain
events, as more fully provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Right Certificate are beneficially owned by (a) an
Acquiring Person or an Associate or Affiliate of an Acquiring Person, (b) a
transferee of an Acquiring Person (or any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (c) under
certain circumstances specified in the Rights Agreement, a transferee of an
Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and void, and no holder hereof shall
have any right with respect to such Rights from and after the occurrence of
such Section 11(a)(ii) Event.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of
the Right Certificates, which limitations of rights include the temporary
suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of the Rights
Agent designated for such purpose and subject to the terms and conditions
set forth in the Rights Agreement, any Rights Certificate or Certificates
may be transferred or exchanged for another Rights Certificate or
B-2
Certificates evidencing a like number of Rights as the Rights Certificate
or Certificates surrendered.
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the close of
business on the tenth day after the Stock Acquisition Date (or such
later date as a majority of the Continuing Directors may designate
prior to such time as the Rights are no longer redeemable) and (ii)
the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right; or
(b) at any time after any Person becomes an Acquiring Person
(but before such Person becomes the Beneficial Owner of 50% or more
of the shares of Common Stock then outstanding), exchange all or part
of the then outstanding Rights (other than Rights held by the
Acquiring Person and certain related Persons) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right.
If the Rights shall be exchanged in part, the holder of this Right
Certificate shall be entitled to receive upon surrender hereof
another Right Certificate or Certificates for the number of whole
Rights not exchanged.
No fractional shares of Preferred Stock are required to be
issued upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are multiples of one one-thousandth 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. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Right Certificate or Certificates for the number of whole
Rights not exercised.
No holder of this Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
capital stock 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
Agreement), or to receive
B-3
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by an authorized signatory
of the Rights Agent.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal by its authorized officers.
Dated as of ________________, 19__
MASCO CORPORATION
By______________________
Title:
[SEAL]
Attest:
______________________
Secretary
Countersigned:
THE BANK OF NEW YORK,
as Rights Agent
By____________________
Authorized Signature
Date of Countersignature:
______________________
B-4
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________________________
hereby sells, assigns and transfers unto _________________
__________________________________________________________
(Please print name and address of transferee)
__________________________________________________________
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
______________________ Attorney, to transfer the within Right Certificate
on the books of the within-named Company, with full power of substitution.
Dated: _____________________, 19__
___________________________
Signature
Signature Guaranteed:
B-5
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate ___are
___are not being assigned by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___did ___did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: __________, 19 __ ________________________
Signature
__________
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change
whatsoever.
__________
B-6
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise
Rights represented by the Right Certificate.)
To: Masco Corporation
The undersigned hereby irrevocably elects to exercise
____________ Rights represented by this Right Certificate to purchase
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 securities 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 Right Certificate, a new Right 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: ________________, 19__
___________________________
Signature
Signature Guaranteed:
B-7
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate ___are
___are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person
(as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it ___did ___did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person.
Dated: __________, 19 __ ________________________
Signature
__________
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.
__________
B-8
Exhibit C
MASCO CORPORATION
STOCKHOLDER RIGHTS PLAN
Summary of Terms
Form of Security: The Board of Directors has declared
a dividend of one preferred stock
purchase right for each outstanding
share of the Company's Common
Stock, payable to holders of record
as of the close of business on
December 18, 1995 (each a "Right"
and collectively, the "Rights")
Transfer: Prior to the Distribution Date[3],
the Rights will be evidenced by the
certificates for and will be
------------------
[3] "Distribution Date" means the earlier of:
(1) the 10th day after public
announcement that any person or
group has become the beneficial
owner of 15% or more of the
Company's Common Stock and
(2) the 10th business day after the
date of the commencement of a
tender or exchange offer by any
person which would, if consummated,
result in such person becoming the
beneficial owner of 15% or more of
the Company's Common Stock,
in each case, subject to extension
by a majority of the Continuing
Directors.
"Continuing Director" means any
member of the Board of Directors
who was a member of the Board prior
to the time an Acquiring Person (as
defined below) becomes such or any
person who is subsequently elected
to the Board if such person is
recommended or approved by a
majority of the Continuing
Directors. Continuing Directors do
not include an Acquiring Person, an
affiliate or associate of any
Acquiring Person or any
representative or nominee of the
foregoing.
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transferred with the Common Stock,
and the registered holders of the
Common Stock will be deemed to be
the registered holders of the
Rights.
After the Distribution Date, the
Rights Agent will mail separate
certificates evidencing the Rights
to each record holder of the Common
Stock as of the close of business
on the Distribution Date, and
thereafter the Rights will be
transferable separately from the
Common Stock.
Exercise: Prior to the Distribution Date, the
Rights will not be exercisable.
After the Distribution Date, each
Right will be exercisable to
purchase, for $100.00 (the
"Purchase Price"), one
one-thousandth of a share of Series
A Participating Cumulative
Preferred Stock, par value 1.00 per
share, of the Company.
Flip-In: If any person or group (an
"Acquiring Person") becomes the
beneficial owner of 15% or more of
the Company's Common Stock, then
each Right (other than Rights
beneficially owned by the Acquiring
Person and certain affiliated
persons) will entitle the holder to
purchase, for the Purchase Price, a
number of shares of the Company's
Common Stock having a market value
of twice the Purchase Price.
Flip-Over: If, after any person has become an
Acquiring Person, (1) the Company
is involved in a merger or other
business combination in which the
Company is not the surviving
corporation or its Common Stock is
exchanged for other securities or
assets or (2) the Company and/or
one or more of its subsidiaries
sell or otherwise transfer assets
or earning power aggregating more
than 50% of the assets or earning
power of the Company and its
subsidiaries, taken as a whole,
then each Right will
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entitle the holder to purchase, for
the Purchase Price, a number of
shares of common stock of the other
party to such business combination
or sale (or in certain
circumstances, an affiliate) having
a market value of twice the
Purchase Price.
Exchange: At any time after any person has
become an Acquiring Person (but
before any person becomes the
beneficial owner of 50% or more of
the Company's Common Stock), a
majority of the Continuing
Directors may exchange all or part
of the Rights (other than the
Rights beneficially owned by the
Acquiring Person and certain
affiliated persons) for shares of
Common Stock at an exchange ratio
of one share of Common Stock per
Right.
Redemption: The Board of Directors may redeem
all of the Rights at a price of
$.01 per Right at any time prior to
the close of business on the 10th
day after public announcement that
any person has become an Acquiring
Person (subject to extension by a
majority of the Continuing
Directors).
After any person has become an
Acquiring Person, the Rights may be
redeemed only with the approval of
a majority of the Continuing
Directors.
Expiration: The Rights will expire on December
6, 2005, unless earlier exchanged
or redeemed.
Amendments: Prior to the Distribution Date, the
Rights Agreement may be amended in
any respect.
After the Distribution Date, the
Rights Agreement may be amended in
any respect that does not adversely
affect the Rights holders (other
than any Acquiring Person and
certain affiliated persons).
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After any person has become an
Acquiring Person, the Rights
Agreement may be amended only with
the approval of a majority of the
Continuing Directors.
Voting Rights: Rights holders have no rights as a
stockholder of the Company,
including the right to vote and to
receive dividends.
Antidilution The Rights Agreement includes
Provisions: antidilution provisions designed to
prevent efforts to diminish the
efficacy of the Rights.
Taxes: While the dividend of the Rights
will not be taxable to stockholders
or to the Company, stockholders or
the Company may, depending upon the
circumstances, recognize taxable
income in the event that the Rights
become exercisable as set forth
above.
_______________
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A.
A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights
Agreement.
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